Connect with us

Business

Taxation: A Two-way Social Contract

Published

2 years ago

on

Dapo Okubanjo

It is the norm in every society, for the authorities and the people to have what is loosely referred to as a social contract or an implicit agreement.

It is a theory that is as old as humanity itself and it presupposes that a people’s moral and political obligation depends on an agreement among them.

Taxation is seen as one of those obligations that the citizenry in every country is expected to abide by, but in Nigeria this is one social contract that has for years been difficult to keep.

We are a country with the largest economy in Africa in terms of Gross Domestic Product (GDP) and at the last count, the size of Nigeria’s economy is way ahead of South Africa and even Egypt.

But in terms of GDP to tax revenue, the country is not among the performing countries of the world and does not even compare with the two African countries mentioned above. In fact the International Monetary Fund (IMF) has been concerned to the extent that it recently urged Nigeria to improve on its tax revenue which stood at 6% of its GDP as at 2022.

That has been the highest the country has done in recent years but the Federal Inland Revenue Service (FIRS) on the watch of Muhammad Nami, the Executive Chairman, said it plans to raise the tax revenue to GDP ratio to 17% this year.

On paper, this looks ambitious but the FIRS has in the last few years consistently surpassed old records and broken new grounds, so it may not be ideal to bet against the FIRS achieving a quantum increase in the country’s tax revenue.

ALSO READ:  FIRS, EFCC To Join Forces To Enhance Tax Compliance - Mr. Adedeji

*Chicken or egg dilemma*

Paying tax is a chicken and egg situation in many parts of Nigeria. It is usual to hear arguments among Nigerians revolving around inadequate infrastructure or outright lack of it in their immediate communities.

But the truth is funds need to be in public coffers before these things could be done so the question of what comes first between citizens paying the necessary taxes as at when due or government putting up infrastructure and providing social amenities does not even arise.

An aspect of the argument that vexed citizens make against payment of taxes is that not much is visible in terms of social amenities and infrastructure after citizens have done their side of the social contract.

This may be true considering the President Muhammadu Buhari administration had in the past raised posers on what previous administrations had done with public funds based on what it met on ground.

But this is not enough to kick against tax payment especially at a time of dwindling revenue from crude oil. It is ideal for the chicken to be well fed before it could lay eggs.

And to put the issue in proper perspective, it is at a time of a global oil slump that the Buhari administration has been able to depend on other revenue sources and chief amongst these is tax revenue, to deliver so much.

It is through these taxes that government is able to fund road construction, bridges including but not limited to the Loko – Oweto Bridge and Second Niger Bridge, provide medical care (Primary Health Care Centres across the country), build schools and equip them with the necessary infrastructure.

ALSO READ:  President Tinubu at the Government-to-Business Roundtable

It is pertinent to me to also note that the interventionist fund TETFUND was able to disburse over N2 trillion in about 10 years to several tertiary institutions and this was made possible from the Tertiary Education Tax, which is 2.5% of the assessable profit of companies operating in Nigeria,

When the FIRS made its record breaking tax collection of N10.1 trillion in 2022, it attributed the feat to its internal revamp, its data-centric reforms, and its improved collaboration with all stakeholders including tax payers—emphasising that it recognizes the role that the citizenry plays in achieving its set goal.

And now that the agency has raised the bar in tax collection, the good job that the President Buhari administration is doing in ensuring that Nigerians see where their tax is going would be a further boost to FIRS target for 2023.

So it is absolutely necessary that Nigerians continue to keep their side of the social contract which taxation represents and government, whether the incumbent or the incoming, will have little or no reason to ensure that the people reap the necessary benefits in terms of provision of social amenities.

Related Topics:
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

NLC Rejects Electricity Tariff Adjustment, Sets For Protest

Published

20 hours ago

on

March 2, 2025

By

By Abubakar Yunusa

The Nigeria Labour Congress (NLC) has rejected plans by the Federal Government to regularise electricity tariffs for customers for Bands A, B and C.

In a communique released on Sunday after the National Executive Council (NEC) in Yola, Adamawa State, the labour union vowed to lead mass nationwide protests across Nigeria should the government continue with its plan.

Last Thursday, Minister of Power, Adebayo Adelabu, said lower bands would be upgraded to Band A.

In its communique sign by NLC General Secretary, Emmanuel Ugboaja, the labour union rejected the “forcefully migration” of consumers from lower bands to Band A.

“On the Migration of Electricity Consumers with a view to increasing tariff: NEC unequivocally rejects the ongoing sham reclassification of electricity consumers by the Nigerian Electricity Regulatory Commission (NERC), which seeks to forcefully migrate consumers from lower bands to Band A under the guise of service improvement while, in reality, imposing unjustified extortion on the masses,” the NLC declared.

“This systematic exploitation, sanctioned by the Ministry of Power, is nothing short of economic violence against the working class and broader Nigerian populace.

“It is evident that the ruling elite, acting as enforcers of global monopoly capital, are determined to further deepen the misery of the Nigerian people through incessant tariff hikes, increased taxation, and relentless economic strangulation.

“Whereas inflation has soared, wages remain stagnant, and the cost of living has become unbearable, the ruling class continues to transfer the burden of their fiscal irresponsibility onto the already impoverished working masses.

“NEC-in-session warns that any attempt to announce further electricity tariff increases will be met with mass resistance.

ALSO READ:  AfDB Injects $618 Million Through i-DICE Initiative

“Consequently, the Congress resolves to immediately mobilise for a nationwide protest should the Ministry of Power and NERC proceed with their exploitative plan to further hike electricity tariffs under any guise.

“The NLC shall not stand idly by while the Nigerian people are subjected to the unholy machinations of capitalist profiteers and their state collaborators.”

For decades, Nigeria, Africa’s most populous nation, has been faced with intractable energy challenges, no thanks to an epileptic power supply which significantly affects productivity levels. Despite the privatisation of the electricity sector, power generation, transmission and distribution have remained bogged with hydra-headed monsters of policy inconsistency, low investments and operational challenges.

https://x.com/ZagazOlaMakama/status/1895958762063560836?t=ZQcL_C2ABzvXK0bihDZc0w&s=19

In 2024, NERC approved the upward review of electricity prices with a unit of power costing about N250 for Band A customers.

The cost of petrol and diesel which are readily available alternatives have equally increased by fivefold, compounding the dilemma of consumers. In the same year, NERC granted at least some State’s Electrify Regulatory Commissions licenses to power plants and power distribution.

Continue Reading

Business

Uba Sani Disburses N375m Loan To 10 Communities

Published

20 hours ago

on

March 2, 2025

By

By Abubakar Yunusa
Uba Sani, Kaduna state governor, says 10 communities received $25,000 cheques each from the community revolving fund to support farmer groups.

According to a statement by the state government, the cheques presented on Saturday amount to a total of N375 million.

Sani explained that the World Bank-assisted Agro-Climatic Resilience in Semi-Arid Landscapes (ACReSAL) Project provided the fund to help beneficiaries invest in climate-smart rain-fed agriculture.

The benefitting communities include Anchau, Kuzuntu, Kubau, Zuntu, Jenau, Likoro, Jaja, Hunkuyi, Kudan, and Danmahawayi.

Sani said the fund aligns with his administration’s commitment to rural transformation, which is designed to support registered farmer groups under the umbrella of community interest groups (CIGs).

“Kaduna state is proud to be at the forefront of initiatives aimed at combating climate change and ensuring sustainable livelihoods for our people,” he said.

‘’Over the years, we have implemented a range of strategic policies and programs designed to enhance ecological conservation, mitigate the impact of climate change, and promote economic resilience among our citizens.

‘’With the support of ACReSAL, the State Government unveiled a 10-year Climate Change Policy, trained 500 women, youth, and school-feeding vendors in the production of biomass briquettes as an alternative to wood fuel.”

Also, Sani said his administration disbursed loans in Kudan and Kubau local governments under phase one of the initiative, covering a total of 82 CIGs.

He further explained that phase two would commence in the second quarter of the year, including four local governments in the central and southern senatorial zones, alongside two area councils in the northern senatorial zone.

ALSO READ:  President Tinubu at the Government-to-Business Roundtable

According to the governor, the concluding phase of the implementation will cater to the remaining 11 local government areas in the state.

Joy Agene, the task team lead of the ACReSAL project, praised the government for its commitment to environmental sustainability, saying that the state remains one of the best-performing sub-nationals in the country.

Balarabe Lawal, minister of environment, also spoke at the event, stressing that the community revolving fund is a loan, not a grant, and must function as an investment fund for community and farmer groups.

‘’The loan is intended for communities, facilitating circulation among farmers and sustained through groups that ensure the loan remains active within your community via timely repayment, thereby enabling other farmers to reap the benefits,’’ he said.

“The ACReSAL project constitutes a significant component of the Federal Government’s aim to rehabilitate one million hectares of degraded land, contributing to the overarching goal of restoring four million hectares by the year 2030.

‘’The initiative will additionally contribute to diminishing the susceptibility of countless individuals living in extreme poverty in northern Nigeria, thereby enhancing their capacity to engage in the stewardship of their surroundings.”

At the event, Sani announced the procurement of the amphibious excavator, otherwise known as a swamp buggy, to prevent and control erosion, deepen waterways, and maintain and clean rivers.

Continue Reading

Business

Afreximbank unveils new documentary series on Africa’s growth

Published

2 days ago

on

March 1, 2025

By

The African Export-Import Bank (Afreximbank) has announced the launch of its new documentary series titled “Impact Stories.”

A statement issued on Friday in Abuja by Vincent Musumba, Afreximbank’s Communications and Events Manager, stated that the documentary aimed to showcase the bank’s developmental impact across various sectors and countries in Africa.

It also highlighted the bank’s influence in the diaspora.

Musumba said Season One of the series, which consisted of six episodes, filmed across six countries and sectors, went on air on Afreximbank TV (www.youtube.com/@afreximbanktv) on Feb. 27, 2025.

He said the series produced by the Afreximbank TV team and CNN’s Created Studio services, sought to spotlight the bank’s interventions, incorporating multi-faceted narratives that brought the bank’s initiatives to life.

“Through testimonials of individuals, businesses, communities and economies that have been positively impacted by the interventions, the series creates an emotional connection.

“It also creates a shared commitment of an African vision focused on transforming trade and economic self-determination.”

Musumba said the inaugural season, consisting of six episodes, showcased some of Afreximbank’s development impact through inspiring short documentary-style films.

He said the episodes featured the Zimborders Beitbridge project which involved the expansion, upgrade and improvement of Beitbridge Border Post in Zimbabwe.

“This explores the transformative effect of Afreximbank’s investment in modernising the border post, and showing how improved infrastructure is addressing trade inefficiencies, fostering intra-African trade and driving regional growth.”

He said other episodes include the Glo-Djigbé Industrial Zone (GDIZ) in Benin, a project led by Afreximbank investee company, Arise Integrated Industrial Platform (Arise IIP).

ALSO READ:  CBN extends FX sale period to Bureau de Change operators

“This project is focused on driving industrialisation, job creation and end-to-end production on the continent.”

Another episode was on Oando PLC, which showcased the organisation’s successful acquisition in a key Nigerian oil sector joint venture and its transformative impact on local content and economic prosperity.

“Other episodes are Eva’s Coffee in Kenya, an SME business driving export development and local value chain expansion; Reine Ablaa, a rising music star and alumni of Afreximbank’s CANEX Music factory initiative.”

Musumba said an episode was on the ongoing success of the bank’s Pan African Payments and Settlement System (PAPSS).

He quoted Mrs Anne Ezeh, Director of Communications and Events at Afreximbank as saying: “Afreximbank was founded to drive Africa’s economic independence through trade and trade-enabling infrastructure.

“For the past 32 years, we have consistently translated that mandate into impactful projects and initiatives across the continent.

“The Impact Stories series represents an avenue to showcase the tangible progress we are making to transform the economic fortunes of the African people while reminding us of the development challenges that remain.”

Ezeh stated that compelling impact storytelling, when combined with data, evidence, and personal stories, made these elements potent tools for advocating positive change and motivating others to champion a cause.

She said new episodes would be released weekly. (NAN)

Continue Reading