Review… Multiple taxation in a recession all for $30bn loan

The Muhammadu Buhari-led administration in an effort to secure $29.9 billion loan facility from international financial institutions will from 2017 likely place a burden of several taxes on citizens and businesses.

This is in a bid to meet the preconditions set for securing the facility from the World Bank.

For one, Nigeria has initiated moves to tax all services rendered by various government agencies and parastatals through incorporating them into the Value Added Tax (VAT) column.

The move is already fueling resentment among the public presently weighed down by an economy hit with the worst recession of its type in the country’s history, and which is already taking its toll on businesses.

It could be recalled that various international financial institutions, including the World Bank and IMF, had asked for increase in internal revenue drive by Nigeria as part of the terms to grant the country any loan.

As at date, one of such loan applications is awaiting approval of the National Assembly.

And according to the Federal Inland Revenue Services (FIRS), the bar on payment of taxes may soon be lifted off all goods and services offered to the public in Nigeria.

“This has made it possible for the consumer tax base, popularly known as VAT, to be extended to all services, excluding the medicals”, said an aide to the chairman of FIRS, Babatunde Fowler.

He named the new services that will now attract VAT: to include immigration services, quarantine, tax on international passports, air tickets, railway tickets, tax on public parks and other related services.

It is expected that by 2017 when the new policy would have taken full root, government would have its internal revenue base increased by 25 per cent.

But the directive has not gone down well with the public as they are already complaining of the effects of multiple taxation on them.

Already, professionals have voiced condemnation of the new policy, describing it as a mark of insensitivity by the government.

A legal practitioner, Julious Dubem, put it like this: “This is a case of introducing tax through the back door. I can assure you that this will be challenged in court very soon.

Read also:  Nigeria, Qatar sign BASA, taxation agreements

“There have been several attempts by government to increase VAT, but they lack the legal framework, so they are now using another method to introduce it,” he said.

The organised labour: Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) have separately frowned at introduction of multiple taxes in the country despite job losses and the biting economic hardship.

Tunde Olayinde of TUC said the next general meeting of the Congress will deliberate on the issue and come up with a position paper on it.

It would also be recalled that a former Central Bank of Nigeria governor, and now Emir of Kano, Lamido Sanusi had also advised the government to review its monetary policies, even as he noted that no institution will grant the government, the loan it seeks.

The traditional ruler had at a public event recently, described President Buhari’s plan to inject $30 billion into the nation’s economy by way of external borrowing as wishful thinking.

He called on the National Assembly to approve the loan request, adding, that it would be interesting to see “how you will go to the international market with (such) an economy”, and the financial policies currently in place.

 

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