Desperate revenue generation or deliberate wickedness?

telecom

Taxation is one of the best ways to generate revenue for countries around the world. Over the decades, Nigeria has struggled to increase tax revenue, but it has proven difficult due to political limitations, corruption, lack of patriotism and the tendency of most Nigerians to try to save money.

However, since 2015, the current administration has put in place some groundbreaking laws, policies and initiatives to expand the tax net, attract millions more Nigerians to pay taxes and strengthen the country’s revenue base. From the days of Babatunde Fowler who headed the Federal Inland Revenue Service (FIRS) to the current leadership headed by Muhammad Umar, trillions of naira have been generated in tax revenue for the federal government.

The FIRS in 2021 collected a total of 6.405 trillion naira in oil (2.008 trillion naira) and non-oil (4.396 trillion naira) revenues, exceeding the target of 6.401 trillion naira.
Corporate income tax was N1.896 billion; The oil profit tax was 2 trillion naira; Value Added Tax was N2.07 trillion; The wire transfer tax was N114 billion; and earmarked taxes amounted to N208.8 billion.

Meanwhile, since the arrival of Professor Isa Ali Pantami as Minister of Communications and Digital Economy and his team of experts, tax revenue from ICT and telecommunications has increased multiple times. This is due to the unprecedented reforms they have made.

Nigerians are taxed and they pay heavily. This must be why the recent idea of ​​an additional 5% telecommunications tax has not been well received by the masses.

While the government, through the Minister of Finance, Budget and National Planning, Zainab Ahmed, is willing to increase its revenue by imposing additional taxes such as the 5% excise duty on telecommunications, he must be wary of overtaxing people. and tax the poor masses to death.

In fact, any arbitrary imposition of such taxes on already impoverished masses could mean the loss of government as it may lead to some form of revolt or rebellion. Fortunately, to the delight of many, Professor Pantami recently announced the suspension of the 5% telecommunications tax.

He made the announcement during the inaugural meeting of the Presidential Committee on Excise Duty for the Digital Economy Sector in Abuja.

One of the reasons he gave was that the digital economy already faces the problem of overtaxation and sometimes multiple taxation. The Minister therefore viewed any other form of taxation as insensitive to Nigerians.

Sadly though, contrary to the minister’s statement, the director general of the budget office, Ben Akabueze, said the issue was still ongoing, that the federal government had not put it on hold.

It threw the spanner in the works as Nigerians thought they would breathe a sigh of relief and escape what looks like government punishment for a tough economy – high unemployment, inflation rate of underemployment, poverty rate, low purchasing power, low value of naira etc.

I will take this opportunity to advise the federal government to listen to Pantami’s sage advice and not do something that will be deemed insensitive.

This crusade does not mean that taxation is not important. Taxation is the foundation of infrastructure development and the evolution of taxation in Nigeria is interesting.

During the 1970s and late 1980s, the focus shifted to oil revenue, so much so that all of the states in the country were dependent solely on revenue from the Federation Account. However, the dawn of the global recession has shown an intense fall in oil prices and by extension a reduction in revenue from Federation accounts, the over-reliance on oil revenue has generated a disparity in the implementation of some of the fiscal policies.

Governments (federal, state, and local) began to look inward, focusing on internally generated revenue (IGR) as a means of sustainable financing as insolvency loomed among states. Nigeria’s federal government revenues from oil over the years have remained grossly insufficient to meet the growing social and public expenditures needed to facilitate economic growth and infrastructure development in the country.

Consequently, Nigeria used taxation as an alternative source of revenue when crude oil revenues began to fluctuate. The contribution of taxation to every economy in the world cannot be overemphasized. Apart from the revenue function it performs for the government, it is also used to help the country achieve its macroeconomic goals in the areas of fiscal and monetary policy.

While I will conclude by urging Nigerians of taxable age to pay their taxes when they are due and to stop tricking themselves into hoarding funds that could be used to provide infrastructure, it is equally important that the Federal Government continues to act on the issue of the five per cent telecommunications tax, because it is a very bad idea at a very bad time.

Vivian is a Mass Communication student at Ahmadu Bello University (ABU), Zaria.

naijanew