Opinion: Nigeria Missing Opportunities To Benefit From A Proper Tax System

Opinion: Nigeria Missing Opportunities To Benefit From A Proper Tax System

Nigerian Finance Minister Ngozi Okonjo-Iweala. Photo by Bloomberg.

By Maxwell Adeyemi Adeleye | From Naij.com

Unarguably, ever since crude oil was discovered in Nigeria on January 1956 by Shell Darcy, the country has changed completely. Nigeria has strategically abandoned other sources of income that could generate trillions of naira annually.

Prior to the discovery of crude oil, Nigeria’s major sources of income were majorly agricultural products such as groundnut, cocoa, cashew, palm oil, etc. These products were free gifts of nature extracted and exported overseas under the import-export substitution policy of the then Nigerian government.

Using the money made on cocoa and other agricultural products the late Obafemi Awolowo, the first premier of the Western Region of Nigeria, built Airport Hotel, Ikeja, Lagos; the University of Ife (now Obafemi Awolowo University); Cocoa House and the Western Nigeria Television Authority (Now NTA), Ibadan; Oodua Textile Mill, Ado Ekiti; Ifon Ceramics Industry, Okitipupa Oil Palm Plc, Oluwa Glass Company Plc, Ondo state, etc.

With strong agricultural sector at hand Nigeria hit the ground running immediately after being granted independence on October 1, 1960. Now the main source of profit in Nigeria is crude oil. Other income generating sectors have been jettisoned for oil boom which is now more of a curse than a blessing for the Nigerian people.

The panacea

Great nations have developed through taxation. America and Britain live almost solely on tax system. I can say relying on direct and indirect observations that the Nigerian tax policy is too weak and archaic. The Nigerian leaders have allowed more money to be taken out of Nigeria by the neo-colonialists pretending to be owners of multinational corporations in the country than they (the neo-colonialists) pay as taxes.

Providing that crude oil one day dries up, and agricultural sector is totally ruined, the effective tax policy will be able to remedy the quagmire militating against the development of Nigeria. With adequate tax policy we can get more funds to withstand the infrastructural decadence presently battering the country.

Pay as you earn

First, pay as you earn policy should be rigorously pursued. The more one earns the bigger tax they should pay. I also recommend the Nigerian government to introduce pay as you have system; in other words the more properties one has the more they should pay. Thus Nigeria would be able to benefit from taxing multimillionaires and billionaires.

I am aware of the country’s tenement rate policy, however, the government should ensure that the privileged Nigerians possessing as much as 40-60 mansions in the choice areas of Abuja, Kano, Lagos, Port Harcourt, etc. pay taxes according to the number of houses they own. In fact, they should pay not only according to the number of properties, but also according to its quality. It is very unfair the one owning a N5m house on a plot of land in Ojodu, Lagos, and the one possessing a N100m house in the same location pay equal tax and tenement rate. The tax system in Nigeria is a total antithesis of the developed tax polices worldwide.

Vehicle registration

The government has failed to boost its revenue through vehicle registration. The policy of duties designed by the Nigerian Ports Authority and the Nigeria Custom Service should be adopted by those in charge of vehicle registration in Nigeria.

In the Nigerian ports and on the border, duty is imposed on the imported cars based on their production years. The size of duty for a car manufactured in 2010 is bigger than that for a car manufactured in 2014 even if the price of the former is higher. Consequently, it is totally unacceptable and economically unwise for the Nigerian authorities to charge the same amount for the registration of a 1998 Honda and a 2012 Toyota Camry.