TheNewsGuru

Tag: taxation

  • ETIM ETIM: Taxation, increased revenues and the limits of fiscal reforms

    ETIM ETIM: Taxation, increased revenues and the limits of fiscal reforms

    By ETIM ETIM

    If any evidence was needed to prove the efficacy of President Tinubu’s fiscal reforms, the latest report from the Ministry of Budget & National Planning would suffice. For the period January – August 2025, the federal government collected a total revenue of N20.59 trillion, a 40.5% increase from N14.6 trillion recorded in 2024. Of this, non-oil receipts is N15.69 trillion, representing 75% of the total accruals. The main contributors to the improved earnings were FX revaluation as well as reform-driven processes such as digitized filings, Customs automation, tighter enforcement, and broadened compliance. Customs’ collections were N3.68 trillion in the first half of the year, N390 billion above target and already 56% of the full-year goal. At this rate, the government is expected to achieve its full-year revenue target of N36.35 trillion. These figures do not include crude oil earnings which have continued to fall behind projections largely due to falling oil prices and weak production.

    President Tinubu is expectedly excited about the success of his fiscal reforms, and has vowed that the federal government will no longer borrow from local banks. However, external borrowings will continue due to weak FX earnings. Improved fiscal performance means increased revenues to the states and local governments. In July, for example, FAAC shared N2 trillion to the federating units, the highest amount ever. Some states like those in the Niger Delta region now receive up to N40 billion in a month as their share, fuelling a new season of establishing mega projects. Most states have reported that they have also exited domestic borrowing.

    The Tinubu administration deserves commendation for addressing the huge fiscal challenges that confronted the nation during the Buhari presidency. The former president was unwilling to make the difficult decisions.

    But there’s a limit to what fiscal reforms and increased revenues alone can do. On their own, they cannot stimulate economic development and industrial growth. Unless we pursue a well-designed policy of industrialization and manufacturing with the determination and single-mindedness that other countries did, we will continue to face steep economic challenges. Manufacturing is a key driver of economic growth. A weak manufacturing sector such as ours can limit a country’s ability to achieve rapid and sustained growth. A tax-and-spend policy that does not focus on driving increased production and stimulating exports of manufactured goods will only generate more money for the politicians, while the country remains at the lowest level of development. Tax revenues alone are not enough. The administration should reset its agenda and focus more on promoting agricultural production, food sufficiency and robust industrial development and exports of manufactured goods. Continued reliance on imports will only exacerbate our trade deficits and vulnerability to external shocks. Crude oil price has been trending downwards for months now, and if, for example, it goes down to $30 or less per barrel, we would be in serious trouble in spite of the improved tax revenues. Boosting non-oil exports, especially value-added goods, is key.

    Nigeria’s struggling manufacturing sector possess many drawbacks. It’s the reason the economy is not diversified, making it vulnerable to fluctuations in global commodity prices. Its inability to add value to our natural resources, limits the country’s ability to increase exports and generate foreign exchange. Our limited manufacturing capability accounts for the high incidents of multidimensional poverty and inequality in the country, particularly in rural areas where job opportunities are scarce. Without industrial development, the development of skills and expertise needed to drive innovation and growth would be slow, very slow.

    Of course, Nigeria has made several attempts at industrialization in the past, but they have been unsuccessful for many reasons, key among which are inconsistent policies and lack of continuity and inadequate infrastructure. Some African countries like South Africa, Morocco, and Egypt have made better progress in developing their industrial bases than Nigeria. It’s time to rethink our strategies. Fiscal reforms alone won’t take us far. Investing in infrastructure, such as energy and transportation networks can help support industrial development. The federal government should therefore do more to improve our rail and road networks. Implementing effective industrial policies, such as support for SMEs and skilling up the workforce through vocational training programs can help foster a robust manufacturing sector.

    Nigeria’s manufacturing is dominated by a few entities which depend on imported inputs for production. Many of them have had to exit the country in recent years due to difficulties in sourcing foreign exchange. With insecurity rising and farmers abandoning the fields, we have gone back to the era of massive food importation. President Buhari was able to significantly improve agricultural outputs, almost achieving self-sufficiency in some grains. But President Tinubu had since rolled back many of the initiatives, notably the Anchor Borrowers Program of the CBN that helped propel food production under Buhari. It’s now time to pursue manufacturing, non-oil exports and increased food production. Taxation alone won’t save this country.

  • TNG EXPLAINER: How President Tinubu’s four new executive orders will affect industries and you

    TNG EXPLAINER: How President Tinubu’s four new executive orders will affect industries and you

    In a move aimed at mitigating economic hardship and creating a more business-friendly environment, President Bola Ahmed Tinubu has signed four Executive Orders that curbs arbitrary taxation policies in Nigeria.

    The announcement was made by the Special Adviser to the President Dele Alake, during an interactive session with State House Correspondents on Thursday.

    Shedding light on the key provisions of these orders, Alake said the orders are in furtherance of President Tinubu’s commitment to creating a business-friendly environment.

    The first Executive Order, known as the Finance Act (Effective Date Variation) Order, defers the implementation of changes in the Finance Act from May 23, 2023, to September 1, 2023.

    TheNewsGuru.com (TNG) notes that the National Tax Policy (NTP), first published in 2012, underwent a review in 2016 to align with the government’s goals of creating a business-friendly environment and simplifying taxation.

    However, some tax changes did not adhere to the 90-day notice period prescribed by the 2017 NTP, putting businesses in violation of the new tax regime even before the changes were gazetted.

    These inconsistencies and uncertainties prompted President Tinubu’s deferral to ensure that taxpayers receive a 90-day notice period before any tax changes take effect, allowing for better preparation and compliance.

    The second Executive Order, the Customs, Excise Tariff (Variation) Amendment Order, also shifts the start date of tax changes from March 27, 2023, to August 1, 2023.

    This alteration provides businesses with additional time to adapt to any modifications in customs and excise duties, enabling them to make informed decisions and mitigate potential disruptions.

    Recognizing the impact of excessive taxation on certain sectors, President Tinubu has suspended the five per cent Excise Tax on telecommunication services, the Excise Duties escalation on locally manufactured products, and the newly introduced Green Tax on single-use plastics.

    The Excise Tax on telecommunication services was introduced as part of the 2022 Fiscal Policy Measures and Tariffs Amendments Order and is applicable to all telecommunications services provided in Nigeria, including postpaid and prepaid services.

    However, this tax faced significant controversy, as industry players raised concerns about multiple taxes on their operations and the potential negative impact on the sector’s growth and affordability of services.

    The Excise Duties escalation on locally manufactured products on the other hand was introduced as part of efforts to enhance revenue generation and promote local production.

    It involved increasing excise duties on various goods manufactured within Nigeria, presenting challenges for businesses, as it affected production costs, competitiveness, and ultimately, their ability to thrive in the market.

    The Green Tax, including the Single-Use Plastics (SUPs) tax, aimed to reduce plastic waste and promote environmental sustainability, by imposing an excise duty of 10 per cent on single-use plastics, including plastic containers, films, and bags.

    The tax aimed to discourage the use of SUPs and encourage the adoption of more sustainable alternatives.

    Nevertheless, concerns were raised regarding the impact on businesses and the need for a comprehensive approach that considers the country’s net zero plan without negatively affecting the economy.

    Additionally, the President has ordered the suspension of the Import Tax Adjustment (IAT) levy on certain vehicles, which initially took effect on June 1, 2023. This decision aims to ease the financial burden on individuals and businesses involved in the importation of affected vehicles.

    The IAT levy was introduced to adjust taxes on imported vehicles based on engine size and value, imposing a two per cent tax on vehicles with engine sizes ranging from 2 to 3.9 litres, and a four per cent tax on vehicles with engine sizes of 4 litres and above.

    The levy also allows the federal government to charge N75 per litre of beer, stout or wine imported into Nigeria.

    The IAT aimed to generate revenue and encourage local vehicle manufacturing, but imposed additional costs on importers and affected the affordability of these items.

    Over the past month, Nigerians have expressed their concerns and frustrations following the abrupt removal of subsidies on fuel and foreign exchange by President Tinubu, after his swearing-in on May 29.

    The sudden removal of subsidies led to increased fuel and commodity prices, as well as a weakened purchasing power, placing a significant burden on Nigerians.

    However, by issuing these orders for the suspension of these taxes, the President aims to ameliorate the adverse impacts of tax adjustments on businesses and provide much-needed relief in these challenging times.

    These measures also signify a deliberate effort to strike a balance between revenue generation and ensuring the sustainability and growth of businesses in Nigeria.

    The signing of these Executive Orders has been hailed in some quarters as a significant step towards curbing arbitrary taxation policies, promoting stability, and providing much-needed relief to businesses and households.

    It is expected that these measures would contribute to a more conducive business environment, alleviating the burden of taxation on citizens and fostering sustainable growth, in line with economic recovery efforts.

  • FIRS official emerges winner of Africa’s award in taxation

    FIRS official emerges winner of Africa’s award in taxation

    A staff member of the Federal Inland Revenue Service, Dr. Anthonia Alebiosu, has won the ‘Forty Under 40 Africa Award’ in South Africa.

    The award ceremony, which took place in South Africa in late March, saw Dr. Alebiosu win the taxation category of the award, with over a thousand entries received for the preliminary stage of the award.

    Awardees that won other categories alongside Dr. Alebiosu are the first African woman referee at the 2022 men’s World Cup, Salima Mukansanga; Lagos State Commissioner of Finance, Rabiu Olowo; Global President, Association of Chartered Certified Accountants, Joseph Owolabi and Broadcast Journalist and British Broadcasting Corporation’s Presenter, Nyasha Michelle.

    The Forty Under 40 Africa Award identifies, honours, and celebrates a cross-section of the continent’s most influential and accomplished young business leaders under the age of forty from a wide range of industries. These individuals are committed to business growth, professional excellence, and community service, and have risen-up the ranks of their companies or industries at a relatively young age as a result of this.

    Speaking during the event, the Director of the Award Ceremony, Richard Abbey Jnr, said that they organised the event not only to put a spotlight on young achievers but also to build a strong platform for them to share their voices and opportunities with the next generation of industry pacesetters. This would also help to build a positive attitude in young people to strive for excellence at a tender age.

    “Year after year, we have seen outstanding individuals and trailblasers strive hard with dedication and perseverance by overcoming challenges and economic instability. These are the people we had honored,” Abbey added.

    Dr. Alebiosu is a highly accomplished and versatile professional with a wealth of experience in accounting and taxation and presently works as a Manager at the Federal Inland Revenue Service, where she’s responsible for assessing and collecting tax revenues for the Federal Government. She has over 15 years of work experience, including over 10 years at the Federal Government Revenue Agency.

    She has a strong academic background, having obtained a bachelor’s degree in business administration from Olabisi Onabanjo University, a master’s degree in finance from the University of Lagos, and a Master of Philosophy and Doctoral Degree in Accounting from Babcock University.

    TheNewsGuru.com (TNG) reports that Dr. Alebiosu is also a Fellow of both the Institute of Chartered Accountants of Nigeria and the Chartered Institute of Taxation of Nigeria.

    The FIRS official expressed her joy as she received the award and thanked the FIRS for the opportunity to work with the agency.

    She also pledged to remain committed to her work and strive for excellence in all that she does.

  • Telecoms in a season of Regulatory Capture – Okoh Aihe

    By Okoh Aihe

    Twin evils in the telecommunications industry are regulatory capture and multiple taxations. Even in developed economies, they constitute a major bogey and operators are frenetic when the phrases are thrown about. This explains why organisers of global telecommunications events like the ITU World and the Mobile World Congress, among others, would usually allocate generous time to address these issues.

    And governments and regulators across the world are wooed to attend in order to acquaint themselves with the latest information. Yet, the problems remain; very stubborn, like the fly in the rural setting, the more you hit them the more they come. Very recalcitrant.

    On the surface, the bigger threat is multiple taxation, a situation that evolves when governments at the various levels, from the federal through states to the council areas, and in some queer cases ‘area boys’ – the notorious lords of the local environment – introduce a cocktail of levies in order to make more money from operators for the erroneous impression that telecom operators have an open pipe of cash that can never be threatened no matter the pressure.

    On the other hand, regulatory capture smacks of influence on the regulator by higher authorities, individuals or governments usually for very selfish purposes, beyond the public good. WikiLeaks explains it very succinctly: Regulatory capture (also client politics) is a corruption of authority that occurs when a political entity, policymaker, or regulatory agency is co-opted to serve the commercial, ideological, or political interests of a minor constituency, such as a particular geographic area, industry, profession, or ideological group.

    When regulatory capture occurs, a special interest is prioritized over the general interests of the public, leading to a net loss for society. Government agencies suffering regulatory capture are called captured agencies.
    Regulatory capture is a devious feature of government-regulated industries like water, energy and telecommunications. Regulatory capture does not mean well for any industry and should not be tolerated under any guise; this shall be explained at the later part of this material.

    Now if the truth makes you comfortable, telecom operators in Nigeria pay federal taxes; they pay state taxes; they pay local government taxes; and wait for this, they must also pay taxes to ‘area boys’ whose punishment can be more severe as they can stop any operator from even deploying services. Sitting by my side in one international programme one gentleman chuckled to my hearing: ‘I have worked in Cuba and in the Philippines, it is terrible over there.’ The only strange addition in our part of the word is the ‘area boy’ malaise which is exacerbated by the economic flux, a dearth of job availability which is making even the best turn delinquent and roguish.

    Multiple taxation can be debilitating in its sucker punch. Although the sucker punch is an unexpected blow that takes you to the ground immediately, multiple taxation will come in trickles, in strands, and settle down over a time to overwhelm your business. One can testify that the regulator in Nigeria, the Nigerian Communications Commission (NCC), has applied every ingenuity to help fight this evil but success has been very elusive because the perpetrators are insistent and very consistent in their pursuit. Governments are desperate to find cash to provide some services and those with the similitude of affordability must have to respond. With the unfolding situation in the economy before our very eyes, the desperation may soon hit boiling point; governments will either have to apply a leash on the search for cash or asphyxiate businesses to death with tax overload.
    This returns me to the title of this piece, Telecoms in a season of Regulatory Capture.

    Regulatory capture is one hidden killer of businesses across the globe with the danger more manifest and potent in developing economies. Part of the blood that feeds this evil comes from the fact that operators in an environment like ours are too afraid to speak about government meddlesomeness or invidious interventions in their businesses. In the words of venerated writer, Femi Osofisan, they ‘accept defeat as their fate’ out of the fear that every little protestation to, or disagreement with government may attract sanctions from the authority, including withdrawal of operating license.
    The impotence of defeat derives from the defeated underestimating his value or the value of his services to the society.
    For years Regulatory capture didn’t mean anything to anybody from the telecoms regulatory agency of Nigeria. They walked with their heads in the air, like the typical black man in Aiyi Kwei Armah’s Fragments who can only come from Nigeria or Ghana and walks with a gait anywhere in the world. The Nigerian regulator was the world and caused the world to listen to his voice.
    However, the source of the sprightliness of the Nigerian regulator derived from a very strong document, the Nigerian Communications Act 2003 which clearly defined responsibilities and strength of an independent regulator put in place by a government desirable of attracting international recognition, acceptance and investment in a sector generally taken as an enabler of modern development. Little wonder that what happened in the telecommunications industry in Nigeria has never been repeated in any other industry in the country or anywhere in Africa.
    Investments run into tens of billions of dollars. The industry provides some of the best jobs in the country and supplies the oxygen that powers our creative industry. In defiance of practices of yore, people are connected across the land to the extent that even the conservative banking sector can become the unrepentant ventriloquist of inclusive banking consequent upon the superstructure provided by the telecoms industry.
    A primary object of the Nigerian Communications Act is: to establish a regulatory framework for the Nigerian communications industry and for this purpose to create an effective, impartial and independent regulatory authority.

    To forestall every anticipated opportunity of a capture, the Act defines the relationship between the regulator and the Ministry of Communications headed by a Minister, who is an appointee of the President. The relationship enunciated under the Functions of the Minister mostly bothers on policy issues and international representation of government. The Act insulates the Commission from every external encumbrances and wilful interventions.
    The Act is the fuel that powered the telecommunications industry of Nigeria. The document gave assurances and indemnity to local and international investors. The regulatory independence was what excited the ITU which made
    Nigeria a case study and reference point for peer study opportunities.

    However, recent direct orders to, and interventions in the activities of the NCC by the Minister of Communications and Digital Economy has put to question the independence of the regulator and its ability to continue to superintend the sector going forward. Some of these depressing developments in the industry which surprisingly have elicited conspiratorial silence from the usually vociferous stakeholders, are a painful pointer that there is something going very wrong with a sector that will soon become a receding poster boy of the country’s economy if something is not done urgently.

    It is a deserved prayer here that people of goodwill and love for the industry including the National Assembly should take urgent measures to redeem the industry from supervening individual whims and caprices and spare the country from becoming an investment pariah.

    More than ever before Nigeria needs the attention of the international community and the investing public to look more generously at the attractive investment opportunities in the telecommunications industry instead of engaging in activities that will put them at bay. Sometimes these actions emanate from insipid overzealousness but their results can be very devastating.

    It is perhaps for the danger it poses that experts, including the Nobel laureate economist George Stigler have canvassed the need for a regulatory agency to be protected from outside influence as much as possible even as they also stated quite clearly that “a captured regulatory agency is often worse than no regulation, because it wields the authority of government.”

    The GSMA, a trade body that represents the interests of mobile operators worldwide, including nearly 800 operators with more than 400 companies in the broader mobile ecosystem, in a 2016 research by NERA Economic Consulting, titled: A New Regulatory Framework for the Digital Ecosystem, observed that the industry was already contributing over $3 trillion to the global economy annually, supporting 25 million jobs and enabling growth across all sectors of the economy. With 3.8 billion mobile users at the time and about 700 million more expected to connect by 2020 the contributions of the sector to the global economy would be much more.

    In a global ecosystem where finances are struggling for the best investing environment, nobody or rather no country trifles or gambles away the opportunity to grow a low hanging opportunity like the telecommunications sector by permitting certain actions that certainly wear the odium of regulatory capture.

    The more obvious danger is that regulatory capture destroys investors’ confidence in a sector and pressure operators to put further investments on hold while holding the regulator’s impotence to shame and ridicule in the eyes of the public. The other more damaging aspect which escapes attention always is that happenings in one sector are keenly watched by investors in the larger economy who will often use the regulatory capture of one industry to measure a government’s sinister attitude to protecting other people’s money beyond selfish manifestations. A domino effect will happen and investors will scramble to safe havens, away from one country’s claim to vacuous importance.
    Okoh Aihe writes from Abuja