‘Nigeria Can Earn More Revenue With Good Tax Administration’
Chief Mark Anthony Dike is the President of Chartered Institute of Taxation of Nigeria. In this interview with TEMILOLUWA ADEOYE, he emphasized the need for Nigerians to pay tax to boost government income in the face of uncertainty in the oil and gas sector.
Government seems to be focusing on taxes as alternative to oil revenue; is that a good way to diversify the economy? TAX is like blood for any government.
People talk about the nexus between taxation and governance; they are two sides of the same coin. You cannot effectively talk about governance without money, and money has to be derived from taxation.
So for government, therefore, money is the lifeblood and that money first and foremost generally has to come from contributions of the people. Tax is a compulsory exertion imposed by sovereign authority on the citizen.
That has a kind of adverse implication that somebody out there called government imposes a compulsory levy on the citizens.
That means if citizens don’t like such impositions, they can resist it, especially when they see it as not for their own good.
In modern terms, tax is the price we pay for a civilized society. When you now pay that tax, which is supposed to be for the common interest of citizens, it is used to provide those things that cause us to be civilized, things that will not make us to quarrel or fight among ourselves.
That is what tax ought to do. So when there are failures by government, then you can ask question as to why the government now wants to resort to tax as bail out.
Of course, if you resort to taxation, then we need to know if it is a new tax that the government is trying to impose. We may want to know also if government is trying to improve on its machineries of collection.
As long as government is not imposing new taxes, but just trying to look at tax administration, that means the machinery for tax collection is weak, ineffective, inefficient and therefore, requires to be re-organised or re-vitalised.
But when government is imposing new taxes, then you will now ask a question again, why is it imposing new taxes? Has it reached the limit of collection of existing taxes that it will now go into new areas? Of course, replicating layers and layers of taxes may not be the solution.
Do you see agriculture as a possible alternative revenue earner? You know when you talk about viable alternative; I don’t want to see agriculture as a viable alternative. Someone who does not have income cannot pay tax. And those who pay taxes are those who have means of livelihood and can earn income.
How do you earn income? It is by working or by being in business. If agriculture is business, it is when you sell your produce and you’ve sorted out your cost that you can then talk about profit. Incidentally, there are some tax incentives for agric. In fact, it is the most pampered sector.
If you make profit like any other business, you pay tax. But agriculture cannot be taken to be an alternative to taxation. Rather, you are looking at those drivers in the economy that can rejuvenate the economy, those that can bring a surge to economic activities.
What other options, apart from Agriculture, will you recommend as viable alternative to crude for national income? I’ve said it all. If you take the crude oil for example, why are you sending crude oil overseas? Why don’t you refine it here? We now talk about petrochemical complexes; there are several by-products from crude oil, apart from PMS, diesel, kerosene and the like.
All these poly products will spring up if we have petrochemical companies here. Small companies will spring up and there will be a multiplier effect.
If we have refineries working here there will be emergence of other businesses that the government can stimulate. Look at the textile factory in a comatose state at Oshodi, Isolo, Ikorodu. If you go to Kaduna, Katsina, Guso, Kano, some of them have been abandoned.
If people are sowing cotton and there is no textile factory that can take the cotton, what use is it? So if there is a textile factory that can buy off the man who is sowing cotton, you are also keeping the man who has the cotton farm in business. How best can government diversify the economy? From independence, we neglected palm oil, palm kernel, cocoa and groundnut. Yes, there are resurgence now under the present government. They have done a lot, and the government should not let go.
They are trying to revive the textile industry; they have tried to do something about car assembly plants. Now we have Innoson Motors.
Old Peugeot Automobile is coming back in Kaduna, the Anamco in Enugu. This import substitution projects are equally key, we say we are having export processing zones, but the truth of the matter is that government is having a retrospective policy, whereby, huge export proceeds are for exports.
What are the things you do for the export sector? You should make it more competitive by giving them incentives. So that when they have lower cost, they can compete with imported products.
Unfortunately, they started the processing zone and having a policy where they are allowing imports into the domestic economy and you are supposed to protect the local industries The why do we import products that we can produce in Nigeria? We have to do something about the quality and acceptability of locally produced goods. Our manufacturers should have taste for quality and excellence for their products to be accepted domestically.
What of our untapped resources, do you think they can replace oil in terms of national income? Yes and no. It depends on estimates.
There is going to be a gestation period, because mining is not something you just get your driller and drill and then get water. If you are in a riverine area, it is easy to get water, but go into upland area; it’s a different story. So, it is not a tea party.
We have a lot of mineral resource that are potential revenue earners for Nigeria. Look at the Okitipupa axis of Ondo State that has bitumen. It is a potential revenue earner. Nobody wants to make sacrifices and nobody wants long gestation.
People want it quick. So, that is where government can come in with good policy intervention and create an enabling environment for those who have the capital. I know the Australians are coming in strongly into Nigeria. I had meeting with some of them. They are planning to find out the policy of government that can make it encouraging for them to bring in their capital.