Youth Party moves to strengthen base, charts course for better Nigeria
Barely three months after President Bola Ahmed Tinubu assumed office, Youth Party (YP) has harped on the need for the federal and sub-national governments to demonstrate frugality, eliminate waste and prosecute those who had misappropriated Nigeria’s commonwealth.
YP’s National Publicity Secretary, Ayodele Adio, who raised the issue during a courtesy visit to The Guardian, also said there was an immediate need to raise the national minimum wage to help the poor cope with the effects of fuel subsidy removal.
Adio, who was accompanied by the party’s Head of Digital Media, Adeogun Oluwadamilola, also asked the government to subsidise public transportation to lessen the impact of the policy on low-income earners and the vulnerable, noting that this could be achieved by allowing public transporters to continue purchasing fuel at a subsidised rate, either through a weekly voucher system or exemption from certain statutory fees, provided they keep transport fares affordable.
According to him, the government should expedite the transition to Compressed Natural Gas (CNG) by prioritising its neglected Autogas Policy. He noted that CNG is a cleaner and cheaper fuel, adding that some companies were already using it successfully to power their fleets.
“To facilitate this, the government should establish a legal framework that encourages gas development and subsidises the conversion cost of 10,000 petrol or diesel engines to CNG; and ensure the availability of CNG at filling stations,” he said.
The party also stressed the need to expand the country’s tax base, while reducing tax rates to attract investments and encourage tax compliance.
“Our party’s plan outlines strategies that could raise $US30 billion within three years by improving our tax and incentive policies and efficiently utilising Nigeria’s existing assets,” Adio said.
He added that YP’s plan for fixing Nigeria’s revenue problem was premised on increase in revenue generation, partial divestment of Federal Government’s equity in specific companies, replacement of universal petrol subsidy with targeted public transport and LNG subsidy, stopping electricity subsidy, reducing cost of governance and building public trust and accountability.
“We intend to generate more revenue through increasing the revenue to Gross Domestic Product (GDP) ratio of eight per cent to 14 per cent; reduce consolidated corporate tax from 34.5 per cent to 22.5 per cent and increase registered corporate taxpayers from six per cent to 15 per cent; amend the Petroleum Industry Act (PIA) and reduce the average oil tax to 70 per cent onshore, 80 per cent deep water, 25 per cent frontier basin, 25 per cent transitional.
“Divest 20 per cent of the 49 per cent FGN equity in NLNG to raise $16 billion; Divest 20 per cent of FGN equity in Nigerian Petroleum Development Company Ltd (NPDC) to raise $US2.5-3.5 billion; replicate the success of the Public-Private ownership structure and management at NLNG in Nigerian Petroleum Development Company (NPDC) to generate at least $US1 billion per year; tax the informal economy in a business-friendly manner; increase VAT on luxury goods to 20 per cent; make our sea and airports the regional transport hubs to generate significant income; improve tax administration at both federal and sub-national levels and prohibit opaque privatisation of tax collection,” he explained.
Adio maintained that high tax rate for companies was killing businesses and discouraging Foreign Direct Investments (FDI), saying: “Our consolidated corporate tax is 34.5 per cent: Companies Income Tax, 30 per cent; Education Tax, two per cent; Employees Compensation Fund, one per cent; Industrial Training Fund, one per cent; Compensation Act and Police Trust Levy, 0.5 per cent.
“The global average for company income tax is 23.03 per cent while we recognise the tax exemption and incentives granted to small and medium scale businesses under the Finance Act 2019 to 0 per cent and 20 per cent tax rate, respectively.”
Adio said the 35 per cent consolidated rate for large companies was too high and creates collection issues including tax evasion and avoidance, stressing the need to reduce corporate tax for both large and medium scale business to 22.5 per cent to encourage more businesses, create employment opportunities and increase revenue generation through improved tax compliance.
“There is a need to maintain a minimum tax rate of five per cent for small businesses. With company income tax reduced, the incentive for tax evasion and avoidance would be reduced and companies would be discouraged from keeping two accounting books. This should also attract more FDIs to the nation.
“Specifically, we would maintain the education tax at two per cent and the Police Trust Fund Levy at 0.5 per cent and further extend the duration of the PTF to 10 years. We would also eliminate the Industrial Training Fund Act payment of one per cent, as the fund is needless, if our education is properly funded. The Employee Compensation Fund would also be eliminated as insurance schemes already cater for this area,” he noted.
He added that to increase the tax base, the country must create a comprehensive database of the people to include existing taxpayers and potential taxpayers, saying there cannot be adequate plan of revenue projections and adequate taxing of the informal sector without a sufficient amount of data.
“Our tax administration must be data driven. We must harness data from both the public and private sectors,” he said.
Adio added that the country couldn’t be serious about raising revenue if the fiscal policy on the oil sector remains unclear and unattractive to investors.
He lamented that a large percentage of the country’s annual budget is directed towards recurrent expenditure, which is premised on the payment of salaries for a government that is “unnecessarily large.”
“More plainly, our government is expensive. Apart from the numerous salaries that need to be paid, there is also the issue of ‘over bloated’ salaries especially for our parliament, which gulps N128 billion from our budget, enough to cover budget for capital expenditure in education (N48 billion), health (N59 billion) and the whole budget for the judiciary at N33 billion.
“It was also reported in 2019 that the National Assembly was to receive a welcome package of over N4.68 billion; apart from the monthly salary, the real issue lies in the numerous allowances. For instance, the National Assembly spends over N8.64 billion on clothes, N2.650 billion on furniture. On car loans, senators receive over N867 million while House of Representatives members receive N.8 billion,” he claimed.
He maintained that if the government was serious about funding its priorities, the size and running cost of the government must be reconsidered.
He said a large percentage of Nigeria’s budget should be directed at funding capital projects and be injected into the real economy.
Adio stated that to save more, there was a need to spend strategically and encourage more investments, both locally and internationally.
“We have Ministries, Departments and Agencies (MDAs) that do not work or have outlived their usefulness. We recall that the Goodluck Jonathan administration set up the Presidential Committee on the Rationalisation and Restructuring of Federal Government Parastatals, Commissions and Agencies, led by Stephen Oronsaye.
“The final report proposed the reduction of the size of government, particularly MDAs to a practicable level and restructuring of the processes of its various organs for cost reduction and efficient service delivery. The final report recommended that 220 out the existing 541 government agencies be either merged or scrapped. Unfortunately, the report was never implemented,” Adio said.
According to him, the YP would prioritise the implementation of the Oronsaye report and ensure compliance that suits the peculiarities of today’s government structure, adding that the money that would be saved from the scrapping and merging of the MDA’s would rather be used to fund the real economy.
“Our cost of governance must reflect our revenue realities. Our lawmakers are the second highest paid in the world with each senator earning around US$520,000 (N187, 200, 000) per year in salaries and allowances. Among the top 20 countries, Nigeria is the only developing country on the list.
“In doing this, we would heavily push for reduction in salaries and the undue luxurious allowances in our National Assembly budget in a way that will be unattractive to rent-seekers. Due to our revenue realities, we would dissolve our Bi-cameral parliamentary system and shift to a unicameral system; the relevance of the two legislative houses have not truly reflected the original intent of their creation. This could save us over N50 billion annually.
“Also, one major excuse for the bloated salaries and allowances is the fact that, currently, our national legislators are prohibited from engaging in business save agriculture. This is unlike their counterparts in other developed climes. It should be noted that our National Assembly only sits for less than half a year.
“Thus, we would push for a part-time National Assembly and focus remuneration on just salaries and sitting allowance. With this in mind, our legislators can keep a day job but must disclose their business interest in a public register to prevent conflict of interests.”
Speaking on revenue generation at the sub-national level, Adio said 70 per cent of states revenue comes from the Federal Government, noting that only a few economically viable states can generate enough revenue internally to take care of their basic needs or even pay their employees the monthly minimum wage of N30,000.
“Sub-national governments are not raising enough tax because most State Inland Revenue Authorities lack the administrative capacity to collect taxes within their jurisdiction and we need to build the capacity they lack. This has led to the numerous tax consultants collecting taxes.
“Most of our policies at the federal level would ultimately trickle down to the states and would eventually boast state revenue. However, states too must generate enough to boost their internally generated revenue.”
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