I’ve been inundated with inquiries of what I would have done differently if I were at the helm of affairs of our country. I am not the president, Tinubu is. The focus should be on him and not on me or any other. I believe that such inquiries distract from the critical questions of what President Bola Tinubu needs to do to save Nigerians from the excruciating pains arising from his trial-and-error economic policies. However, I understand and appreciate the challenges faced by citizens in seeking alternatives to what is not working for them. I hope Tinubu and members of his administration are humble enough to borrow one or two things from our ideas in the interest of the Nigerian people. I would now go ahead and articulate some of our ideas that would have had the potential to transform our beloved country.
IN GENERAL
We would have planned better and more robustly: My journey of reforms would have benefited from more adequate preparations; more sufficient diagnostic assessment of the country’s conditions; more consultations with key stakeholders; and better ideas for the final destination.
We would have been guided by my robust reform agenda as encapsulated in ‘My Covenant With Nigerians’, my policy document that sought to, among others, protect our fragile economy against much deeper crisis by preventing business collapse; our document had spelt out policies that were consistent and coherent.
We would have sequenced my reforms to achieve fiscal and monetary congruence. Unleashing reforms to determine an appropriate exchange rate, cost-reflective electricity tariff, and PMS price at one and the same time is certainly an overkill. Add CBN’s bullish money tightening spree. As importers of PMS and other petroleum products, removing subsidy on these products without a stable exchange rate would be counterproductive.
We would have been more strategic in our response to reform fallout. We would not over-estimate the efficacy of the reform measures or underestimate the potential costs of reforms. I would recognise that reforms could sometimes fail. I would not underestimate the numerous delivery challenges, including the weaknesses of our institutions, and would work assiduously to correct the same. I would, as a responsible leader, pause, reflect, and where necessary, review implementation.
I would have led by example. Any fiscal reform to improve liquidity and the management of our fiscal resources must first eliminate revenue leakages arising from governance, including the cost of running the government and the government procurement process. I (and members of my team) would not have lived in luxury while the citizens wallow in misery.
We would have communicated more effectively with the people, with civility, tact, and diplomacy. Transparent communication with the public is essential to build public trust, which in turn is important to ensure that the public understands what the government is doing.
We would have consulted more with all stakeholders to learn, negotiate, adapt, and modify, among other policy goals.
We would have demonstrated more empathy. My Reforms would wear a human face.
We would have been more strategic in the design and implementation of reform fallout mitigating measures. I would not run a ‘palliative economy’ yet, we would have robust social protection programme that will offer genuine support to the poor and vulnerable and provide immediate comfort and security to enable them to navigate the stormy seas.
SPECIFIC MEASURES
We would have undertaken extensive reforms of the public sector institutions to maximize reform impact.
We would have placed special focus on security viz:
- Commenced on day one, the reform of security institutions with improved funding, and enhanced welfare. My Policy Document had spelt out a Special Presidential Welfare Initiative for security personnel that we would implement
- Adopted alternative approaches to conflict resolution such as diplomacy, intelligence, improved border control, deploying traditional institutions, and good neighbourliness.
We would have launched an Economic Stimulus Fund (ESF), with an initial investment capacity of approximately US$10 billion to support MSMEs across all economic sectors.
How would this have been funded?
Details are in my Policy Document.
Alongside the ESF, we would have launched a uniquely designed skills-to-job programme that targets all categories of youth, including graduates, early school leavers as well as the massive numbers of uneducated youth who are currently not in education, employment, or training.
To underscore our commitment to the development of infrastructure, an Infrastructure Development Unit (IDU) directly under the President’s watch would have come into operation. The IDU will have a coordinating function and a specific mandate of working with the MDAs to fast track the implementation of the infrastructure reform agenda within the framework provided herein. The IDU will hit the ground running in putting the building blocks for our private sector driven Infrastructure Development Fund (IDF) of approximately US$25 billion.
To engender fiscal efficiency and promote accountability and transparency in public financial management, we would have committed to a review of the current fiscal support to ailing State-Owned enterprises. We would’ve also begun a process review of government procurement processes to ensure value-for-money and eliminate all leakages.
We would have initiated a review of the current utilization of all borrowed funds and ensured that they were deployed more judiciously.
SUBSIDY REMOVAL
Yes, I have always advocated for the removal of subsidy on PMS because its administration has been mildly put, opaque with so much scope for arbitrariness and corruption. Mind boggling rent profit from oil subsidy accrued to the cabals in public institutions and the private sector.
I would have prioritized the following:
First, tackling corruption. Fighting corruption should have commenced with the repositioning of the NNPCL, which is a huge beneficiary of the status quo. Its commitment to reform and capacity to implement and enforce reforms is suspect. The subsidy regime has provided an avenue for rent seeking, and the NNPCL and its guardians will be threatened by reforms.
Second, paying particular attention to Nigeria’s poor refining infrastructure. We are by far the most inefficient OPEC member country in terms of both the percentage of installed refining capacity that works and the percentage of crude refined. We would’ve commenced the privatization of all state-owned refineries and ensure that Nigeria starts to refine at least 50% of its current crude oil output. Nigeria should aspire to export 50% of that capacity to ECOWAS member states.
Third, adopt a gradualist approach in the implementation of the subsidy reforms. Subsidies would not have been removed suddenly and completely. It is instructive that when I was Vice President, we adopted a gradualist approach and had completed phases 1 and 2 of the reform before our tenure ended. The incoming administration in 2007 abandoned the reforms, unfortunately. The majority of the countries that review or rationalize subsidy payments adopt a gradualist approach by phasing price increases or shifting from universal to targeted approach (Malaysia, 2022 and Indonesia, 2022 -2023). In many EU economies, complete withdrawal often takes 5 years to effect. The gradualist approach allows for adjustments, adaptation and minimizes disruptions and vulnerability.
Fourth, implement a robust social protection programme that will support the poor in navigating the cost-of-living challenges arising largely from reform implementation. We would’ve invested the savings from subsidy withdrawal to strengthen the productive base of the economy through infrastructure maintenance and development; to improve outcomes in education and healthcare delivery; to improve rural infrastructure and support livelihood expansion in agriculture; and develop the skills and entrepreneurial capacity of our youth in order to enhance their access to better economic opportunities.
ON FOREIGN EXCHANGE REFORMS
I also made a commitment to reform the operation of the foreign exchange market. Specifically, there was a commitment to eliminate multiple exchange rate windows. The system only served to enrich opportunists, rent-seekers, middlemen, arbitrageurs, and fraudsters.
What would I have done?
A fixed exchange rate system was out of the question because it would not be in line with our philosophy of running an open, private sector friendly economy. On the other hand, given Nigeria’s underlying economic conditions, adopting a floating exchange rate system would be an overkill. We would have encouraged our Central Bank to adopt a gradualist approach to FX management. A managed-floating system would have been a preferred option. -AA
STATE HOUSE PRESS STATEMENT
EXPLAINER: PROPOSED TAX REFORM BILLS NOT AGAINST THE NORTH; THEY WILL BENEFIT ALL STATES
Governors of 19 Northern States of Nigeria, under the platform of the Northern Governors’ Forum, at their meeting on Monday, October 28, 2024, expressed their opposition to the new derivation-based model for Value-Added Tax (VAT) distribution in the new tax reform bills before the National Assembly.
Chairman of the forum, Governor Muhammed Inuwa Yahaya of Gombe State, read the communiqué.
The Northern Governors’ Forum meeting also had traditional rulers from the region, led by the Sultan of Sokoto, His Eminence Muhammadu Sa’ad Abubakar III, in attendance.
While we commend the Governors and traditional rulers for supporting President Bola Tinubu over the success recorded in addressing the country’s security challenges, we consider it necessary to address the misunderstandings and misgivings around the tax reform already embarked upon by the administration.
President Tinubu and the Federal Executive Council recently endorsed new policy initiatives aimed at streamlining Nigeria’s tax administration processes, enhancing efficiency and eliminating redundancies across the nation’s tax operations.
These reforms emerged after an extensive review of existing tax laws. The National Assembly is considering four executive bills designed to transform and modernise Nigeria’s tax landscape.
First is the Nigeria Tax Bill, which aims to eliminate unintended multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide.
Second, the Nigeria Tax Administration Bill (NTAB) proposes new rules governing the administration of all taxes in the country. Its objective is to harmonise tax administrative processes across federal, state and local jurisdictions for ease of compliance for taxpayers in all parts of the country.
Third, the Nigeria Revenue Service (Establishment) Bill seeks to rename the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS) to better reflect the mandate of the Service as the revenue agency for the entire federation, not just the Federal Government.
Fourth, the Joint Revenue Board Establishment Bill proposes the creation of a Joint Revenue Board to replace the Joint Tax Board, covering federal and all states’ tax authorities.
The fourth bill also suggests establishing the Office of Tax Ombudsman under the Joint Revenue Board, which would serve as a complaint resolution body for taxpayers.
It is instructive to note that these proposed laws will not increase the number of taxes currently in operation. Instead, they are designed to optimise and simplify existing tax frameworks.
The tax rates or percentages will remain the same under these reforms, as they focus on ensuring a more equitable distribution of tax obligations without adding to the burden on Nigerians.
The reforms will not lead to job losses. On the contrary, they are structured to stimulate new avenues for job creation by supporting a dynamic, growth-oriented economy.
Importantly, these laws will not absorb or eliminate the duties of any existing department, agency, or ministry. Instead, they aim to harmonise revenue collection and administration across the federation to ensure efficiency and cooperation.
At the moment, tax administration lacks coordination among federal, state, and local tax authorities, often resulting in overlapping responsibilities, confusion, and inefficiency. Without reform, this inefficiency will persist.
The proposed laws aim to coordinate efforts between different tiers of government, resulting in better tax resource management and greater clarity for taxpayers.
Under existing laws, taxes like Company Income Tax (CIT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), Value-Added Tax (VAT), and other taxing provisions in numerous laws are administered separately, with individual legislative frameworks.
The proposed reforms seek to consolidate these multiple taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure to reduce administrative fragmentation.
On the proposed derivation-based VAT distribution model, which the Northern Governors oppose, it must be stressed that the new proposal, as enunciated in the Bill, is designed to create a fairer system.
The current model for distributing VAT is based on where the tax is remitted rather than where goods and services are supplied or consumed. The ongoing tax reform seeks to correct the inherent inequity in the current derivation model as a basis for distributing VAT revenue.
The new proposal before the National Assembly outlines a different form of derivation which considers the place of supply or consumption for relevant goods and services. This means that states in the Northern region that produce the food we eat should not lose out just because their products are VAT-exempt or consumed in other states.
These reforms are critical to improving the lives of Nigerians and were not put forward by President Tinubu to undermine any part of the country. There is no better time than now for the National Assembly to give due consideration to these bills that will overhaul our tax systems and create the revenue all the tiers of government require to fund the development our country and people urgently need.
Bayo Onanuga
Special Adviser to the President
(Information & Strategy)
October 31, 2024
STATE HOUSE PRESS STATEMENT
PROPOSED TAX REFORM BILLS SHOULD GO THROUGH THE LEGISLATIVE PROCESS; INPUTS CAN BE MADE AT PUBLIC HEARINGS
President Bola Tinubu has received the National Economic Council’s recommendation that the tax reform bills already sent to the National Assembly be withdrawn for further consultation.
President Tinubu commends the National Economic Council members, especially Vice President Kashim Shettima and the 36 State Governors, for their advice.
He believes that the legislative process, which has already begun, provides an opportunity for inputs and necessary changes without withdrawing the bills from the National Assembly.
While urging the NEC to allow the process to take its full course, President Tinubu welcomes further consultations and engagement with key stakeholders to address any reservations about the bills while the National Assembly considers them for passage.
When President Tinubu set up the Presidential Committee on Tax and Fiscal Policy Reform in August 2023, he had only one objective: to reposition the economy for better productivity and efficiency and make the operating environment for investment and businesses more conducive. This objective remains more critical even today than ever before.
The Committee worked for over a year and received inputs from various segments of society across the geopolitical zones, including trade associations, professional bodies, different Ministries and Government Agencies, Governors, traders, students, business owners, and the organised private sector.
The tax reform bills that emerged were distilled from the extensive work of the Presidential Committee.
The tax bills before the National Assembly aim to streamline Nigeria’s tax administration processes, completely overhaul the nation’s tax operations, and align them with global best practices.
Below are the major highlights of the four Bills.
- The Nigeria Tax Bill: This Bill seeks to eliminate multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide.
- The Nigeria Tax Administration Bill (NTAB): This Bill proposes new rules governing the administration of all taxes in the country. Its objective is to harmonise tax administrative processes across federal, state and local jurisdictions to ease taxpayers’ compliance and enhance the revenue for all tiers of government.
- The Nigeria Revenue Service (Establishment) Bill: The Bill seeks to re-establish the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS) to better reflect its mandate as the revenue agency for the entire federation, not just the Federal Government.
- The Joint Revenue Board Establishment Bill: This Bill proposes creating a Joint Revenue Board to replace the Joint Tax Board, covering federal and all state tax authorities. The fourth bill will also establish the Office of Tax Ombudsman under the Joint Revenue Board, protecting taxpayers’ interests and facilitating dispute resolution.
The bills’ overarching objective is to effectively coordinate federal, state, and local tax authorities, thereby eliminating the overlapping responsibilities, confusion, and inefficiency that have plagued tax administration in Nigeria for decades.
Under existing laws, taxes like Company Income Tax (CIT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), Value-Added Tax (VAT), and other taxing provisions in numerous laws are administered separately, with individual legislative frameworks.
The proposed reforms seek to consolidate these numerous taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure to reduce administrative fragmentation.
While there may be differences in approach or specific provisions of the new tax bills, what is not in contention is the need to review our tax laws and how we administer them to serve our overall national development agenda.
President Tinubu will continue to respect and welcome the advice and recommendations of the National Economic Council, an essential constitutional organ of government on economic matters.
Bayo Onanuga
Special Adviser to the President
(Information & Strategy)
November 1, 2024.
