Opinion
Tax Reforms: A Double-Edged Sword for Nigeria’s Economy
By Lukman Laleye Babalola.
When President Bola Ahmed Tinubu announced his ambitious tax reform agenda, it was clear that he intended to reshape Nigeria’s fiscal framework. The reforms, targeting personal income tax, corporate tax, and value-added tax (VAT) distribution, are undoubtedly bold and necessary. But like any sweeping policy change, they come with both promises and pitfalls.
As someone deeply invested in Nigeria’s socio-economic progress, I see these reforms as a double-edged sword—a tool for much-needed transformation, but one that requires careful handling to avoid cutting too deeply into the fabric of our fragile federal system.
Let us not downplay the potential benefits. The proposed exemption of individuals earning up to ₦800,000 annually from personal income tax is a welcome relief for low-income earners who have borne the brunt of rising inflation. Similarly, the reduction in corporate tax rates from 30% to 25% is a lifeline for businesses struggling to stay afloat in a challenging economic climate.
The overhaul of VAT revenue sharing, which allocates 60% of VAT revenue to the state where goods and services are consumed, aims to promote fairness and encourage states to boost their economic activity. For consumption-heavy states like Lagos and Rivers, this is a much-needed windfall that could translate into better infrastructure, healthcare, and education for their residents.
But these gains are not without costs. Nigeria’s regional disparities could deepen under this new tax regime. Northern states, with lower consumer activity and VAT contributions, stand to lose out, raising concerns about fairness in a nation already grappling with economic inequalities.
The implementation process is another hurdle. Overhauling a tax system is no small feat, and Nigeria’s tax collection mechanisms are notoriously inefficient. Without significant investment in infrastructure and human capacity, the reforms could collapse under their own weight.
Then there is the issue of political resistance. Many lawmakers and regional leaders, particularly from the north, have voiced concerns about the potential loss of revenue under the revised VAT formula. Balancing these competing interests will be a test of the administration’s political acumen.
Under the proposed tax reforms, states like Lagos, Rivers, and others in oil-producing regions stand to benefit significantly. With 60% of VAT revenue allocated to the state of consumption, high-consumption states like Lagos and Rivers are poised to see a substantial increase in their revenue. Lagos alone generates over half of Nigeria’s VAT, and retaining a greater share will empower the state to fund critical projects.
For oil-producing states, increased revenue can be invested in non-oil sectors such as agriculture, manufacturing, and tourism, helping them reduce dependency on crude oil and build more sustainable economies. The additional funds can be used to improve infrastructure, healthcare, education, and other public services, directly benefiting citizens in these states. The reforms also encourage states to create business-friendly environments to attract investments and increase consumption, further boosting revenue generation.
Members of the National Assembly are tasked with ensuring these reforms benefit all Nigerians equitably while addressing regional disparities. Legislators must address the fears of less economically vibrant states and push for transitional mechanisms, such as a redistribution fund, to support regions with lower VAT contributions. They must oversee how states utilize their increased revenues, ensuring the funds are invested in projects that directly benefit the public.
By engaging their constituents, lawmakers can explain the benefits of the reforms, address concerns, and secure public support, thereby easing tensions surrounding implementation. National Assembly members must also facilitate the passage of laws to strengthen tax administration, close loopholes, and ensure effective implementation of the reforms. Legislators from wealthier and poorer states alike must work together to ensure the reforms foster national unity and equitable development across all regions.
The National Orientation Agency (NOA) plays a critical role in ensuring public acceptance and understanding of the tax reforms. The agency must continue to simplify and disseminate information about the reforms to the grassroots, helping Nigerians understand how these changes will benefit them in the long run. By launching campaigns, the NOA can counter rumors and fears about the reforms, especially in regions where there is resistance due to concerns about inequitable benefits.
The NOA should encourage citizens to ask questions and provide feedback on the reforms. This engagement will foster trust and ensure the government remains accountable to its promises. The agency must also address regional concerns by showing how the reforms can be tailored to benefit less economically vibrant states through collaboration with local governments.
The Federal Inland Revenue Service (FIRS) is central to the success of the reforms, as efficient tax collection and administration are critical. The FIRS must invest in modern technology to improve tax collection processes, reduce leakages, and enhance compliance monitoring. Bringing the informal sector into formal taxation while ensuring compliance is not burdensome will also expand the tax net.
Training and equipping tax officers to handle the new tax structures efficiently will be crucial to prevent administrative bottlenecks. The FIRS must regularly publish reports on tax collection and utilization, fostering public confidence in the system. By collaborating with state governments, the FIRS can provide technical assistance to ensure states maximize their VAT collections under the new sharing formula.
As a nation, we cannot afford to shy away from difficult reforms. For too long, Nigeria’s tax system has been inefficient, inequitable, and unable to meet the needs of our growing population. These reforms, though imperfect, represent an opportunity to address these shortcomings and lay the groundwork for a more sustainable fiscal future. However, the government must tread carefully. Transparency, inclusiveness, and stakeholder engagement are non-negotiable. Addressing regional concerns and ensuring efficient implementation will be critical to the success of these reforms.
President Tinubu’s tax reforms have the potential to transform Nigeria’s economy, but they also carry significant risks. Agencies like the NOA and FIRS, along with the National Assembly, must work together to ensure the reforms deliver on their promise of a fairer, more prosperous Nigeria.
As we navigate this critical moment in our nation’s history, let us remember that true reform is never easy, but it is always worth pursuing when done with the greater good in mind.
*Lukman Laleye Babalola,is Publisher/Editor-In-Chief,Emporium Reporters online and Emporium Magazine.can be reached on [email protected], [email protected]
Opinion
MEMORY LANE: West-Idahosa reflects on his earthly sojourn to commemorate birthday
By Dr. Ehiogie West-Idahosa, SAN.
By the Grace of God, I am one year older today. I was born on this day many years ago in St. Philomena’s Hospital, Benin City to Late Hon. Justice Joseph Oghogho Idahosa and late Mrs.Josphine Idahosa.
“I am grateful to God for His mercies and benevolence in my life. I have luckily navigated many dangerous moments in life by the Grace of Almighty God and the prayers of my families and friends. They include police shooting incident at ibadan as a young lawyer, nearly drowning in a big river, receiving middle voltage electricity shock as a child and a host of other mines that are daily encountered in life. I thank God for my ancestry. I thank my late parents for my education and upbringing. I am lucky to have an an extremely good wife and very wonderful children. I thank my brothers, sisters and extended family members for who they are. Very supportive people. I have wonderful friends all over Nigeria and beyond.
I have been lucky to be trusted by by different levels of the Nigerian society to serve in one capacity or the other. By the authority of others, I have served as Sanitary Prefect in Edo College, Benin City, Public relations officer of the Law Students Association, Uniben, Public relations officer of the students’ union, Uniben, branch secretary of Benin branch of NBA, Edo State Secretary of the defunct National Republican Convention (NRC), and thrice elected to the House Representatives, where I served Ovia Federal Constituency, Edo State and Nigeria to the best of my ability and energy. My sojourn in the House is known to many and they are the only persons who can write my testimonial.
I am grateful to Nigeria, Edo people and in particular, the wonderful constituents of Ovia Federal Constituency ( living and dead) for the opportunities given to me to serve them amongst so many ably qualified persons.
I enjoyed the good old Nigeria and hope that it can be recreated for the benefit of the majority of our country men and women. We had patriotic and well meaning leaders who were committed to good governance. They were industrious and nationalistic within the limits of available resources, knowledge, science and energy of that time. It has been tough for our country men and women in the last ten years or so.
But, the Tinubu regime seems to be willing to make big economic decisions in the hope of repositioning our national economy to serve all of us. Some of these decisions have been hurtful in many ways to the majority of our people as they were not incrementally implemented. But, these decisions would only be appreciated, if the dividends intended, begin to trickle down soon. This would mean more fiscal and monetary policy discipline on the part of government itself. There must be a cut on the cost of governance. There is too much of Holly wood life style on the part of public officials. The essence of governance is to serve the people, not to show off with public funds held in trust for the public. They are not personal funds and must be spent prudently for the good of all.
The fight against corruption must be made real. It must be carried out with a sense of equality before the law. As long as many remain untouchable by the law, the fight would remain cosmetic and negatively affect the quality of lives of all of us as funds made to develop our country would continue to vanish into thin air
The increased funding of the component states of Nigeria by Tinubu’s administration is good news indeed. It means that the governors can truly do extraordinary things for residents of the various states, as part of the renewed hope project. They have to noticeably decrease the ratio of infant and maternal mortality. They must work to provide more functional health care centers in urban and rural areas, pay real attention to education from primary to post secondary levels. Significantly, they must give new impetus to tecnical education. It is the way to go in the new world order. The state governments must commit to massive provision of infrastructure in key areas of the economy. They must take a good look at the need to generate more electricity in their states to boost economic development. They must venture into rail transportation. It is the easiest way to move people around in large numbers. It can be done. Lagos state is already leading the way. Others can do the same. It is a matter of exhibiting the requisite political will to do it.
State governments know the importance of security in their respective states. It is not enough to openly support the police with funds, it is equally important to set up covert informal intelligence networks across the states to provide information for the use of formal security apparatus in carrying their out functions.
Nigeria can be great again. It has the raw population, man power, presence in diaspora, sufficient elites in various spheres of life to drive the renaissance.
God bless Nigeria and best wishes to all of us.
Dr. Ehiogie West-Idahosa, SAN
Opinion
“Lessons on Leadership from the Nigerian Law Society (NLS): What the Nigerian Bar Association (NBA) can Learn”
By Dr. Tonye Clinton Jaja,
Executive Director,
Nigerian Law Society (NLS)
“We must forever conduct our struggle on the high plane of *dignity and discipline* .We must not allow our creative protest to degenerate into physical violence”
-Martin Luther King Jr.’s “I Have a Dream”,August 28, 1963.
The leadership (National Officers) and administrative staff (Executive Director, and ICT and Secretary) of the Nigerian Law Society (NLS) have conducted themselves with utmost “dignity and discipline”.
The NLS “dignity and discipline” in the face of unrelenting attacks and illegal provocation by the Registrar-General of the Corporate Affairs Commission (CAC) and the former President of the Nigerian Bar Association (NBA) is something that students of Masters of Business Administration (MBA) are supposed to use as a case study of exemplary leadership and team work.
From the date December 2023, when a Federal High Court in Abuja gave a favourable judgment in favour of the Nigerian Law Society (NLS) ordering the Corporate Affairs Commission (CAC) to register the Nigerian Law Society (NLS) in compliance with Section 40 of the Nigerian Constitution, 1999 (as altered), it has been one attack after another.
The Registrar-General of the Corporate Affairs Commission (CAC), who is a Senior Advocate of Nigeria (SAN) and who was supposed to apply legally approved methods, refused and resorted to extra-judicial methods such as publishing DEFAMATORY comments against the NLS on both social media and traditional newspapers.
In accordance with it’s principled “dignity and discipline”, the Nigerian Law Society (NLS) refused to respond in kind by engagingin a social media war. Instead, it submitted it’s complaints to the courts of law which were already handling the appeal filed by the same CAC and the NBA.
When these social media methods did not achieve the desired results, the Registrar-General of the CAC, then resorted to writing petitions against the NLS to law enforcement agencies such as the Department of State Security Services (DSS), Police and even the Nigerian Information Technology Development Agency (NITDA) requesting them to shut down the website and other operations of the NLS. NITDA is on record as refusing by telling the Registrar-General of the CAC that only a court of law can give an Order to that effect.
With their characteristic “dignity and discipline” the Executive Director of the NLS personally went to the DSS and Nigerian Police to respond by Submission of both written and oral evidence, to all these petitions by the Registrar-General of CAC.
Even though some members of the National Officers of the Nigerian Law Society (NLS) also have connections within the Nigerian Police and other law enforcement agencies, and could have “unleashed” such law enforcement agencies upon the Registrar-General of the CAC, the NLS resisted the temptation of returning “fire-for-fire”. Instead they chose the path of “dignity and discipline” by reporting all these harassment to the courts of law and the National Human Rights Commission by a visit to the Executive Secretary.
They also paid a visit to the Hon. Attorney-General of the Federation and Minister of Justice to formally notify him of the illegal actions of the Registrar-General of the CAC.
All these foregoing, points to the maturity of the National officers of the Nigerian Law Society (NLS). This maturity cannot be attributed to only one person alone namely Mela Nunge, SAN, who currently serves as the President of the NLS. It is a result of the collective maturity displayed by all the National Officers of the Nigerian Law Society (NLS) who came on board sometime in July 2024.
It is not as if everything is smooth sailing or there are no challenges within the Nigerian Law Society (NLS), however they have managed to manage their egos and internal revolts internally without bringing it into the public domain.
To the contrary, the Nigerian Bar Association (NBA) is recently embroiled in an internal revolt at it’s Rivers State branches that has now spilled into the public domain.
The crux of the matter is that the eight Chairpersons of the Nigerian Bar Association (NBA) branches wrote a letter to disassociate themselves from the decision of the headquarters of the Nigerian Bar Association (NBA) whom they accused of not caring them along as Local Organising Committee (LOC) in the forthcoming NBA national conference due to hold in Port Harcourt, Rivers State.
In opposition to the letter written by the said 8 Chairpersons of the NBA in Rivers State, another group of lawyers have written a disclaimer that the said 8 Chairpersons of the NBA branches of Rivers State do not represent the views of the majority of lawyers in Rivers State.
This recent crisis speaks volumes, it shows that the leadership style of the NBA is bereft of democratic ideals and lacks both the “dignity and discipline” and amicable dispute resolution methods that are the now the characteristic trademarks of the Nigerian Law Society (NLS).
Roll over NBA, welcome the Nigerian Law Society (NLS).
Perhaps it is time that the national officers, EXCO members of the headquarters of the NBA and all it’s chairpersons from the 218 NBA branches should attend a seminar on leadership style to be delivered by the national officers of the Nigerian Law Society (NLS)!!!!
Opinion
SOLUDO, OTTI AND PROSPECTS FOR TRUE NATIONAL INTEGRATION
By Tunde Olusunle
Nigeria’s South East geopolitical zone has courted global notoriety for the multipronged crimes and criminality which has festered over the years. In several public engagements, I’ve had reason to comment on this lingering malaise which never seems to abate. First I wrote “Gunsmoke from the East,” published in The Guardian of August 9, 2021. I equally engaged the subject in “Unknown Gunmen, November 6 and the Epidemic of Bloodletting,” which appeared in The Cable of October 6, 2021. The needless hemorrhaging of precious, oftentimes innocent, definitively irreplaceable lives in the mould of day-to-day Nigerians, technocrats, businessmen, security personnel, cannot be more discomforting. “Travel advisories” emanating from the diplomatic outposts of several countries with nationals in Nigeria, typically classify the South East as a “no-go zone.” Reports from a few friends who spent the last yuletide in their eastern homeland, however, allude to a measure of sanity in the region within the season. Kidnappings were scantily recorded, killings barely reported. Let’s see how the minimisation of blood flow within the season, is sustained for our collective good.
As tribute to the innovations they were bringing to bear on governance and administration in their respective addresses, I had reason to salute governors Alex Otti of Abia, Chukwuma Soludo of Anambra and Mohammed Bago of Niger State in an overview I did last year. The piece was titled “Plaudits for Otti, Soludo and Bago,” and published in Thisday of May 24, 2024. I acknowledged Otti’s frugality and clear-headed focus on multisectoral development, as against the dour, colourless stint of Okezie Ikpeazu his predecessor. Soludo won me over for his determination to encourage and further deepen the development of homegrown competencies and products, while prosecuting an infrastructural makeover of Anambra State. Bago’s recourse to the conscientious development of agriculture in his infinitely blessed state, for local sufficiency and the economic sustenance of his constituents, remains remarkable.
Soludo and Otti are in the news again playing the roles of pan-Nigerian statesmen and helping to paper up the cracks of the edifice of our togetherness as a nation. The percentage parochialism which Nigeria witnessed during the ruinous eight years of Muhammadu Buhari at the helm of national politics and governance, was only comparable to the divisive rhetoric of Nigeria’s pre-civil war era. Buhari exhumed the fossils of our latent ethno-religious fault lines, intentionally imposing a Fulani hegemony on Nigeria to the consternation of the mass of his Nigerian constituents. He said in the early days of his administration, that sections of the country which gave him five percent of their votes, would reap similar measures in political appointments and project appropriation. Buhari made good his threat to a large extent. He punitively appointed Igbos to marginal ministries like Labour and Employment, as well as Science and Technology!
Early last year, Soludo appointed Joachim Achor and Adebayo Ojeyinka as Permanent Secretaries in the Civil Service of Anambra State. Achor is from Abia State, while Ojeyinka hails from Osun State. Ojeyinka by the way was engaged in the Anambra bureaucracy by the third republic governor of the state, Chukwuemeka Ezeife. Okwadike as Ezeife was famously adulated, led the state between January 1992 and November 1993. Ojeyinka grew through the ranks in the Anambra system, logging over three decades before his elevation last year. The process which produced him was merit-based. It included a computer-based examination, an engaging search process including security verification, and a one-on-one interaction with the governor.
Southwards from Awka, the Anambra State capital, Alex Otti of Abia State last week appointed Benson Ojeikere as the new Head of Service of the Abia State Civil Service. A little over 30 years ago, Ojeikere underwent the National Youth Service Corps, (NYSC) in Abia State. He emerged the best participant in the mandatory one-year exercise and was granted automatic employment by the incumbent regime at the time. It is a measure of his qualities and the implicit confidence reposed in him by successive administrations in Abia State, that Ojeikere’s brief before his recent elevation was that of Permanent Secretary in Government House, Umuahia. At Ojeikere’s inauguration, governor Otti re-echoed the sentiments of Soludo, his counterpart in Anambra State. He spoke of the imperative to “build a system where meritocracy triumphs over mediocrity, where the best and brightest can rise to the top, regardless of their ethnic backgrounds.”
This same pan-Nigerian vision, has successively informed the broad-arms embrace of Nigerians from all over into the scheme of governance in Lagos State, for example, over the years. Lai Mohammed, (Information Minister under the Buhari regime) from Kwara, and Rauf Aregbesola, (former Governor of Osun State and immediate past Minister for Interior), from Osun, savoured national political limelight under the Bola Tinubu governorship in Lagos, between 1999 and 2007. Dele Alake, (incumbent Minister for Solid Minerals); Opeyemi Bamidele, (Leader of the Senate), both from Ekiti, and Biodun Faleke, (a ranking member of the House of Representatives) who is primarily from Kogi State, are all alumni of the Tinubu “Lagos School.” Indeed, between Tinubu’s addresses as Governor of Lagos State and National Leader of the All Progressives Congress, (APC), his media advisers, Segun Ayobolu, Sunday Dare and Tunde Rahman, hail from Kogi, Oyo and Osun states.
If the sociocultural backgrounds of the above listed is unanimously Yoruba, if they bear etymological consangiunity with Lagos State, how about Ben Akabueze, who was commissioner for budget and economic planning under Tinubu in 2007 and thereafter Director-General of the Budget Office under Buhari? How about Joe Igbokwe, a serving Special Adviser to Governor Babajide Sanwo-Olu of Lagos? As Governor of Edo State, Adams Oshiomhole took along with him from the labour movement, Olaitan Oyerinde who served as his Principal Secretary. Sadl, Oyerinde was assassinated in May 2012, a matter which remains unresolved like most other murder cases in our country. All through his years as Governor of Bayelsa State, Henry Seriake Dickson had with him Francis Otah Agbo from Idomaland in Benue State, as one of his closest aides and confidants. Dickson indeed supported Agbo to vie for a seat in the House of Representatives which he won.
Between 1999 and 2007, Sheddy Ozoene from Enugu State was Chief Press Secretary to the Governor of Delta State, James Ibori. Back in 2003, Festus Adebayo from Ondo State, was Special Assistant, (Public Policy Analysis) to the Enugu State Governor at the time, Chimaroke Nnamani. As governor of Kaduna State, Nasir El Rufai had Adebisi Lawal, from Ogun State and Muyiwa Adekeye, from Kwara State as his advisers on Investment, and Media, respectively. Fausat Adebola Ibikunle, also from the Yoruba country was his Commissioner for Housing and Urban Development. Veteran journalist Bala Dan-Abu from Kogi State was spokesperson for the immediate past governor of Taraba State, Darius Ishaku. The foregoing discourse is apposite because it attests to the feasibility and sustainability of authentic integration in our socioculturally divergent polity, if intentionally prosecuted.
Except deployed for political mischief, except triggered by hard-line extremists, ethnicity and religion are barely divisive elements in our coexistence as a people. This reminds of a section of the lyrics of the song Me and You No Be Enemy, with the refrain “We Suppose to Be Family,” by Lagbaja, a post-Fela Anikulapo-Kuti Afrobeats legend. The song was released over two decades ago. Lagbaja’s treatise contends that if the colour of our tongues is the sole measure of our individual origins and backgrounds, humans from all over the world could all have evolved from the same biological roots! All tongues are red, Lagbaja reaffirms, while asking rhetorically what the distinguishing features would be, between a Nigerian and a Ghanaian; an Indian and a Pakistani; an English man and an American, if they stood in a file line.
By acknowledging and rewarding competence and merit as against sectionalism and parochialism in statecraft, Soludo and Otti have proven to us that we can together build a genuinely egalitarian country. We can draw from the diverse pool of human resource abundance available to us as a country to propel this country to greater heights at every level. Six Nigerians: Azeez Butali, Ijeoma Opara, Oluwatomi Akindele, Eno Ebong, Oluwasanmi Koyejo and Abidemi Ajiboye, medics, engineers and professors, were recently honoured by outgoing American President, Joe Biden. They received the Presidential Early Career Award for Scientists and Engineers, (PECASE). Their country of primary origin was not a parameter for measuring their intellectual and professional competencies, even as Biden’s successor, Donald Trump, once caustically categorised Nigeria as a shit hole country.
The colours of the skins and eyes of the Nigerians so acknowledged by Biden didn’t matter. The quality and value with they continue to avail to humanity was uppermost. Food for thought for leaders intent on imprinting landmarks on the aisles of time.
Tunde Olusunle, PhD, Fellow of the Association of Nigerian Authors, (FANA), teaches Creative Writing at the University of Abuja
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