In this interview on Wednesday’s edition of Channels Television’s Sunrise Daily, the Chairman of Presidential Tax and Fiscal Policy Reform, Taiwo Oyedele, says area boys can be trained for tax collection and paid decent salaries to forsake their old ways. He also speaks on efforts made to reduce multiple taxes he describes as a nuisance at the state and local government levels.
Nigerians have been wondering when is this thing gonna take off. I mean, by now, prices should be reduced simply because the Tax Reform Committee, you know, is expected to have come up with some of those recommendations. Let’s begin, how far so far?
Thank you, for having me. So you’re right. I also joined Nigerians to say that I’m impatient to see the results coming up. And more importantly, the impact on the people, particularly the small businesses and the poorest people who are most impacted by the reforms and the different policies. Unfortunately, you know, fiscal policy matters are not as quick. So if you make a monetary policy decision today, you can see the impact tomorrow. Sometimes, fiscals take a little longer but even at that, I feel like we could have made progress faster. We submitted our first report in October with so many recommendations. Over 20 recommendations.
As of today, maybe about three of them have been fully implemented. The remaining ones are in different stages of implementation. The biggest instrument to implement our recommendation is the Emergency Economic Intervention Bill that we came up with, trying to amend about 15 different laws and implement some very important changes that will help with price stability in terms of inflation, will help also in terms of costs that will help in terms of providing relief to the right people who are most impacted, that will help take the burden of small businesses And that would also in a large, a large part help with, you know, foreign exchange as well. I know that’s the purview of the central bank. But we also think it’s an area where we can work together between the monitoring of fiscal authorities and also even align with trade policies. So, those are different stages.
(FILES) Chairman of Presidential Committee on Tax Policy and Fiscal Reforms, Taiwo Oyedele
In fairness to the lawmakers, we haven’t presented the bills to them. And that was also because once they had the budget for 2024 it became their priority. And we are aware that they were walking around the clock just to get the budget out of the way. But now that that’s out of the way, we want to try and prioritise this and send the bill to them and for them to also pass it as a matter of urgency. So the Nigerian people can begin to feel the positive impact sooner rather than later, you know.
So is there a timeline to this?
It’s difficult to put a timeline to it. I can tell you what the steps are. So the internal processes of getting all the key stakeholders happy with the content is where we are now.
The next phase will be for that to be presented to the Federal Executive Council. So it depends on when the next meeting will be and then getting it to be on the agenda. And then once that has been done, then it’s sent to the National Assembly. So, at the National Assembly also, we have no control over that but in our engagement with them, they recognise that this is an emergency issue and therefore they would also prioritise it.
So we expect that we should get that out of the National Assembly within one to two weeks, given that we’ve done extensive consultation anyway. So this is something where once the National Assembly members are happy you do a public hearing, you pass it because it’s coming from the executive, we don’t see a problem with them signing it. If I must give you any indication at all is to say by the end of the first quarter. So, latest by March, we should see these things come out, fingers crossed.
So we are looking at it, but that is the execution, not the impact.
Yes, you’re right. So that’s the execution, which is the biggest part of it. What we’ve been trying to do is to work on the implementation mechanism to transmit the policy into real impact. We are already working on that. We are not waiting for the instrument to be out. Some of it would be, for example, asking states and local governments to suspend nuisance taxes that just create problems with very little revenue to show for it. We are already meeting with the governors. In some cases, we will set off small committees to discuss with their team. So we’re already working on that. Once the thing is signed, there’s no excuse just implement like the next day.
It’s like you saw my list, it is number one on my list because this is where these are the places where, the impact will be felt. And I always say this from time to time. The Federal Government has citizens. States have indigents. And there are two completely different classes of people in any environment. It’s one thing to talk to states that have governors, it all together to talk to local governments, you know, administrations that have to more or less take in though unconstitutionally from state governments to do whatever they need to do. We had a conversation on Saturday and one individual came in with a list of about 60 taxes for a private car.
I’m not surprised. I’m not, we’ve seen 73 stickers on just one trip to transport goods from the north to the south. This thing is annoying, to be honest. Right, like you wonder how did we get here in the first place in a country where there is the rule of law and you have government, it should not have happened in the first place.
In our intelligence engagement with stakeholders, you know, may not be, you know, right from the point of the law, what we have been advised is you get the governors to say yes, you solve more than 90% of the problem. So ideally to those things, we want even local government to suspend.
So we’re discussing with the governors first and demonstrating to them why this is good for the local government, good for them and good for us as a people. Once the governors agree, then, we’re not going to ignore the local government, right But what we were advised is if you start with the local government and they say yes and the governor says no, you are going nowhere. We are now taking top top-down approach but we engage with everyone, including during the conference of speakers, and the forums of finance commissioners. We’re engaging with everyone. It’s more like the strategy of who are the biggest stakeholders to make this happen quickly.
Some believe that most of the levy duties or whatever you want to call it that are charged by these stickers and all, most monies don’t get to even the state governments themselves. What are the benefits to the state government if they agree indeed to these interventions? Let the state governments know what the benefits that come to them should these interventions that you are marketing to them, so to speak.
Yeah, you’re right. I think the starting point can say what, are they getting now, what benefits are they getting now. And what chaos are they creating now? Or maybe you call it disadvantages. So, at the moment, according to the Bureau of Statistics, for 2022 all the local governments in Nigeria that sent reports to them, didn’t even collect 50 billion naira in a whole year. They didn’t collect up to 50 billion.
This 50 billion you talked about, is it cumulative?
It’s cumulative for the whole year, and they did not even collect 50 billion.
So, this means the pain that our people are going through, the chances of getting any fiscal exchange or dividend of paying taxes from the government is zero because the money is not getting to the government. So, on the other, my apologies, on average, how much do you think these stickers, these levies and duties amount to?
I think only one local government should collect 50 billion. You know, so the amount of wastage and liquid is mind-boggling. You don’t want to fathom it. And it’s, to be honest, the reason why it’s so painful is that these are the monies we are extracting from the poorest people. It’s not like I’m saying it’s ok to steal money, right? But when you extract money from people who are just trying to make ends meet on a day-to-day basis, it’s painful that those monies are pilfered and you know, they are extorted and all of that. So, the point to your question is we think that where we are today, the state is not benefiting, the local government is not benefiting and the people are sacrificing, they are going through pain, right? So what we are proposing, it’s vastly different and benefits everyone. So imagine you have only just one tax. Our view is that there should be only one tax at the local government level.
So you know how much you need to pay?
You can pay it once or you pay it installment and electronically. It shouldn’t be that hard. It should not be harder to pay taxes than it is to buy pizza. So the receipt comes on your phone. That way, the money gets to the government, and the people pay less. The government collects more and then we can then move on to the second phase of what we are also working on, which is how to spend that money to benefit the people. Our view is that the local government can collect more than 10 times what they are collecting now by following the recommendations that we’re giving them. We are looking for sources where we can find at least N50 billion which we can then use to compensate them for suspending the taxes we’re asking them to suspend.
We’re also thinking about how you bring all stakeholders on board because at the end of the day, if you stop the livelihood of anyone, whether they are earning it legitimately or not, you can create crises that would be difficult to manage but once you bring everybody in, maybe we need to train those area boys and touts, give them uniforms and then they’ll be the ones to ask you to show the evidence on your phone, right? And then they get paid a decent salary. And if you give them the skills, some of them will on their own, move on from that job to something else, right? So, our strategy is let’s think about what’s best for our country and get all stakeholders to align. We do think that all the stakeholders including the government want the best for their country and we just need to make them see that big picture and then come along with us. That’s the plan that we have.
I’m intrigued by the fact that you said that all of this execution would be done and over by March. I would like you to give us some clearance on that because if I remember correctly, some of the levies that are in the constitution for local governments to collect are radio licenses, TV, licenses and all those things. And if those are going to change, it has to be a function of legislation. And we all know that constitutional amendment is a long marathon of sorts on its own. What’s the plan around that?
Yeah, excellent question. First, I’m not expecting every local government to make N50 billion, right? N50 billion is what you expect from the biggest of them. And the biggest source of revenue for local government, to be honest, is property tax. In many countries, you make more from property tax than any other form of taxing because you can’t run away with it. It’s there physically, that source is guaranteed, you know.
Your question about how do you quickly implement something as complicated as, you know, things that are even enshrined in the law or the constitution? You’re right. Our approach is that we would amend, not only the relevant laws, we would amend even the constitution, but we also recognise that that will take time. Yeah, you need the National Assembly, you need the states. You know, it’s a long process but we don’t want to then wait until that process is concluded because people are struggling.
Our view is that if you have the power, if the law has given you the power to collect the tax, then you have the power not to collect it, right? We’re discussing with them to suspend it. So if a state says I’m no longer collecting taxes for moving things from one place to the other, I don’t see anybody taking them to court, right? We think that they can suspend it while we walk through the details of amending the law and in the meantime, find other revenues for them to in lieu of what they have given up. That’s the idea. That’s the reason why we are hopeful that this can be done quickly because once it’s suspended, we are working on an MoU already. We are visiting governors around, we have about five or six of them lined up over the next 30 days. Then we’ll go to the Governor’s Forum. We’ve been to NEC already. There’s a MoU, once they sign and they suspend it, people feel the impact the following day. That’s our hope and aspiration.