Archive | January, 2017

Buhari Falters as Tax Revenue Down in 2016

17 Jan

David O. Kuranga, Ph.D.

The author is the Managing Director and Principal of Kuranga and Associates, a full-service investment, political and economic risk consultancy, and asset management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.

At the beginning of the year, the Nigerian federal government positioned 2016 as the year that they would have a bonanza in new non-oil tax revenue setting their target at 5 trillion naira! They tapped the former head of Lagos tax agency, the Nigerian state with the highest internal revenue, who promised that vigorous compliance and enforcement would do the trick. Despite all the promises made by the Minister of Finance and budgeting and planning;(http://www.premiumtimesng.com/business/197957-must-deliver-n4-96-trillion-year-nigeria-tells-countrys-tax-agency.html), and all the claims touted by the new head of Nigeria’s Tax Agency (http://allafrica.com/stories/201602031047.html), Nigeria’s tax revenue for 2016 was merely a dismal 1.2 trillion; (http://guardian.ng/news/2016-tax-collection-slumps-to-n1-2trillion/). If Nigeria were a meritocracy, where people who occupied positions in government were actually qualified to hold those positions, and once they did hold a position they were required to perform at an acceptable level, undoubtedly somebody would be sacked. Unfortunately Nigeria is not a meritocracy so it is not likely that any of the office holders responsible for this colossal failure that even the IMF noted was the real cause of Nigeria’s deep recession will face any consequences; (http://punchng.com/imf-links-nigerias-economic-woes-poor-management/).

There are three people who are critically responsible for the failure to raise Nigeria’s tax receipts. 1) The minister of finance, 2) the head of Nigeria’s tax agency, 3) the minister for budgeting and national planning. While the former two take a good portion of the blame, the most at fault is the latter. The key reason why Nigeria’s tax receipts are down in 2016 despite claims to the contrary is because the elitist APC administration led by President Buhari, has refused to require Nigeria’s elite to pay their fair share of taxes to the Nigerian treasury despite the disproportionate amount of national resources that Nigeria’s elite have consumed over the previous decade. As I discussed on a show “Deji 360” a few months ago; (https://youtu.be/mhn5RXEaNOA), and as I have been saying for years now even before the administration took office; (https://venturesafrica.com/if-nigeria-wants-to-avoid-economic-collapse-it-should-tax-its-wealthy/), the only way for Nigeria to effectively navigate its way out of its revenue crisis, is to diversify its sources of income by finally requiring Nigerian elite to pay what they owe to the country. To date, the Buhari administration and his minister of budgeting and national planning have sat on their hands watching the downward spiral of the economy and collapse of the naira that I predicted would happen years ago.

The IMF has blamed the administration for its poor management and announced that they only expect the Nigerian economy to improve just slightly next year. While some are taking this as good news, it is actually not. Nigeria has the potential to return to 5% growth, if the APC and the Buhari-led administration were not elitist and did the right thing. The tax reform badly needed in Nigeria, long overdue from the day the president entered office is the primary pathway to change the fortunes for the masses in Nigeria. The dismal performance of the Nigerian tax agency to increase tax receipts through enforcement and compliance measures alone have shown that this is a futile and totally unacceptable strategy. The majority of Nigeria’s taxes are in the hands of Nigeria’s elite who own a disproportionate amount of Nigeria’s wealth and thus consume a disproportionate amount of state resources. Requiring them to finally pay what they owe for this is not only sensible, it is the only morally correct course of action. The fact that it has not happened and the Nigerian nation continues to suffer as a result is a testament to how morally bankrupt the APC and the Buhari administration truly are at their core.

Kuranga and Associates Limited is an investment management advisory firm and an asset manager with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2016 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Dr.Kuranga

David O. Kuranga; Ph.D.
Managing Director
Kuranga & Associates Limited
Phone: 212.363.0936
david.kuranga@kaglobal.net
https://kurangaandassociates.wordpress.com
http://us.macmillan.com/thepowerofinterdependence/DavidOladipupoKuranga