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Tax Reforms Bill: Addressing Legacy Laws, Streamlining Administration, and Balancing Derivation Concerns

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Yisa Usman

By Yisa Usman FCA, FCTI

The proposed tax reforms mark a transformative moment in Nigeria’s fiscal evolution, focusing on modernization and addressing challenges rooted in outdated pre-colonial tax laws and redundant systems that burden businesses and individuals. These reforms aim to streamline tax administration and improve Value Added Tax (VAT) processes, providing a pathway toward equitable revenue distribution and fiscal decentralization. However, while the potential benefits are substantial, addressing significant challenges and equity concerns is critical to ensuring the reforms achieve their objectives.

A comparative analysis of Nigeria’s tax system against those of countries like Kenya, the United States, and other nations with comparable political structures reveals stark disparities that emphasize the critical need for reform. These nations have leveraged robust tax frameworks to achieve significant economic growth, foster local economic activities, and ensure a more equitable distribution of national resources, outcomes that starkly contrast with Nigeria’s performance. In Nigeria, outdated legislation, inadequate tax assessment and recovery system, and systemic corruption have created inefficiencies and exacerbated inequalities. The lack of effective mechanisms to optimize tax revenue further hampers the nation’s fiscal sustainability and economic competitiveness, making comprehensive reform an urgent necessity.

Nigeria’s reliance on antiquated tax laws has long hindered administrative efficiency and equitable resource allocation. These reforms seek to modernize the tax framework, aligning it with global best practices to foster economic development and decentralization. Key objectives include streamlining administration to eliminate duplicative tax practices, centralizing data to enhance accuracy in tax derivation and remittance, and empowering states to take greater responsibility for revenue generation and allocation, in line with the principles of fiscal federalism.

The proposed increase in derivation weight from 20% to 60% introduces a dual-edged dynamic. On the one hand, it incentivizes states to boost local economic activities and align revenue allocation with consumption patterns. On the other hand, it raises concerns about exacerbating existing inequalities, with states like Lagos, Ogun, Rivers and Kano poised to benefit disproportionately due to their robust economic bases, while resource-poor states may face disadvantages.

The reforms are supported by compelling arguments, including their potential to decentralize economic development by motivating states to leverage local resources and attract investments. The allocation of a larger revenue share to states promises improved infrastructure and public services, particularly in states that prioritize economic growth. Additionally, by leveraging technology to track consumption patterns, the reforms should enhance transparency and fiscal responsibility.

Nonetheless, the reforms face significant challenges. A heavy reliance on derivation risks marginalizing less affluent states, deepening socio-economic disparities. The reforms’ implementation will require extensive data collection and systemic upgrades, posing logistical and financial challenges. Furthermore, the reduction in population-based allocations from 30% to 20% could generate social and political tensions in densely populated states struggling to meet citizens’ needs.

To balance these opportunities and risks, several recommendations are essential. First, the derivation weight increase should be phased in, starting with a modest adjustment from 20% to say 30%-40%, allowing states and corporations to adapt gradually. Second, a centralized, dynamically updated tax database is critical for accurate derivation tracking and dispute reduction. Third, a revenue equalization mechanism, such as a stabilization fund, can support economically weaker states during the transition. Fourth, capacity-building initiatives should equip state tax authorities with the necessary skills and resources to manage the new system effectively. Fifth, standardized procedures for VAT collection, derivation tracking, and dispute resolution should be established to ensure consistency across states. Finally, fostering public engagement with stakeholders, including state governments, businesses, and civil society, will promote transparency, address concerns, and build collective ownership of the reforms.

These reforms not only resolve immediate administrative inefficiencies but also lay the foundation for a more equitable and sustainable fiscal system. By addressing pre-independence legacy laws and fostering economic accountability, Nigeria has an opportunity to position itself for inclusive growth, ensuring all states contribute to and benefit from national development. However, achieving these outcomes requires a careful balance between incentivizing derivation-based revenue sharing and providing mechanisms to support resource-poor states. With a focus on equity and efficiency, the reforms can establish a tax system that empowers businesses, strengthens states, and improves the living standards of citizens across the federation.

Yisa Usman is a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN), a Fellow of the Chartered Institute of Taxation of Nigeria (CITN), and a doctoral candidate at the Nigerian Defence Academy, Kaduna

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Opinion

Revisiting Obaseki’s Dark Legacies

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Monday Okpebholo and Godwin Abaseli

By Fred Itua

Edo State has had its fair share of political drama, but the exposés surrounding former Governor Godwin Obaseki’s administration are giving Nollywood a run for its money. From land-grabbing sagas to oil palm scandals, the State has been left reeling from a cocktail of alleged mismanagement and shady dealings. Enter Governor Monday Okpebholo, the man now tasked with cleaning up the mess.

Let’s call a spade a spade. The administration of former Governor Godwin Obaseki was notorious for acts that flagrantly undermined the interests of Edo State. While his spin masters are quick to trumpet projects they claim were of high-quality, heavy-portfolio investments, fact-finding missions, and community consultations have exposed these claims as mere fabrications. It was a government of ‘obubuyeye’ —an elaborate show of smoke and mirrors where, truly, the more you looked, the less you saw.

Now, the chickens have come home to roost, and the harsh realities of Obaseki’s misrule are being laid bare. Thankfully, the people of Edo refused the shameless attempt to install a puppet administration through his political godson, which would have been nothing more than a proxy government to shield Obaseki’s tracks.

In the wake of his departure, stakeholders across Edo State are finally finding their voices and courage to speak up about the reign of terror, deceit, and mismanagement that characterized Obaseki’s eight years in office. Let us take a closer look at the damage he left behind.

Rebranded by critics as “Grabland Obaseki,” the former governor’s tenure has been likened to a real-life episode of Game of Thrones—minus the dragons but with enough land disputes to make Westeros blush. According to a damning committee report, Obaseki allegedly allocated a staggering 37,000 hectares of land to cronies, pocketing billions of naira that cannot be traced. But that wasn’t enough. The former governor reportedly had his eyes on palace artifacts, too, because why stop at land when you can aim for history?

The fallout? Communities across Edo State left in anguish, their lands handed over for private enrichment. If unchecked, critics warn, Obaseki’s reign could have turned every Edo indigene into a tenant in their homeland. At the heart of this betrayal lies the plight of Edo’s agrarian communities, whose ancestral lands were stripped from them under the guise of development. The administration turned its back on its constitutional responsibility to provide security and welfare for the people, leaving communities to fend for themselves.

Without government support, these communities have been forced into desperate self-help. Villagers constructed their own classrooms and employ teachers because the government failed to fulfill its basic educational responsibilities. Rather, it superintended over a failed local government administration, diverting resources and celebrating mediocrity. Deplorable roads were patched with makeshift palliatives, often funded by communal contributions, as state funds meant for infrastructure disappeared into private coffers. With insecurity on the rise and no intervention from the state, some communities had no choice but to rely on ill-prepared, poorly trained, and unequipped vigilante groups they constituted for protection.

This is not just neglect; it is a betrayal of the very people Obaseki swore to serve. Obaseki’s administration perfected the art of distraction. His eloquence and carefully curated public image masked an administration rife with fraud and deceit. The so-called reforms, often touted as groundbreaking, turned out to be nothing more than adacadabra—a government of illusions. Thankfully, Governor Okpebholo has vowed to recover these lands and redirect funds toward the state’s development.

If the land saga was the starter, the oil palm scandal was the main course. The Onitsha Zone Shareholders’ Association recently dropped a bombshell, accusing the former administration of colluding with Okomu Oil Palm and Presco PLC to fleece the state. According to Bishop Goodluck Akpore, the association’s chairman, these companies were gifted 36,388 hectares of land and have not paid taxes or compensated host communities. Instead, profits were allegedly funneled into private pockets, with Obaseki’s Afrinvest Company reportedly eyeing a ₦100 billion bond for future share conversion.

The allegations paint a bleak picture: multimillion-naira businesses extracting wealth from Edo soil without giving back. Host communities have no corporate social responsibility (CSR) projects to show for the companies’ presence, yet trailer loads of palm oil valued at ₦80 million each roll out of the state regularly. It is the ultimate “thanks-for-nothing” scenario.

Governor Okpebholo is not taking these revelations lightly. He has promised thorough investigations into both the land and oil palm controversies. While emphasizing peaceful dialogue, the Governor made it clear that no company or individual would be above scrutiny.

“We will seek a peaceful resolution and invite Presco and Okomu Oil to meet with us,” Okpebholo said. “Their investment is important, but they must contribute fairly to Edo State.”

The Governor’s approach is a delicate balancing act: ensuring justice for Edo people while maintaining the economic contributions of these companies. His administration has pledged to revisit tax evasion policies and explore ways to enforce compensation for land use. This signals a shift from impunity to accountability.

Obaseki’s administration will go down in history as one of Edo’s darkest chapters—a fraudulent regime that cloaked itself in eloquence while perpetuating widespread exploitation. The very communities that should have been uplifted were instead condemned to poverty, forced to build their own schools, maintain their own roads, and protect themselves from insecurity.

But Edo is resilient. The courage of its people, coupled with Governor Okpebholo’s determination to right these wrongs, signals a brighter future. The era of ‘obubuyeye’ is over, and the people of Edo will no longer tolerate leadership that speaks eloquently but delivers nothing of substance.

Fred Itua is the Chief Press Secretary to Edo State Governor.

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Opinion

BENUE 2027:The Apa/Agatu Quest for Equity

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By Tunde Olusunle

It may be well over two years to the next cycle of general elections in Nigeria. For the people of Apa/Agatu federal constituency in *Benue South, however, the measure of their participation and integration into the governance scheme will be defined in the run-up to the general polls that year. Nine local government areas make up the predominantly Idoma country of Benue State also labelled Zone C in the senatorial tripod of the geo-polity. The zone is also home to the Igede ethnic stock and the Etulo. Local government areas in “Benue Zone C” include: Apa, Agatu, Oju, Obi, Ado, Ogbadibo, Okpokwu, Otukpo and Ohimini. The other zones, Benue North East and Benue North West, are wholly dominated by the Tiv nationality, striding across 14 local government areas. They are christened Zone A and Zone B in the local political scheme of the state. Federal constituencies in Benue South are: Apa/Agatu, Oju/Obi; Ado/Ogbadibo/Opokwu and Otukpo/Ohimini.

The subjugation of groups and ethnicities considered demographically smaller, by the larger groups which has dominated Nigeria’s politics over time, has not been any different for the Idoma of Benue State. Until the circumstantial emergence of a Yahaya Bello from the Ebira ethnicity in Kogi State in 2015, the Igala had the relay baton of governorship of Kogi State, in rounds and succession. The Ebiras and the Okun-Yoruba zones in the state could only aspire to be serial deputies or Secretaries to the State Government. This political template was virtually cast in stone. The Ilorin people of Kwara State have similarly wholly warehoused the gubernatorial office, sparingly conceding the position to other sociocultural groups in the state. The only exception was the concession of the seat to a candidate from Kwara South, in the person of Abdulfatah Ahmed, by his predecessor, Bukola Saraki in 2011. Even at that, there were murmurs and dissent from those who believed Ahmed came from a community too close to the Ilorin emirate to be of genuine Igbomina stock, which prides itself as the pure Yoruba species in Kwara State.
Twenty-six years into the Fourth Republic, the maximum proximity of the Idoma to Government House, Makurdi, has been by the customary allocation of the Deputy Governor’s slot to its people. Ogirri Ajene from Oju/Obi, the charismatic blue-blood of blessed memory, was deputy to George Akume, incumbent Secretary to the Government of the Federation, (SGF), from 1999 to 2007. Akume it was reported, genuinely desired to be succeeded by Ajene who exhibited competence and loyalty and could build on their legacies. The Tiv nation we understand, shot down the proposal. Gabriel Suswam succeeded Akume and had the urbane multipreneur, Stephen Lawani from Ogbadibo as deputy. Samuel Ortom, a Minister in the Goodluck Jonathan presidency who took over from Suswam opted for Benson Abounu, an engineer from Otukpo as running mate, while Hyacinth Alia, the Catholic priest who succeeded Ortom, also chose as deputy, Samuel Ode, who was also a Minister in the Jonathan government, from Otukpo. Arising from this precedence, Apa/Agatu has not for once, been considered for a place in Government House, Makurdi.
In similar fashion, the position of Senator representing Benue South, has repeatedly precluded Apa/Agatu federal constituency. David Alechenu Bonaventure Mark a former army General from Otukpo, took the first shot at the office in 1999. He was to remain in the position for five consecutive times, a distinctive record by Nigerian standards. Mark would subsequently become President of the Senate and the third most senior political office holder in the nation’s governance scheme for a string of two terms between 2007 and 2015. He was replaced by Patrick Abba Moro, who hails from Okpokwu and was a former teacher, in 2019. Abba Moro who previously served as Minister of Interior in the Jonathan government from 2011 to 2015, won a second term at the 2023 general elections and remains substantive Senator for “Benue Zone C.” He is indeed incumbent Minority Leader of the Senate, and thus a principal officer in the leadership scheme of the “red chambers.”
While Moro is barely two years into his second term, there are suggestions that he is interested in a third term which should run from 2027 to 2031! This is the core issue which has dominated contemporary political discourse in Benue South, especially from the Apa/Agatu bloc. For Apa/Agatu, it is bad enough that they are repeatedly bypassed in the nomination of deputy governors in the scheme of state politics. It is worse that they are equally subjugated by their own kinsmen within the context of politics in *Idoma and Igede land.* This is particularly worrying when both local government areas constituting the Apa/Agatu federal constituency, Apa and Agatu, are not in anyway deficient in human resources to represent Benue South. Names like John Elaigwu Odogbo, the incumbent *Och’Idoma* and respected clergy; Isa Innocent Ekoja, renowned Professor and Librarian; Sonny Togo Echono, FNIA, OON, Executive Secretary, Tertiary Education Trust Fund, (TETFUND), and John Mgbede, Emeritus State Chairman of the Peoples Democratic Party, (PDP), Benue State, readily come to mind.
Major General R.I. Adoba, (rtd), a former Chief Training and Operations in the Nigerian Army; Professor Emmanuel Adanu, former Director of the Kaduna-based National Water Resources Institute, (NWRI) and the US-based specialist in internal medicine, Dr Raymond Audu, are eminent Apa/Agatu constituents. There are also Ada Egahi, long-serving technocrat who retired from the National Primary Healthcare Development Agency, (NPHDA), and Super Eagles forward, Moses Simon, (why not, hasn’t the retired soccer star, George Opong Weah just completed his term as President of Liberia)? The Member Representing Apa/Agatu in the House of Representatives, Godday Samuel Odagboyi, an office previously held by Solomon Agidani, as well as Adamu Ochepo Entonu, is, like his predecessors, a prominent figure from the resourceful Apa/Agatu federal constituency.
The Olofu brothers, Tony Adejoh, a retired Assistant Inspector General of Police, (AIG), and David, PhD, a renowned management and financial strategist, who is also an Emeritus Member of the Benue State Executive Council during the Ortom dispensation, are from the same federal constituency. So is Abu Umoru, a serial entrepreneur who represents Apa State Constituency in the Benue State House of Assembly. The continuing intra-zonal alienation of Apa-Agatu from the politics of Benue Zone C, remains a sore thumb which must be clinically diagnosed and intentionally treated in the run-up to 2027.
If previous top level political office holders from Idomaland in general and Apa/Agatu in particular, had diligently applied themselves to tangible, multisectoral development of the zone and constituency, the present clamour for inclusiveness would probably been less vociferous. *River Agatu* which flows from Kogi State, and runs through Agatu before emptying into *River Benue,* is a potential game changer in the socioeconomy of Apa/Agatu, Benue South and Benue State in general. Properly harnessed, it can revolutionise agriculture and aquaculture in the state, beyond subsistence levels which are the primary vocations of the indigenous people. Rice, yam, guinea corn, millet and similar grains, thrive in the fertile soils of the area. These can support “first level” processing of produce and guarantee value addition beneficial to the primary producers, before being shipped to other markets. River Agatu can indeed be dammed to provide hydro-electricity to power the entire gamut of Idomaland.
The infrastructure deficit in Benue South with specific reference to Apa/Agatu is equally very concerning. A notable pattern in Nigerian politics is its self-centeredness, the penchant for political players to prioritise their personal wellbeing and the development of their immediate space. This has accentuated the ever recurring desire of people to ascend the political pedestals of their predecessors if that is the principal window by which they can also privilege their own primary constituents. Motorable roads are non-existent, seamless travel between communities therefore encumbered. Expectedly this has been a major impediment to subsistent trade and social engagements between constituents and their kinsmen. Primary health facilities are almost non-existent, compelling people to flock to Otukpo, headquarters of Benue South, for the minutest of medical advice and treatment.
Apa/Agatu pitiably bleeds from the relentless and condemnable activities of vagrants and bandits who have reduced the constituency into a killing field. Reports suggest that in the past 15 years, no less than 2500 lives were lost to the vicious attacks of marauders and trespassers in the area under reference. This unnerving situation has compelled engagements between concerned Apa/Agatu leaders, and the leadership of the Nigeria Police Force, (NPF). The prayer is for the swift establishment of a mobile police outpost in the troubled sub-zone to contain bloodletting. The proposal, anchored by AIG Tony Olofu, NPOM, (rtd), and Echono, has received the blessings of the police high command. At the last update, a commander for the outfit had been named, while the deployment of personnel had begun in earnest.
It is very clear that in the march towards 2027, Apa/Agatu will refuse, very vehemently, to be sidelined and trampled upon in the political scheme of their senatorial zone. Abba Moro may desire a third term in the Senate, but the people of Apa/Agatu are quick to remind him that his curriculum vitae as a politician is sufficiently sumptuous for him to yield the seat in the “red chambers” and sit back like an elder statesman. They remind you that for a man who began his working life modestly as a lecturer in the Federal Polytechnic, Ugbokolo in 1991, Abba Moro has done extremely well for himself in Nigerian politics. For reminders, Abba Moro was elected Chairman of Okpokwu local government in the state as far back as 1998. Ever since, he has remained a permanent fixture in Nigeria’s national politics.
The people of Apa/Agatu will put up a determined fight for the Benue South senatorial seat in 2027, and no one should begrudge them. They are the proverbial ram which was pushed to the wall, which must of necessity push back with angered horns to liberate itself. They are already engaging with their kith across “Benue Zone C” to ensure that intra-zonal equity, fairness and justice, prevails in communal politics.

Tunde Olusunle, PhD, Fellow of the Association of Nigerian Authors, (FANA), teaches Creative Writing at the University of Abuja

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Opinion

The Prince Adebayo prescriptions for ease of doing Business: 15 Take-Aways

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By Dr. Ag Zaki

On Thursday, 9 January 2025, Prince Adewole Adebayo presented a keynote address at the Radisson Blu Hotel, Ikeja, Lagos. The occasion was the annual conference of a group of professionals, business executives and experts codenamed J9C for January 9 Collective. The theme of the Conference was “Business and Policy Strategy: Examining the Role of Reform in enhancing the ease of doing business in Nigeria.” Prince Adebayo is a versatile cerebral man of many parts, a lawyer, a multimedia practitioner, a real estate investor, a large-scale miner, a philanthropist, a community developer, and the 2023 Presidential Candidate of the Social Democratic Party (SDP). The organisers of the J9C conference introduced him as an intercontinental lawyer because he currently practices law in over sixteen countries.

The full speech of Prince Adebayo at the occasion is available online and can be accessed by clicking at this url: https://youtu.be/SsHkcJbVNRg?si=ebvoOVqGh0zVOsnt or by scanning the QR code above. However, we are presenting the salient take-aways from this most incisive keynote address below for the convenience of interested persons and for the public good.

THE TAKE-AWAYS
Preamble
1. Not every change of policy or programme is a reform. A reform is a fundamental change in the activities, programmes, and policies structured to cause improvement. Genuine government reforms are people oriented and so citizens can interject, comment or contribute.
2. Reform may be internally motivated, externally forced or imposed, or technological driven.
3. The government of Nigeria must first reform itself to be able to implement development-oriented reforms to improve the country’s economic performance.

In general terms
4. Fiscal and monetary reforms are critical and are urgently required in Nigeria. While government can freely control its fiscal reforms, it must be bound by market forces for realistic and realisable monetary reforms.
5. Economic reforms must positively affect developmental policies, programmes and projects to engender economic growth, increase in efficiency, and lead to stability. Economic and political reforms must be implemented pari-passu for untainted policies and programmes.
6. Urgent structural reforms are required in areas of legal reforms, laws on banking controls and regulations, lending and borrowing as well as land matters.

In specific terms
7. Reforms which are aimed at targeting ease of doing business must be aligned with the Malam Aminu Kano maxim that “all civil servants should abstain from contracts or business”.
8. Nigeria must break the current odious and unwholesome conspiracies between policy makers, civil servants, and contractors, which can lead to irreversible endemic corruption, long foreseen by the revered Malam Aminu Kano, and which can permanently damage the economy.
9. Structural reforms must ensure that land laws open up maximum benefits and potentials of the land, encourage labour productivity and efficient and transparent entrepreneurship rules including registration, capital and lending matters.
10. Tax reforms should be broad-based, not about sharing of revenue but promoting productivity and competitiveness in all aspects of endeavours and infrastructure reforms should make transportation of people and goods safe and cost effective.
11. Monitoring economic crimes must be thorough and should go beyond arresting of “Yahoo boys” and those spraying Naira notes, but those devaluing the Naira and abusing economic rules and regulations.

Warnings
12. Adebayo left some stern terse warnings for the business sector and for the government of Nigeria.
13. Business executives and professionals should not ask or encourage government for specific reforms but for general broad-based reforms as firm-specific reforms can enhance operations of specific firms or business in the short term but will ultimately kill the industry.
14. Government should not meddle into business or be guided by partisan businessmen; government should meet business only at the junction of regulatory framework.
15. Government should be selfless and honest in carrying out reforms, incorporate measurable performance indices and ensure that reforms are implemented in a way not to inflict pains or punishment on the people.

# DrZaki25, 903 Tafawa Balewa Way, Abuja

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