The Nigerian billionaires and Tinubu’s Tax Reform
By Temitope Ajayi
It has been a refreshing experience, in the last one week, to read very strong endorsements of President Tinubu’s tax reform by at least five major national newspapers via their editorials.
I align with the view of Professor Niyi Akinnaso who wrote, yesterday, in his Nation Newspaper column, that the media should assist the government in achieving its development goals in the overall interest of the people instead of unrelenting negative reporting.
Our country has a chronic revenue problem which left previous governments no option than to borrow. Available records show that we have over N75 trillion in foreign and local debts.
We have an economy that is reported to be the largest in Africa at almost $500 billion in GDP size, with an estimated 200 million plus population. In comparison with South Africa, with about 50 million population and second largest economy in Africa, we are nowhere near in terms of tax revenue. While South Africa has tax to GDP ratio of 27.3%, our country is crawling at 10.86%!
For proper context, the richest man in Africa is a Nigerian and the second richest man is a South African, Johann Rupert. The Personal Income Tax Rupert paid, as individual, to the South African government in 2022 was more than the entire tax collected by the 36 states of Nigeria in 2021.
There are three Nigerians among the 15 richest Africans whose business interests cut across various sectors – from retail to banking, oil & gas, mining, telecoms, real estate, manufacturing, food and beverage e.t.c. The combined wealth of the three Nigerians on the Africa’s rich list is put at $27.4billion whereas Rupert’s wealth is put at $10.7billion.
Here is the interesting twist: The rich and wealthy Nigerians live in states within Nigeria and do most of their businesses in Nigeria, yet, what one wealthy South African paid as his Personal Income Tax in one year was more than the entire revenues of 36 states in Nigeria.
In Naira terms, South Africa collected N27.76 trillion in Personal Income Tax in 2022, while Nigeria with population 4 times bigger than South Africa collected N1.6trillion in total IGR of states.
Our tax system is dysfunctional especially at the state level. This is why our states and Federal Government can not fund big infrastructural projects and social services. It is the reason the Taiwo Oyedele led Tax and Fiscal Reform Committee put together by President Tinubu has come at the right time.
The committee aims to close annual N20 trillion tax gap Nigeria is denied within the next few years, by bringing more eligible taxpaying Nigerians into the tax bracket. This does not mean that the Federal Government is planning on raising taxes. Far from it! It only means time has caught up with wealthy Nigerians would have hitherto evade paying their taxes.
The committee already has its job cut out for it. President is determined to reset the finances of the country to generate the required money to fund real development and improve the quality of life of Nigerians.
-Ajayi is Senior Special Assistant to the President on Media & Publicity