By Jeph Ajobaju, Chief Copy Editor
Civil Society Organisations (CSOs) have condemned plans by the Federal Inland Revenue Service (FIRS) to tax social media activities in the pursuit by President Muhammadu Buhari to tax nearly all items to repay loans.
Nigeria’s debt rose by N20.8 trillion to N32.92 trillion between June 2015 and December 2020, and to N33.11 trillion in the first quarter of 2021 (Q1 2021), according to Debt Management Office (DMO) data.
Between January and May, debt servicing cost N1.8 trillion, about 98 per cent of revenue in the same period. Abuja plans to borrow more, according to Finance Minister Zainab Ahmed.
However, both the World Bank and the African Development Bank (AfDB) have expressed concern that Nigeria and other African countries run the risk of defaulting on loan repayments.
A major problem is that most loans taken by Nigeria and other African countries are not invested in infrastructure to yield returns to pay off debt.
Public officials often divert loans and revenues into personal pockets, and into fictitious or inflated contracts, with the extra amount collected as bribe.
FIRS seeking NASS approval for social media tax
The PUNCH reports that the FIRS is seeking approval of the National Assembly (NASS) to amend the Finance Act to capture online activities in the tax net.
FIRS Chairman Muhammad Nami announced at the ongoing engagement between Senate Joint Committees working on the Medium Term Expenditure Framework and Fiscal Strategy Paper and heads of federal revenue generating agencies.
Nami said apart from targeting social media businesses, the proposed Finance Act amendments would also affect the Stamp Duty Act as some of the provisions are obsolete.
“You are aware of the issues of digital economy and the challenges of policing the digital tax payers like Twitter and Facebook,” he told the lawmakers.
“So, we are going to come up with the rules and provisions that the National Assembly will passionately look at and approve for us so as to bring them to the tax net. We want to see a way of taxing online activities and businesses.”
CSOs criticise move
But Civil Society Legislative Advocacy Centre Executive Director, Auwal Rafsanjani, cautioned the FIRS against doing anything that would affect the businesses of young Nigerians struggling to survive, as reported by The PUNCH.
“There are many avenues which the FIRS can explore in order to generate income. It should not impose additional burden on young Nigerians who are just struggling to survive and making use of social media to transact their businesses,” he said.
“The FIRS should concentrate on taxing companies that are making profits from adverts and not individuals that subscribe to those social media platforms.
“Individuals who subscribe to those platforms and showcasing their businesses there should not be taxed. The tax should be on corporate entities that are making profits.”
Women Advocates Research and Documentation Centre founding Director, Abiola Akiyode-Afolabi, described the move as another plot to shut social media against the people.
“The government can’t make money on everything when it’s not giving people back.
While taxation in theory is progressive, Nigeria should follow best practices.
“This is another attempt to shut down the space against the people. This attempt should be resisted; the government should focus on providing good governance for her people, not targeting people for more hardship and exploitation,” she insisted.
However, Centre for Public Accountability Executive Director, Olufemi Lawson, countered that all Nigerians doing businesses in whatever form must pay tax.
“I think the FIRS must ensure that all persons and businesses in Nigeria must pay this tax, as far as it is legally backed by the needed legislation,” he argued.
FIRS seeking feedback from tax payers
Nami told senators that the Finance Bill was supposed to accompany the annual budget and that the FIRS would review feedback from tax payers and its internal operations to help fix loopholes in the tax law, per The PUNCH.
Said he: “The Stamp Duty Act came into being in 1962 and the figures in that Act are obsolete.
“For instance, some of dutiable instruments which are about 100 are in the region of 10 kobo or 15 kobo. In real time, it cannot give us any significant revenue and we would not be able to generate additional revenue for government.
“If for instance we are spending N5 to print an adhesive stamp when the tax it would be used to administer is 15 kobo, I think there would be no need for us to collect that tax in the first place.
“These and more are some of the things that we have identified so that in line with the way business processes are changing, we have to adjust the law to make tax payment simple and enable us to block leakages and mobilise revenue for the three tiers of government.
“We are not really increasing or reducing some of the rates but to change the figures to reflect the current reality.”
Senate Finance Committee Chairman, Solomon Adeola, who coordinates NASS joint panels working on the MTEF/FSP, said the proposal would enable the FIRS meet its revenue projection of N10 trillion in 2022.
VAT hikes cooking gas price 100%
A 7.5 per cent backdated VAT Abuja imposed on cooking gas in August has stoked more than 100 per cent price rise in eight months, with 12.5kg cylinder refill jumping from N3,500 to N7,200 and projected to reach N10,000 in December, per The PUNCH.
In cities and semiurban areas, middle consumers in large numbers have returned to the use of firewood and charcoal to cook food in homes and restaurants, posing environmental hazards besides the unbearable financial cost.
Petroleum Resources Minister of State, Timipre Sylva, says Liquefied Petroleum Gas (LPG), also called cooking gas, is deregulated by the government and it cannot remove the VAT – even if that means reducing human hardship.
Average price per litre of kerosene increased from N370.29 in June to N370.34 in July, according to National Bureau of Statistics (NBS) data, the price rising 7.31 per cent month-on-month (MoM) and 18.42 per cent year-on-year (YoY).
However, the real market price of kerosene, an alternative to cooking gas used by the poor, is N2,000 per five-litre keg. Which makes the street price N400 per litre.
Gross Domestic Product (GDP) rose 5.01 per cent year-on-year (YoY) in the second quarter of 2021 (Q2 2021), in three straight quarters of growth after slumps in Q2 2020 and Q3 2020, says the NBS.
But the GDP figure is bizarre because it contradicts empirical evidence that, by all metrics, Nigerians have been getting poorer since Buhari became President six years ago.
By March this year, Buhari alone had obtained N12.31 trillion loans for Nigeria since June 2015, and plans to borrow more from local and foreign lenders.
Buhari taxes Nigerians to repay wasted or stolen loans
Buhari is taxing Nigerians to death to service or repay loans taken by him, most of which get wasted or government officials steal through fictitious or inflated real contracts, or steal directly by dipping their hands in the till.
And he does not prosecute the thieves, some of whom are in his cabinet.
Buhari’s negligence as well as direct and indirect taxation have been stoking up every week – if not every day – since 2020 the prices of food, housing, transportation, health care, education, and all of other basic human necessities.
Last month, the Socio-Economic Rights and Accountability Project (SERAP) filed a lawsuit against him for failing to probe N106 billion officially declared missing from 149 ministries, departments and agencies (MDAs).
Part of the grouse in the suit filed at the Federal High Court in Abuja is that Buhari failed to prosecute those responsible for the fraud and recover the missing public funds to reduce the pressure of borrowing more money.
The suit is sequel to confirmation by the Office of the federal Auditor General in its 2018 annual audited report that N105,662,350,077.46 of public funds are missing, misappropriated or unaccounted for across 149 MDAs, per Premium Times.