In part one of this report, published on June 5, Correspondent SAM NWOKORO listed ways the government can collect tax to fund the N2 trillion deficit in the N6.8 trillion budget for 2016.
This second part examines more of such tax windows.
Penalise corporate tax defaulters
The Federal Inland Revenue Service (FIRS) should make corporate organisations to comply with the Corporate Affairs Commission (CAC) mandate for firms to file annual business report and tax receipts, in line with the Companies and Allied Matters Act (CAMA).
FIRS Director General, Tunde Fowler, disclosed late last year that many corporate organisations and individuals who are supposed to pay tax were not doing so.
He said about 200 oil and gas firms had not filed returns for the 2015 business year and about 35,650 corporate bodies were not paying tax.
Fowler made the disclosure at a tax summit where he also listed many steps the FIRS had taken to ease tax administration.
However, the public perception is that the tax collectors themselves need to be scrutinised in the light of allegations that most FIRS personnel were recruited without due process.
Implement NEITI report
During a visit to Nigeria in April, International Extractive Industry Transparency Initiative (IEITI) Chairman, Clare Short, urged Abuja to implement its various reports on the extractive sector compiled since 2012.
Her plea coincided with the counsel from Nigeria Extractive Industries Transparency Initiative (NEITI) Chairman, Waziri Adio, who disclosed that reports on Nigeria’s extractive industries compiled between 2009 and 2012 showed that at least $11.6 billion remains unremitted to the federation account by operators in the extractive chain, especially oil and gas.
A NEITI report presented in Abuja on May 16, 2016 said Nigeria made $58.07 billion from hydrocarbon industry in 2013 and lost $5.966 billion and N20.4 billion from the operation of off-shore processing agreement with the Nigerian National Petroleum Corporation (NNPC).
The concerns of these bodies should be taken seriously and their recommendations implemented to recover such funds.
Gas flaring
An energy expert, Chris Mgbeokwere, has faulted the penalty on gas flaring as too lenient.
About 63 per cent of ‘associated gas’ produced during crude oil production is flared. With the emergence of local upstream operators, probably up to 70 per cent of gas is being flared.
In 2015 alone, between $3.5 billion and $5 billion worth of gas was flared from about 257 flow stations in the Niger Delta. About 17 per cent of 95,471 metric tonnes of gas was produced that year.
The Organisation of Petroleum Exporting Countries (OPEC) said in its 2015 global energy report that Nigeria produced 86,325.2 standard cubic feet (scf) of gas in 2014 and flared 10,736.8 scf.
It also reported that Nigeria lost $868.8 million (about N173.76 billion) to gas flaring in 2014.
The law imposing a fine of $500,000 on a company which fails to report within 24 hours any emergency flaring on account of equipment failure is hardly implemented.
Besides, indigenous firms in particular have not been paying the mandatory 5 per cent levy ring-fenced for the Education Trust Fund.
The government should enforce gas flare penalties, and also raise the penalties where firms fail to implement gas utilisation projects.
Oil firms to create value chains
One of the protocols of the United Nations mandates on sustainable development is “inclusive growth”.
The UN expects public and private sector partnerships in the creation of jobs to engage as many people as possible in economic activities.
Experts argue that Nigeria should enact laws to make big transnational corporations establish auxiliary businesses in order to create jobs for Nigerians, rather than repatriating all their profits.
One of those seeking to compel multinational companies to invest in the economy rather than just exploiting the market is Olisa Agbakoba, a Senior Advocate of Nigeria (SAN), who pioneered the Cabotage Act.
He often calls for measures to compel multinationals to develop value chains of their enterprises in Nigeria rather than repatriating everything to the detriment of the economy. At the moment, Nigeria does not have any enforceable measure on that more than penalising companies when they break the rules.
Enforce genuine CSR
An oil and gas consultant, Syl Okpowa, said: “When it comes to corporate social responsibility (CSR), only a few established corporate names perform.
“Most local firms, especially those in the oil and gas sector, are poor in mitigating the social cost of their operations to the areas they operate in.”
“Their CSR activities are only tokens and do not address significantly the social cost of their operations to their immediate communities. Everything is pushed down to the government.”
According to Okpowa, all over the world, governments use CSR commitment to fashion economic and commercial policies such that only those who measure up enjoy state protection, guarantees, or waivers.
He urged the government to initiate strong partnerships with big corporations, especially those in the lucrative sectors of the economy to drive the template on Sustainable Development Agenda (SDA).
Highway tolls
President Muhammadu Buhari says priority will be given to road projects that have the capacity to boost economic activities.
Works, Housing and Power Minister, Babatunde Fashola, has alerted that the government will introduce road tolls to shore up the dwindling federal purse sequel to the oil burst.
A lack of good policy has hindered the country from deriving revenue from highway tolls, caused in part by the fixation on oil.
The United States Congress is currently debating a 1,030-page highway bill that would make it easier for states to install tolls on highways.
Nigeria scrapped its highway toll system in 2004 out of poor foresight that the oil boom from 1999 would not end. The boom ended in 2013.
Now tolls seem the safest route to raise internally generated revenue (IGR).
The highways are of poor standard, most have been derelict for more than a decade, and this gives highway tolling more endorsement than disapproval.
Transport experts argue that the plan to reintroduce highway toll to raise funds to finance roads and ensure efficient maintenance is not a bad idea if it can block the leakages and turn toll gates into “growth centres”.
Lagos State Chairman of the Institute of Estate Surveyors and Valuers, Samuel Ukpong, said: “The government needs to call in stakeholders if we want to reintroduce toll gates. Let’s look at its growth centres. It is a very good thing.
“For it to take the form of growth centres, there must be good infrastructure in place. From where there are toll gates, the government can do 100 kilometres of roads to link the major highways, and the new infrastructure will attract new settlements to decongest densely populated urban centres.
“The traffic situation in big cities in Nigeria is very serious now because of congestion. When we turn these toll gates into growth centres, it will help us to grow the economy and decongest city centres.”
Teniola Kehinde, Association of Consulting Engineers chairman, added that funds from toll gates should be used to maintain roads.
“We are hoping that we would have learnt from experience and that the management of roads now has moved to another level.
“There is a bill at the NASS (National Assembly) to create a national road fund and the idea is that all the roads revenue will go into that fund and would be used to manage and maintain them,” he said.
Penalise pastoralists who damage farms
There is a new danger to agricultural revolution in the country for which previous governments spent billions of naira to encourage modern farming methods and boost national productivity, away from subsistence agriculture.
This threat comes from herdsmen who prowl cultivated land in search of grazing fields and damage crops – undermining yield, threatening food security, and scaring away investment in agriculture.
Experts have asked the federal government to give a deadline to pastoralists to ranch their cattle, failure which they should be penalised.
They say those who allow their cattle owners to stray into cultivated fields and damage plants and human lives should be prosecuted, jailed, and bared from drawing from government’s agricultural incentives.
Recover misappropriated bailouts
There is an urgent need to review the various bailouts given between 2013 and 2015, as the beneficiaries may not have invested those monies in the projects intended.
If power sector operators had deployed loans from the Central Bank of Nigeria (CBN) from 2012 when the N213 billion electricity fund was established, power supply would not have remained unstable.
People are calling for an investigation of those who borrowed from the fund, and if found to have diverted any amount, return it to the treasury.
This call resonated in May when the House of Representatives queried why the government is seeking another N309 billion bonded loan which Fashola said would “bridge the electricity market shortfall to cover 2015 at N187 billion and another N122 billion for 2016.”
The lawmakers threatened to investigate the Nigerian Electricity Regulatory Commission (NERC) over the N213 billion electricity fund.
The House Committee on Power, Privatisation, Loans and Debt Management has been mandated recoup all misappropriated funds.
Reduce NASS allowances
Another avenue through which the government can raise revenue is the shedding of most of the allowances of NASS members.
A chieftain of the All Progressives Grand Alliance (APGA) who did not want his name in print asked Buhari to scrap constituency allowance to save money, since most times lawmakers do not give a satisfactory account of the allowance.
Exclude local content defaulters from incentives
Another suggestion is penalty for companies which fail to obey the Local Content Act.
A stockbroker, Chucks Onyekwere, said as Buhari prepares to implement the 2016 budget, “many companies are already on the queue to get one contract or another.
“The federal government should go beyond partisan considerations and award contracts only to firms which comply with the local content policy of the government. That is one way of creating employment.”
Quote Gencos and Discos on NSE
Power generating companies (Gencos) and distribution companies (Discos) have milked electricity consumers, like most companies enjoying various kinds of waivers since 2009.
The government should make legislation to compel these companies to be quoted on the Nigerian Stock Exchange (NSE) rather than being allowed to repatriate profits or share loot among board members.
Experts insist it will help deepen the capital market and increase Nigerians’ stake in businesses raised up from the doldrums by the recent oil boom.
