Dangote Hails Tinubu’s Quest To Ramp Up Tax Collection, Block Revenue Leakages

President of Dangote Group, Alhaji Aliko Dangote, has commended President Bola Tinubu for inaugurating the Presidential Committee on Fiscal Policy and Tax Reforms, led by renowned tax expert, Mr. Taiwo Oyedele. Dangote expressed confidence in the committee’s ability to help improve the federal government’s non-oil revenue and block avenues of revenue leakage.

Speaking in an exclusive interview with THISDAY, on Wednesday, Dangote also urged the committee to widen the country’s tax net, so as to reduce pressure on those that had over the years been committed to the payment of taxes.

The commendation from Africa’s richest man came as it emerged that the federal government was currently considering making the Federal Inland Revenue Service (FIRS) the sole revenue collection agency at the federal level. And by implication, current revenue generating agencies of the federal government, like the Nigeria Customs Service, Nigerian Communications Commission (NCC), Nigerian Ports Authority (NPA), and about 60 others may be stripped of that role.

Dangote stressed that with an efficient tax collection system, the “government does not need to borrow money, all you need to do is to block the leakages in the system and by blocking the leakages, there is enough money for the government to provide social services. I am really pleased and I wish the president God’s guidance to continue to do a great job”.

He disclosed that Dangote Group paid more taxes than the entire Nigerian banking industry, and urged the committee to work towards harmonisation of the multiple taxes in the country.

Dangote said, “I must thank President Tinubu for creating this committee and also appointing credible people, who are well tested, especially the chairman, who is a tax guru and very objective.

“Taiwo Oyedele is actually one of the best when it comes to taxation in Nigeria.

“I think it is really a very good thing and it is as good as other reforms that were done in terms of petrol subsidy removal and others. Government is losing billions of dollars or maybe trillions of naira in terms of non-collection of taxes.

“We have different taxes and it is much better to harmonise them and also expand the tax net so as to make sure people pay taxes, because it is a social contract between the government and we that operate within the country.”

Dangote pointed out that the government could not offer social services to the citizens without tax collection.

“So, it is a great thing that the president set up this committee,” he said.

Dangote added, “Within the time given to them, I am sure that they would start submitting reports and I think those reports should actually be implemented.

“Maybe they should look at automating the tax system, just like what they did in India. If you go to India today, the country collects at least $1 trillion in various taxes. On petroleum products alone, India makes $100 billion yearly, because they charge 100 per cent on petroleum products. So, what I am suggesting is that people should pay tax and if you pay, you demand services from the government. I think it is a social contract.

“Once people start seeing that the government is using the money to do infrastructure, fund education, healthcare, and that the citizens don’t need to go out to India or other countries for medical attention, then people would settle down and start paying taxes.”

Responding to a question on whether the 18 per cent tax-to-GDP ratio target given to the committee was realistic since the country presently did less than 10 per cent, Dangote said, “It is very realistic. President Tinubu demonstrated this when he took charge of Lagos State and if you look at when he was first sworn in as Governor of Lagos, the state was earning a meagre amount. But by the time he left office, Lagos’ collection was totally different.

“You hardly hear people complaining about paying taxes in Lagos, because you can actually see what the money is being used for and that is what I think we should replicate at the federal level.

“Once people start seeing that infrastructure is being addressed, education and health are well funded, people would pay.

“Let me add, the government is an investor in our businesses. When they facilitate and give you a very good business environment, whether it is a tax holiday or good environment, they are stakeholders through those things that they facilitated.

“So, when it comes to us as corporations, we have to be socially responsible by paying our taxes in return. But when you look at it, you see a lot of companies that are actually not paying. When you tell the taxman to go ahead and collect more taxes, they would go back to the same companies that are paying and put more pressure on them. No, that is not what it ought to be.

“What they should do is to expand the net and make sure everybody is brought in within that segment of taxation. But without computerising things, people would continue to dodge.

“One of the areas that people would need to understand has to do with the issue of tax holidays. Tax holiday does not mean that when you make money, you then use the money to buy houses in Dubai and other places. No, it is for you to make money and re-invest into the business and expand.”

The business mogul revealed that Dangote Cement paid “about $300 million a week as Value Added Tax (VAT) alone.

“So, if I didn’t invest and create that business, how is the government going to collect the VAT? By the time you look at our tax as a company and the withholding tax, if you add both, it amounts to over N200 billion, just on Dangote Cement alone. Are we upset about paying taxes? No, the only thing is that we are upset because some people are not paying. So, people should be made to pay taxes and the government must make sure that it collects its own share from people who are dodging tax.”

The federal government is currently considering making the Federal Inland Revenue Service (FIRS) the sole revenue collecting agency at the federal level.

The move would whittle down the powers of other Ministries, Departments, and Agencies (MDAs), which are currently generating and spending revenue.

It was further revealed that some agencies, including Nigerian Ports Authority (NPA), Joint Admissions and Matriculation Board (JAMB), Nigerian Communications Commission (NCC), among others, might have reneged on their regulatory and supervisory functions and, rather, focused on revenue generation, which had been riddled with corruption.

Chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, which Tinubu inaugurated on Tuesday, Oyedele, said the affected MDAs would be divested from those responsibilities that had cost the economy billions of naira due to sharp practices.

Oyedele, a former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC), said Nigeria’s revenue collection from taxes was one of the lowest in the world, but the cost of collection remained high.

During a recent meeting of the Joint Tax Board (JTB), chaired by Mr.  Muhammad Nami, the proliferation of tax collecting agencies was identified as one of the major obstacles in the country’s tax system.

Speaking in an interview, Oyedele said, “Ironically, our cost of collection is one of the highest. And the reason for that is that we’ve got all manners of agencies. The federal government alone, we have 63 MDAs that were given revenue targets last year, no; actually in the 2023 budget.

“And two things that would come up from that: on one hand, these agencies are being distracted from doing their primary function, which is to facilitate the economy. Number two, they were not set up to collect revenue, so, they won’t be able to collect revenue efficiently.

“So, move those revenue collection functions to the FIRS. It has two advantages: the cost of collection and efficiency will improve, these guys will focus on their work, and the economy will benefit as a result.”

Oyedele added, “If you are customs, focus on trade facilitation, border protection; and if you are NCC, just regulate telecommunications. You are not set up to collect revenue.

“It can be your revenue and someone else can collect it for you. There will be more transparency because you see what is being collected and is accounted for properly. It is also a way of holding ourselves to account as to how we spend the money we collect from the people.”

The tax reform committee chair acknowledged there would be pushback from stakeholders and others benefitting from the current system. However, he said the committee’s sole objective was not to take what belonged to anyone, but to collect what should come to the government.

Oyedele also described the Treasury Single Account (TSA) initiative as a step in the right direction, but said it had not been fully developed. He said the TSA would help his committee’s work but there was more to do to maximise the initiative.

Oyedele said the committee would also look into excess bank charges, adding that businesses pay as high as 65 to 70 levies and taxes. He said the presidential committee had a mandate to reduce the number of taxes to about 10.

He said Nigeria’s tax gap was estimated at N20 trillion, as many among the elite evaded paying the exact taxes they should remit to the government.

According to him, “As of today, we have a significant tax gap estimated in the region of N20 trillion or even more. If you focus more on the few major taxes – Value Added Tax, Corporate Income Tax, Personal Income Tax, a lot of people are not (tax) compliant, particularly the middle class and the elite, some of them are in the tax net with one or two fingers, you pay a thousand naira as tax when you should have paid N10 million.”

The tax expert said all revenues not hitherto captured would be brought into the tax net.

He said, “In fact, our plan is to repeal many of the taxes that currently make doing business difficult without introducing new ones and yet collect more.”

However, it was not the first time the federal government had hinted at giving FIRS the sole authority to collect taxes.

The Finance Act, 2021, for instance, vested the FIRS with the duty to assess, collect, account and enforce the payment of the Nigeria Police Trust Fund Levy.

The Act states, “It is an offence, punishable by a fine of N10 million, imprisonment or both, for any agency of the federal government (other than FIRS) or any of their staff or consultant, to demand for books or returns for the purposes of tax, or carry out the function of assessment, collection or enforcement of tax, or pay any portion of tax revenue to any person or into any account, other than the relevant accounts designated by the constitution or relevant laws of the National Assembly.”

Meanwhile, other agencies of the federal government are under statutory obligation to report cases requiring tax investigation, enforcement or compliance, encountered in the course of performing their functions, to the service for necessary action; they are forbidden from carrying out tax monitoring, audit or investigation.

Essentially, collapsing the tax collection role under FIRS would put paid to recent controversies bordering on regulatory overlap in tax administration among government agencies in the country.

Obinna Chima and James Emejo

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