Buhari set up this committee to devise means of funding the new national minimum wage of N30,000; poor workers’ salaries are about to be raised via a VAT hike that will eventually hit them.
There are many things I wanted to write about from last week but I can’t otherwise I’ll end up in jail. Since the Department of State Services charged Omoyele Sowore, Publisher of SaharaReporters, to court for “insulting” President Muhammadu Buhari, among other allegations, the message from the presidency has been loud and clear enough: insult the President, go to jail.
A part of DSS’s suit accused Sowore of “knowingly sending messages by means of press interview granted on ‘Arise Television’ network, which you knew to be false for the purpose of causing insult, enmity, hatred and ill-will on the person of the President of the Federal Republic of Nigeria.” Since the issues on which I have an opinion this week will likely cause “ill-will” to the President, I better hold my peace.
I wanted to discuss the approval of the Federal Executive Council for a 50 per cent increase in Value Added Tax from five per cent to 7.5 per cent, subject, of course, to parliamentary stamp. Buhari’s loyalists would argue that the increase was first recommended by a presidential technical advisory committee but this is the President’s committee and he had the option to reject the advice. Buhari set up this committee to devise means of funding the new national minimum wage of N30,000; poor workers’ salaries are about to be raised via a VAT hike that will eventually hit them. My conclusion, therefore, is that President Muhammadu Buhari is verging toward robbing Peter to pay Paul.
On a superficial outlook, the plan would directly increase government revenue but all the gain is at once negated by the accrual of only 15 per cent to the Federal Government and a gigantic 85 per cent to local and state governments —read this as state governors — which cannot be trusted seeing how they looted Paris Club interventions while hugely indebted to workers. Finance Minister Zainab Ahmed attempts to mislead us into believing the poor and vulnerable are shielded from the new VAT regime, since it doesn’t affect basic necessities such as food, medicines and education. There’s no way the poor are entirely insulated from the ripple effects if company revenues decrease due to a weakening of general purchasing power; the less companies earn, the likelier they are to fire — to fire staff that include these very poor supposedly protected from the VAT raise.
How about widening Nigeria’s tax net? Even though our current VAT is one of the lowest on the continent (Ghana 10 per cent, Benin 18 per cent, Togo 5-30 per cent), our tax net, at 13 per cent, is also one of the poorest! At least 75 per cent of registered companies are not in the tax net while 65 per cent of those in the tax net do not file returns or pay taxes. In 2018, Babatunde Fowler, Chairman of the Federal Inland Revenue Service, revealed that 85,000 millionaires and billionaires, and corporate organisations, still refuse to pay tax. Many of the country’s biggest tax evaders are people in power or people, who were in power or people close to those who are/were in power. The Federal Government could generate at least an additional N8.5trn should it apprehend the defaulters. Meanwhile, the total revenue estimate for the year 2020, after take-off of the new VAT regime, is N7.5trn. Why leave the recalcitrant tax defaulters then overburden the tax payers? How do you ignore N8.5trn but chase N7.5trn? That’s penny wise and pounds foolish! The President would be thoroughly upset by this, and he could send the DSS after me if I show up at any protest ground. Therefore, I choose not to write.
The average poor man must be asking God what offence he’s committed to be poor but he must more frequently be asking what crime he committed in his previous life to have been born Nigerian. The VAT hike had yet to sink in when banks started notifying their customers in Lagos, Ogun, Kano, Abia, Anambra, Rivers and the FCT of additional charges on cash deposits in those states, all as part of a compulsive Central Bank of Nigeria cashless policy drive. Individual cash deposits of over N500,000 and corporate of over N3m will attract charges of two per cent and three per cent respectively, while individual cash withdrawals of N500,000 and corporate of over N3m attract charges of three per cent and five per cent respectively. It is depressing the heights that state institutions are willing to go, to milk the ordinary Nigerian of his hard-earned money. A cashless economy benefits the country in numerous ways, but preference, not deterrence, should be CBN’s watchword in its implementation. The ideal strategy would be to continue showing people why they should ditch the cash for e-banking, not to enforce by ripping them off. The policy requires aggressive marketing and nationwide orientation, which aren’t happening at the moment. Even the tweet sent out by the CBN to address public umbrage over the latest charges is suffering from information kwashiorkor; it’s more confusing than enlightening. CBN must first understand that the popular love for cash over Internet banking is a direct consequence of illiteracy; as long as adult illiteracy remains as prevalent as it is —41.8million adult Nigerians were illiterate as of 2018 — the march to cashless Nigeria will be as staggered as it hates to imagine. The demand for these charges under these conditions, and by the same CBN that has failed to enforce the fine of N10,000 for non-reversal of failed transfers within 24 hours, is, quite frankly, daylight robbery. The President won’t like to hear this, knowing one of the best-kept secrets of this administration is the CBN’s evolution as rubber stamp for Buhari’s whims and caprices. This is Buhari’s CBN, and this is disguised robbery!
If I was sure it wouldn’t cost me my freedom, I would have written about the numerous challenges blighting the military’s ongoing war against Boko Haram. Why do we have a retired military officer as Commander-in-Chief if a simple but never-ending problem of obsolete weapons can’t be fixed? Last week, some army commanders repeated what we’ve always known but continue to shy away from: Troops are fighting Boko Haram with Shilka guns acquired during the era of Shagari, and Tank 72, also known as T-72, which was made in Russia and manufactured in 1971 but sold out in 1972. The Soviet-era tanks were acquired during the regime of former President Goodluck Jonathan; we criticised Jonathan for it, expecting Buhari to usher in an era of sophisticated warfare. Meanwhile, I thought governors gave the President their approval for $1bn to be withdrawn from the Excess Crude Account last year to fight insurgency. Where is the money? Such a shame Buhari has let us down terribly in this regard. Incidentally, while the military is regressing, Boko Haram are now better armed than ever and have more sophisticated drones than their demoralised opponents. But let’s not talk else we end up in jail.
Finally, as you would imagine, I would talk about Sowore whether or not I’ll end up in jail? Why? An injury to one is an injury to all. Let’s not mince words: Filing charges against Sowore for “insulting” the President is laughable, a complete abuse of federal powers and a lowering of the business of presidency to the gutters. Sowore abuses the ruling class from time to time, yes, but many who would not adopt his choice of words often agree quite alright his summations are not unfounded. He often labels the ruling class as ‘thieves’, is that a lie? He likes to describe this government as ‘incompetent’, isn’t that true? And is it new? Is that not the term we popularly associated with Jonathan while in power? Thankfully, despot Buhari won’t be in power forever. Three more years and his reign will be over.
Soyombo, former Editor of the TheCable, the International Centre for Investigative Reporting and SaharaReporters, tweets @fisayosoyombo