Budget 2015: Let government unlock non-oil revenues

This is the first time – since the fall of the
First Republic – that Nigeria’s federal
government considers the option of non-
oil revenues as index for the national
budget. Before now, crude oil price per
barrel had served as benchmark for
budgeting because it was the major
source of revenue for the economy. As it
were Nigeria’s economy was simply a
crude oil driven one. No one ever thought
that the country would come to this day
when there would be the need for a
diversification let alone diversifying. And
so, as I watched Madam Ngozi Okonjo-
iweala (the coordinating minister for the
economy and minister of finance) on AIT
Wednesday 17th December, 2014
announcing this piece of information, I
thought to myself: indeed, hard times are
here!
One thing I’d like to mention here before I
continue is the fact that the government of
Nigeria has never told anyone the truth;
no, not even to their selves! Was it not
madam Ngozi who many weeks ago
repeatedly told Nigerians that the fall of
oil price per barrel on the international
market is not cause for panic? Why is
government reverting (or should I say
resorting) to non-oil sectors for revenues
now? Is this not a clear enough sign that
all may not be well after all? This is why I
quickly mentioned that government has
never been truthful on any matter. I
remember some years back in 2009 to be
precise, when then Mr. Chukwuma
Soludo’s Central Bank of Nigeria (CBN)
told Nigerians that they were immune to
the effects of a global meltdown that
began the year before. I argued then in
my article (Daily Sun August 10th, 2009)
that Nigeria had no industrial ground to
withstand the crisis when countries that
were ten times more industrialized than
her were crying. It did not take long for
the effects to begin to show on the
economy.
The idea of partially basing the nation’s
over 4 trillion naira budget on Non-oil
revenues is a good one. However, there is
what to be done before such revenues can
be freely generated. It seems to me that
the system necessary for supporting this
idea is practically not-in-place and, you
can not roof a house without first building
the rooms. Government had hinted that
Nigerians must brace up to pay their
taxes as there shall be improvements on
the nation’s tax administration system.
But is it all about taxing the populace?
What about creating the enabling
environment for businesses to survive
and pay tax? Citizens who owned private
aircrafts, yachts, luxury automobiles etc
have also been mentioned as potential
revenues sources.
This brings us to the issue of
understanding the meaning of non-oil
revenue and how to generate it.
As the name implies, non-oil revenue is
any money or income that is not derived
directly from the oil economy. It can be
property tax, market tax, motor park tax,
agricultural produce tax, customs duties
etc or any tax that is not from the oil and
gas sector of a nation’s economy; and
can also be referred to as Internally
Generated Revenues (IGR). Even though
successive government have used this
form of revenue to supplement what they
have at hand in running the economy,
government’s recent announcement have
indeed stated in clear terms the change of
status from supplementary to main
source of revenue generation and this
entails a quest for fresh knowledge on
how to organize as well as effectively
manage the system amongst other
equally important factors
It is not enough for government to
announce a plan such as this without a
proper framework to support it.
Government’s Vision 2020 agenda had to
die the way it did because then Minister of
National Planning, Alh. Shamsudeen
Usman made Nigerians to understand
that up till that moment, no practical
framework was on ground to support the
idea. Perhaps this same mistake would
reoccur if we do not find out and deal
head-on with certain realities on the path
that this government has decided to tow.
No sane government would want to incur
the wrath of her citizens when every
frivolities are been accounted for as
government expenses. So, no matter how
effective the tax administration is and no
matter how willing the populace are to
cooperate, citizens want to see taxpayer’s
monies channeled to productive ventures
and not to sinkholes like legislator’s
furniture and sitting allowances,
centenary celebrations, printing of
centenary one-hundred naira bills or
sponsoring of Nigeria’s football
contingent to go and achieve nothing etc.
This kind of revenue can not cater for
long escort convoys neither will it finance
the long entourage who travel with Mr.
President to international conventions.
And with the massive corruption in the
local, state and federal tiers of
government today, this revenue will surely
finish even if it accrues on a monthly
basis.
Nigerians are yet to understand why the
price of petroleum products have
remained unchanged despite the obvious
fall in the price of crude internationally. Is
it that the foreign refineries which refines
and sells oil to this country still incur the
same cost now that the barrel sells for
less than sixty-five dollar as it did when it
sold for more than seventy dollars? The
reality is that with a drastic reduction in
prices of PMS and AGO, the Nigerian
economy would be the better for it.
Government must device a way to
strengthen the naira in order to improve
on the standard of living as well as get
value for every kobo collected as tax.
Remember that in this economy,
petroleum products have multiplier
effects.
The real estate sector is renowned as a
multi-faceted economic stabilizer. With its
tremendous impact on any economy, the
building industry contributes by
employing all shades of professions and
generating tons of money for the
economy. Therefore urgent care must be
taken to make this sector viable. For
instance, Nigerians can not claim
ignorance of the fact that building sites
suddenly sprang up overnight with the
announcement of a reduction in the price
of cement by Messrs Dangote Cement Plc.
This is to say that commodities with
electric or multiplier effects such as
cement, steel rods and roofing sheets etc
should be cheapened in order to boost the
sector and consequently pour in revenues
to the government and, not vice versa.
While commenting on the budget, the
Minister did mention that government
considers reviewing previous customs
waivers. Whether the review was upward
or downward, we were not told but
looking at the dicey situation at hand, I
would suggest that whatever review that
is necessary must be done with a view to
reviving maritime economy and not
sending away the little commercial
activities that we have there already. A
downward review of custom duties will
certainly pour in more revenue into
customs purse than an upward review will
do. In like manner, the telecoms and
electricity tariffs should be reviewed
downward in order to create more
chances for businesses to survive. Small
and Medium-scale businesses spend
lump sums on customs duties, telecoms
and electricity tariffs every year while
struggling to survive and may not find it
funny paying heavy taxes. They should be
enabled to grow.