Governor Adams Oshiomhole says Edo state government will broaden its tax net to capture the over one million taxable adults in the state, saying only 160,000 people presently pay tax of the state’s four million population.
According to the Governor, states must deepen their tax base as an alternative to the dwindling oil revenue resulting from the crash in the price of crude oil.
While delivering a lecture on “Dwindling Revenue from Crude Oil: The Challenges for State Governments” at the maiden public lecture organized by the Correspondents Chapel of the Edo State Council of the Nigeria Union of Journalists (NUJ) in Benin City, on Wednesday, Oshiomhole said: “we have decided to expand the tax net, to move it away from just salary earners that pay, ‘pay as you earn’ and few other people who volunteer to pay to extend it to consumption tax because, everywhere in the world, people pay for consumption and it is a more equitable way to tax because typically, those who earn a lot tend to consume more and therefore, should pay more taxes.
“You will see a man driving a Mercedes 600, meanwhile his tax suggests that he is on level 10 because he may have benefited from a Dasuki. Now, if he gets such free money, it is bad enough that this money accrued from corrupt practice, but it is worst that he spends it, consumes it without paying anything out of it.
“My own thesis is: why we must shift more emphasis to indirect consumption tax including value added tax is that if the state remains so weak that people who can have access to funds by whatever means that they didn’t earn and therefore because it is not an item that can be taxed, but when he wants to go and buy that Mercedes 600, he finds that he has to pay a 10% VAT.
“At least, he would have paid something. The tragedy we have at the moment is that you take money out of the system, you didn’t work for it; you steal it and spend it. It goes through a full cycle without any tax accruing to state authorities and then you drive it on our 6-lane Airport road that we had constructed with tax payers money.”
According to him: “That is why we are looking at other ways to ensure that however you make the money, if it is not captured at the level of income, it will be captured at the level of consumption when you try to spend it.
“I think it will interest all of us to know that as things are today, the population of Edo State is approximately 4 million but only 160,000 people are taxpayers, whether ‘pay-as-you-earn’ or property tax or any form of taxes. So, the tax burden is borne by only 160,000 persons for government to provide services for 4 million people. Now how far can you go with that?
“For us to survive, going forward, we must broaden the tax net. I believe that the taxable people in this state are up to 1 million. But a couple of things have happened over the years that we are not going to curb it overnight, no one government can curb it overnight.
“I think we have started the foundation and I believe the next government will widen it if this state will be able to remain afloat because our population will continue to grow, we will need to build more schools, employ more teachers, provide more laboratory equipment. We will need to sustain our urban renewal programme, we will need to sustain the fight against erosion in our cities, all of these requires huge financial output.”
He said: “So, if we do not do something differently to widen non-oil based revenue accruing to Edo State, at a point, you will get to a level where the payment of basic services including salaries will be a huge burden. I have done my thinking, I have done my plans, up till the end of my tenure, I will never join the club of states that cannot pay salaries.
“The reason we are not witnessing riots in Nigeria when there is massive disclosure of fraud in high places is because most of us cannot connect those huge stolen money with our efforts and taxes. If you look at our newspapers even today, they are going to report $2.1billion Arms budget that was diverted and shared but you noticed that nobody is protesting.
“But can you imagine that if we were paying 35% or 40% of our salary as tax, the reaction would be different. But now, there is peace everywhere because none of us relates that money to us.
“People call it Government money, government does not have money. What you have is taxpayers money, collected by government and held in trust for the people. Government does not create wealth, government tax does who create wealth. So, if your tax is collected like that and it is stolen, you will fight but now, nobody is complaining.”
He declared: “The real reason we must deepen taxation is to make Nigerians critical stakeholders. To be a stakeholder is to have a stake and how can you have a stake if what is been managed or mismanaged, you can’t connect your sweat to it. If you pay so much tax, you will worry about how it is utilized. In Nigeria, we see it as government money and so long as we see it as such, it is not our money and if we don’t change that, good governance is far away.”
Also speaking, a two-time governor of the defunct Mid-West Region and Bendel State, Dr. Samuel Ogbemudia, commended the Correspondents Chapel for organizing the lecture and called for support for Governor Adams Oshiomhole to enable him identify the right man who will take Edo to the next level.
He said Oshiomhole is a man “who is a square peg in a square hole; a man who is wearing the proverbial shoes and knows exactly where it pinched yesterday, is pinching today and is likely to pinch tomorrow. A man who has the courage to call a pot black even in the presence of the catering master.”
Chairman of the Correspondents Chapel of the NUJ, Mr Simon Ebegbulem said the lecure was timely because “the nation is facing serious economic challenges from our monolithic economy which has put severe burdenon state governments which have for long depended on the Federeal Government’s allocations before paying salaries and discharging other governmental responsibilities.”
The public lecture chaired by His Royal Highness Prof Gregory Akenzua, the Enogie of Evbuobanosa was attended by people from all walks of life including Chief David Edebiri, Esogban of Benin Kingdom, Prof Emmanuel Emovon, former Minister of Technology, representatives of the traditional council, the academia, members of civil society, non-governmental organizations, students, the press and the general public.