Nigeria will HEAD into Recession in the LAST Quarter of 2020 and likely come out of RECESSION by the first quarter 2021 – Nigerians BUCKLE up because things are about to get hard before it gets better – This was the economic position of President Muhammadu Buhari at the 2021 Budget Presentation to a joint session of parliament.
Nigeria has prepared an aggregate budget expenditure of N13.08 TRILLION Naira for the year 2021.
Of this amount, Nigeria has forecasted that OIL Revenue will contribute 2.01 Trillion Naira whilst non-oil revenue which mostly includes VAT (Value-added Tax), CIT (Company Income Tax) and maybe some other off the CORNER Fees or Royalties that Nigeria earns for itself in 2021 will contribute a PALTRY, 1.49 Trillion Naira.
Let’s talk about our DEBT:
Of this 13 Trillion the Federal Government wants to spend in 2021, it INTENDS to borrow 5.20 Trillion Naira to FUND the BUDGET, of this same BUDGET, we will SERVICE our DEBTS to the TUNE of 3.124 Trillion Naira. So imagine, we just ROB PETER to PAY PAUL, funny right, well na so we see am (literally means, that’s what we see or get). Mind you, we are not paying back the ORIGINAL DEBTS oh, we just serviced the DEBT then added a new ONE TO IT, be rest assured that NEXT year for 2022, our SERVICED DEBT figures will INCREASE…
Of the over 13 TRILLION NAIRA to be spent, we have committed 5 Trillion plus to CAPITAL PROJECTS, now remember that it is very POSSIBLE we don’t spend up to 5 Trillion Naira if OIL revenue PLUMMETS or if they don’t get access to the LOANs they have envisaged to drawdown or access..
Now look at the part where it OVERS ASUU so well (Academic Staff Union of Universities) – President Buhari declared OPENLY at the National Assembly that ALL FEDERAL Government EMPLOYEES will be paid strictly via the IPPIS (Integrated Personnel Payroll Information System Platform) and this covers University Lecturers who are fighting bitterly against this MODE of PAYMENT because it spoils their personal SHOWS…
Undergraduates, e be like say una go seat down house well well oh, go learn trade (Lolzzz, ASUU don advice una)…
In summary, whilst this BUDGET is focused on ECONOMIC RECOVERY to support the Nigerian Economic Sustainability Plan (NESP), let’s highlight a major CHALLENGE Government at the Federal and State Levels must TACKLE if they MUSTER the POLITICAL WILL.
Less than 30% of Nigerians at this time PAY taxes*, PAYE (Pay as you Earn) and this has made so MANY states except States like Lagos, Rivers, and some OIL rich States depend more on Federal Government Largesse and Monthly Allocations – Of the 30% who pay taxes, be rest assured that about 7% to 10% are Government Employees, so it seems that Government Salary Earners simply recycle back the money to the same Government, now imagine the IRONY, less than 20% in REAL VALUE are subsidizing the LIVES of the 80% across Nigeria.
The 80% largely in the Informal Sector or those who work as Small Business Owners or Employees in small businesses don’t pay TAXES but expect to have GOOD ROADS, MAKE SENSE WELL EQUIPED HOSPITALS, a robust security architecture, excellent EDUCATION, and access to QUALITY Government services when we barely contribute a kobo via taxes to the revenue Government generates.
Our Political Leaders know for a fact that 80% of Nigerians don’t pay taxes, that’s the major reason they misbehave and appear to be UNACCOUNTABLE to the masses because the majority of revenue they generate comes from sources not directly related to the masses. The U.S, U.K, and most modern economies generate over 80% of the budget’s revenue from TAXES the citizens PAY, trust me, when you pay your hard-earned TAX, you will know how to HOLD your Government Leaders accountable because you realize they shouldn’t and can’t spend your money the way they like.
Nigeria needs to enact a STRONG UNIVERSAL Tax Code, a Universal Tax Code that makes it MANDATORY for all Nigerians regardless of your social status to pay a FIXED minimum PERSONAL INCOME tax – of course, these universal tax code should be tied to clearly defined expectations and benchmarks on what Government intends to do with this money it will generate. This Universal Tax Code should be targeted at those outside the current tax bracket who are not part of the formal sector. Imagine what that kind of money will do for our State Governments, imagine the reduced pressure our Federal Government when they no longer have to fund 36 states many of which are unviable states without Government Largesse.. The economy will bounce back very FAST and very HARD. We need to have these OPEN CONVERSATIONS about our TAX Culture… National Development will remain a MIRAGE if the MAJORITY (80%) is subsidized by the extreme MINORITY (20%)…
Nigerians need to HEAR the TRUTH and the FACT is that the BAD and unaccountable Leadership we have at the top is as a direct result of we Nigerians not investing our LOT and QUOTA into the MONIES Government spends, so when we say our commonwealth, I laugh in Swahili because there is nothing commonwealth about FREE MONEY generated from the natural resources a country has access to – that revenue is meant to supplement the taxes Government generates from its citizens.
Until Government musters the POLITICAL WILL to enact a UNIVERSAL Tax Code for all working or Enterprising Nigerians no matter your financial or economic status, Nigeria will continue to wallow in DEBT TRAPS that generations unborn will come to meet and continue to pay for from that 20% who pay REAL TAXES in REAL VALUE.
I rest my case, you can share your thoughts to email@example.com
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This piece was written by EldaDavid Kehinde Samuel, Elda resides in Lagos, Nigeria and Elda is a Resident Policy Fellow of the Nigerian Global Affairs Council – A Technology-based and Digital Media-driven Public Policy and Evidence-based Research Think-Tank that always simplifies Government Policy Positions.