Nigeria has been used to getting well educated and competent young women to serve in the federal Cabinet as Finance Minister from one administration to another. There must be something the nation’s leaders have found out about female Finance experts. But what is clear now is that they are strict. When they design any policy, they want everyone to stick to it.
The current Finance Minister, Mrs. Kemi Adeosun, has come up with what she calls Voluntary Asset and Income Declaration Scheme, VAIDS, which is aimed at getting more Nigerians into the tax net voluntarily. In a chat with newsmen in Lagos, she explained the issues involved in VAIDS.
Question: Don’t you think that the time left for people to respond to this scheme is quite short, taking into consideration Nigerians in the Diaspora?
Minister: It is a 9-month program that we started on the 1st of July. We have four months left. So, there is enough time for anyone who wants to comply to pick up the asset declaration form. I filled my form two weeks ago, and it took less than 20 minutes to complete. The typically tendency of our people is, to defer things. I am not sure that extending the time makes any difference because Nigerians will still leave it to last minute. There is plenty of time from now till March for those who want to get involved in the scheme.
Question: It’s been 5 months into the program. How has the response been?
Minister: We have had very good responses from companies. So far, we have received $110 million from just 2 companies. One of them paid a liability of $55 million, while the other paid $44 million. Let me give this illustration. If you live in Lagos, Lagos state government does not know you run a business in Abuja.
Lagos state government does not know that you have a property abroad, or that you moved some money to Dubai. Meanwhile Lagos state does not have the jurisdiction to go to the Emirates and say ‘this is my resident. What affiliation does he/she have with your country?’ Largely, no one was really paying the right tax because of these many loopholes.
When we did the analysis, only 241 people in the country were paying above N20 million. South Africa has 950,000 people paying that equivalent amount. Whereas, some of the richest Africans are Nigerians living very good lifestyles, but because the tax system is so lose, people decided not to pay. The level of non-compliance informed the design of the program.
In jurisprudence, they say if nine out of ten people comply with the rule, there is nothing wrong with the rule. But, when nine of the ten people are not complying, then there is a problem with the rule. That’s why we designed the amnesty program, to let people come in and do the right thing. So take that illustration I gave earlier of someone who resides in Lagos and runs a business in Abuja. Maybe the only thing he declares is a salary of N500,000 monthly, meanwhile, he has a private jet, an expensive yacht; his children are in school abroad, but government doesn’t know. Now, we have pooled all the data together and profiled people.
Once the lifestyle of the person does not match the tax paid, then the person has under paid their taxes. So far, the response has been very good because people now know we have the data and we proven that we are ready to use it. So we have given people until March 2018 before we call them tax evaders. After March, we can officially call them tax evaders; hence we can then name and shame them. Candidly, the response has been very good especially from high net-worth people.
Question: One of the main reasons Nigerians do not pay tax is because of lack of social contract. Why should Nigerians be propelled to pay tax when the basic amenities are not even available?
Minister: It is a good argument but it is a flawed one. Today, of the 14 million taxpayers, 90% of them are salary earners and they pay their taxes via P.A.Y.E (Pay As You Earn). Salary earners are taxed whether they enjoyed amenities or not. So, why is it right for billionaires to make the decision whether to pay tax or not. Should billionaires pay taxes only when government does what they like, while salary earners are forced to pay regardless? Interestingly, these billionaires pay taxes on their property and rents abroad, and they don’t complain. We have to change that mind-set. Tax will help deepen the social contract between the government and citizens. When people pay taxes, they will take interest in how their leaders are elected.
