By Johnbosco Agbakwuru
Nigeria has for a long time been a mono-product economy solely depending on oil. Before the discovery of oil in the country, there was a diversification of the economy by the then competing different regions which had made the nation to compete favourably with other developing countries.
But with the oil boom, every other sector for the sustenance of the economy collapsed ans it was abandoned. The resultant effect was the difficulties encountered in the financing of the nation’s budget and implementation of the capital projects including the recurrent expenditure that depends on the oil money.
As the oil price in the international market begins to dwindle, it has drastically affected the economic fortune of the country to the effect that it has become difficult to come up with a realistic budget for the 2015 fiscal year. Ordinarily, the budget for this year was supposed to have been prepared and passed at least, last quarter of 2014, but this is not the case, as the planners of the national budget are yet to come to terms with an implementable budget estimate as a result of the fall in the oil price which remains the main source of financing the budget.
The Federal Government had proposed an Appropriation Bill of N4.357 trillion for the 2015 fiscal year, predicating this on $65 per barrel and exchange rate of N165, but, as at Thursday, when the budget passed through second reading in the senate, a barrel was sold between $45 and $46, while exchange rate was about N195, as a result of the crash in oil price, thereby making it difficult to pass the budget with the projection.
However, as if predicting the fortune of crude oil in the global market and aware of the fate that would befall the country, the National Assembly, through the Chairman, Senate Committee on the Federal Capital Territory, FCT, Senator Smart Adeyemi, came up with a bill seeking to empower the nation’s seat of power, Abuja, to independently generate its own revenue through the establishment of Internal Revenue Service and Board of Management.
The bill, after debate and scrutiny by both chambers of the National Assembly and the two chambers had set up a Conference Committee to harmonise the mode of operation of the IRS, had recently been adopted and it is now to be transmitted to President Goodluck Jonathan for his assent for it to become law.
The implication is that the FCT administration would cease to be parasitic on the Federal Government for funds to develop Abuja.
The Smart Adeyemi sponsored bill seeks the establishment of IRS for the FCT with the mandate of collecting, assessing and accounting for revenues accruable to the federal capital. The bill also provides for the establishment of FCT IRS and Management Board with the power to sue and be sued, control and administer different taxes within FCT and as well account for such taxes.
It provides that the IRS and Management Board shall be headed by a Chairman appointed by FCT Minister subject to the approval of the National Assembly and also a Deputy Chairman, six representatives from different departments of FCT as well as six persons drawn from each of the six geo-political zones of the country who are knowledgeable in tax matters.
Members of the Board are saddled with the responsibility to, among others, collect, recover and pay to the designated account any tax or levy due to the FCT, assess all persons chargeable with tax within the FCT, collect, account and enforce payment of taxes as may be due to the capital territory.
The Board will also collaborate with other relevant agencies to review tax regime and promote application of tax revenues with a view to stimulating economic activities and development and as well administer, collect and enforce payment of property tax in the FCT.
Besides, it would issue a tax payer identification number to every person taxable in FCT, collate and review all policies of FCTA that relate to taxation and revenue generation and simultaneously undertake a systematic and progressive implementation of such policies.
The Board is also empowered to trace, freeze, confiscate or seize the proceeds of tax fraud and evasion and from time to time determine the extent of financial loss and other losses arising from tax waivers and other related matters.
Speaking after the adoption of the harmonized report of the Conference Committee, the Deputy Senate President, Senator Ike Ekweremadu, who presided over plenary, urged the FCT to implement the bill with a human face.
Supporting the report, Senator Thompson Sekibo, PDP-Rivers East, said it was timely, considering the dwindling global oil price and encouraged states to emulate the FCT in ensuring that they tapped from other sources of revenue other than oil.
Senator Ayogu Eze, PDP-Enugu North, encouraged the Federal Government to emulate the FCT by exploring other sources of income.
Also supporting the bill, Senator Chris Ngige (APC-Anambra Central), called on states to take up the challenge by tapping into the numerous mineral resources rather than relying on funds from the Excess Crude Account.
Speaking after the bill’s passage, Senator Adeyemi noted that the bill had been in the National Assembly since 1999, “facing obstacles and hurdles while political considerations made it difficult.”
According to him, “The economic situation in the country now has prevailed over political considerations.
The population in Abuja now is different from what it was once projected which has now made this new law imperative.
The population we have in Abuja now demands upgrading of the infrastructure because allocation from the national budget is not enough…”
He said that for the bill to be passed, it took a lot of “horse-trading before my colleagues in the National Assembly conceded to the establishment of the board. We’ve now put a revenue board to expand the revenue base of the FCT and also make sure there’s property tax in Abuja.
“The harmonised version now allows for collection of taxes as well as the powers of the minister was reviewed in such a manner that the board will meet and recommend appropriate taxes to the minister. The approval of the collection of taxes will be done by the minister who will act on behalf of the President.”
In line with realities on ground as regards dwindling revenues from the federal purse, once assented to by the President, the FCT will be charged with the responsibility of fending for itself and break away from the age-long tradition of being spoon fed by the federal government which has been responsible for provision of funds for the operations of the territory since inception in February 1976. However, the fear in some quarters is whether the FCT administration will not cash in on the legislation to exploit the masses. Already, residents of the federal capital territory are complaining about the high cost of living and the ever increasing house rent by landlords. It is feared that the tax may be high and touts recruited to exploit and harassed the citizenry.