New Independence Group ( NIG) wishes to implore the Federal Government to reconsider its ongoing approach of taxing the economy out of recession.

In a statement issued in Lagos on Friday, and  signed by its Convener, Professor Akinyemi Onigbinde, the group submitted that the path being toed, if pursued further, will hurt the economy more than it will help it, yet counter-productive to the intention of the Administration to shore up the revenue base of government, in view of the shortfall of expected income from proceeds of crude oil.

According to the socio-economic think tank, a further increase in taxation should not only be shelved, those already in place should be reversed, as the tax regime on the already impoverished citizens, whose disposable income has been drastically reduced by a galloping inflation that is today the lot of consumers in Nigeria will further deepen the misery of the people, and make recovery unnecessarily more difficult than it would have been, had more creative and  effective options been explored. 

Upon its inheritance of a sluggish economy, in May 2015, the Muhammadu Buhari presidency set out clearly, even in the midst of inexplicable lethargy in other critical areas, that it would address the decline in public revenue by levying taxes of different types on the citizenry. It is doubtful though, if the wider ramifications beyond increase in earnings were considered.

Starting with the N50 stamp duty on some bank transactions, to increment in custom duties, the government gave a hint of what was to come. It has since followed these with an increase in the cost of electricity, even against a court judgment; as well as hiking the price of fuel from N87 to N145 per litre. 

There are strong indications that the price may be increased further sometime next year. If the government has its way, there will also be other levies and taxes in the near future.

 Also pending, according to NIG, is a nine percent tax on calls, as proposed by Adebayo Shittu, the Minister of Communications, with a modified version of the tax regime by the CBN governor, Godwin Emefiele, which will see calls taxed after the first three minutes.

Bukola Saraki, the Senate President, has also hinted on the re-introduction of toll fees on some Nigeria roads, ostensibly to put the damaged roads in good and serviceable condition. Meanwhile, Babatunde Fowler, head of the FIRS, has equally served notice of proof of tax payment as a condition for owning an International passport by every eligible Nigerian citizen.

In all of these, a vital point seems to elude policy makers: government's effort to spend its way out of recession is supposed to stimulate and reflate the economy in a way that helps the citizens play their complementary role. That is why societies that use tax as an instrument of funding in situations like this target the luxurious consumption of the elite class whose spending capacity is not diminished by virtue of a raise in tax. 

Citizens in the middle and lower classes, as well as small businesses, are often encouraged to spend through tax breaks and holidays. 

To impose cut-throat taxes and levies on hapless citizens, many of whom have lost their jobs, or see their cost of living skyrocket even when wages have been stagnant, is to further erode spending by the populace, without which the economy can rebound from the current recession. 

Government on its own, in recognition of this fact, has been bailing out many states owing several months of salaries, in order to get the economy moving. The inability to keep a leash on the exchange rate however, among other reasons bordering on policy inconsistencies, continues to stand in the way of a turnaround. Recently, the media widely reported an increase of about 30 percent in the taxes of civil servants in the employment of the federal government, effected suddenly at the end of November 2016. 

Just last week, the Nigerian Communication Commission, (NCC) attempted to increase the cost of data, purportedly to keep small operators in the telecoms industry in business. The unpopular measure which has been suspended, for the time being, upon the intervention of the Senate, is only ill-timed; while the arguments offered for its formulation defy logic, and betray the core mandate of the NCC, which is to ensure best services at the most reasonable cost to operators and users.

By seeking to protect small operators in the Telecom business, through a geometric increase in the cost of data, the regulator betrayed a lack of understanding of how the sector it purports to regulate works. 

There are minimum requirements for interested players in the sector, and they are all entitled to compete under basic ground rules for fairness and efficiency. In a market system, which is not without its own challenges, 

sectoral players are expected to compete for control of the market by offering quality, innovative services at competitive rates as a means of staying in business. 

Thus, it is not the business of the regulator to shore up the fortunes of seemingly small players, not the least through a measure that strangulates end users.

In addition, the increment is counterproductive, as it can only trigger a drop in data subscription, an outcome obviously detrimental to the medium and long-term interests of users and the industry players the policy was meant to protect. 

Beyond adverse tax regime, the recent banning of imports, through the country’s  land borders, is counterproductive to a stagnant economic environment because such policy option possesses the tendency of reducing the tempo of commercial activities, just as the cost of imported items are unduly raised, thus putting inflation rate to further spins. It is the position of the NIG that, instead of this ban of imports, what government should be doing, relative to the policy at the ports of neighbouring countries, is appropriate pricing of Port activities.

According to NIG, rather than worsen an already precarious situation, through a tax regime and other policy options that emasculate the people further, the government should widen its dragnet to capture those who have been evading legitimate taxes and various fees for government services.  More importantly, it needs to address the unsustainable cost of governance across different levels, most especially as it affects political appointees. It is ironic that the Senate President will be seeking to impose an extra burden on the populace at a time the National Assembly has refused to answer questions on the huge allowances and perks of its members. The cost of maintaining public office holders who give so little in return is significantly responsible for the present state of the economy. It has therefore become clearer that unless the government deals with the issues of its structures, quick fixes such as the array of taxes being proposed and implemented, will only bring short-term reliefs at best, and worsen the situation in the long run.