Nigerians burdened with unnecessary taxes– Akinwumi Adesina

President, Africa Development Bank,group ,Dr. Akinwumi Adesina has advocated econimic and financial autonomy for state governments in Nigeria.

This according to Adesina will assist the states to unlock their huge resources ,expand wealths for their people to fastrack growth and development.

Adesina stated this while delivering a public lecture to mark the 2nd inauguration ceremony of governor Oluwarotimi Akeredolu of Ondo state.

He delivered the lecture virtually from Abidjan,Côte d’Ivoire.

The theme is Towards a new Nigeria; From Federal Fatherism to a Commonwealth

Adesina said “ In Norway, like all the Nordic countries, education is free through university. And if you finish your course on time, any loans you took to feed yourself, clothe yourself and maintain yourself, are converted into grants.

Singapore, a country that had 1/3 of Nigeria’s per capita income at its independence in 1965, has today 100% access to electricity and 100% access to portable water.

The per capita income of Norway is $68,000, while that of Singapore is $ 65,300. Nigeria’s per capita GDP is just $ 2,250. Taxes must therefore take income levels into consideration. The rich must pay more, but we cannot tax the poor to death .

We must distinguish between nominal taxes and implicit taxes. Taxes that are borne by the people but are not seen or recorded.

Truth be told, Nigerians pay one of the highest implicit tax rates in the world -way higher than Norway and Singapore.

Think of it: Many Nigerians provide electricity for themselves via generators; they repair road in their neighborhoods, if they can afford to.

There is no social security system. They provide security for their own safety. They provide boreholes for drinking water with their own monies. This is incredulous: Boreholes are not the way to provide water in the 21st century. Every household should have pipe borne water.

Federal revenue allocations are the lifeline of State governments. Cut it off and 92% of Nigerian states will fail. To be clear, only three states in Nigeria can survive without a Federal Revenue Allocation.

This Is a Federalism of fiscal dependency.

It Is a Federalism that Is fiscally unhealthy for the States and the Federal government. Because Nigeria depends on oil for over 70% of government revenues, any decline In the price of oil creates fiscal and economic volatilities that reverberate across the States.

What’s needed ls greater economic and fiscal autonomy for the States. The issue is less about state or regional autonomy, but financial and economic viability of Nigeria’s constituent States.

If Nigeria were to be a conglomerate firm, it would not be economically viable because 92% of its constituent ‘subsidiary companies’ are not viabIe without the support of the holding company.

Nigeria’s federalism does not grow its constituent entities. It simply makes them perpetually dependent.

The Nigerian system is therefore not Federalism but ‘Fatherism‘.

The agitations for decentralization can be understood when viewed in the light of a craving for greater autonomy.

But let us face it, political autonomy is meaningless, unless it is backed by greater fiscal selfreliance at the state level.

We tend to copy systems that are not well suited to our context. The United States that we copied from, does not control resources at the state level. Instead, the states generate the bulk of their income from taxes.

This is not the case in Nigeria. You can only tax people that have livable incomes That is not the reality. Nigeria has an estimated 87 million people living in extreme poverty.

You cannot tax people who can barely afford to eat. This debilitating poverty makes the country highly vulnerable to social and political risks. And it provide‘ fodder for anti-social behavior and recruitment by insurgents and terrorists. Poverty provides supermarkets for terrorists.”

He continued “lf States focus on unlocking the huge resources they have, based on areas of comparative advantage, they will rapidly expand wealth for their people. With their increased wealth, they will be able to access capital markets to secure long-term financing to fast-track their growth and development.

States that adopt this strategy would have less of a need for monthly trips to Abuja for grants. Instead, part of their federal revenue allocations can be saved as internal ‘state sovereign wealth funds’.

This can then be used as guarantees against borrowings from capital markets. They would be free from needing to exclusively rely on the federal government.

As a way out of the economic quagmire, much has been said about the need for restructuring.

Restructuring should not be driven by political expediency, but by economic and financial viability. Economic and financial viability are the necessary and sufficient conditions for political viability.

Surgeries are tough. They are better done well, the first time.

The resources found in each state or state groupings should belong to them. The constituent entities should pay federal taxes or royalties for those resources.

The achievement of economically viable entities and the viability of the national entity requires constitutional changes to devolve more economic and fiscal over the states or regions.

The stronger the states, or regions, the stronger the federated units. In the process, our union would be renewed.

In a remark, Governor Oluwarotimi Akeredolu who insisted that he would not reply comments by some governors on insecurity said it was great national pain that the national consciousness was being attacked on a daily basis.

Akeredolu who blamed the growing sectional activism on what he termed ‘faulty and twisted federalism as operated in the country’ said it was regrettable that those with palpable national passion and patriotism were tilting to the unintended ethnic nationality cabin.

The Ondo Governor identified insecurity as the most potent threat to national belief and insisted that the South West states would fight insecurity with every legal means.

He said the support for open grazing would benefit the cattle owners more.

His words, “It is our interest to fight criminalities. It is in the interest of our collective wellbeing.

“All we require is the support and understanding of all Federating Units, including the Federal Government. The simple truth is that we have lived in self-denial amid an excruciating pain that is almost cancerous now.

“Notwithstanding our challenges today, my firm belief in the Nigerian Project is strengthened by my fact of a true Nigerian.

“That I desire a more United Nigeria with every ingredient of freedom, rule of law, patriotism, love, mutual respect and harmony is an understatement. And I am prepared to fight for it legitimately for the benefit of all.”

Present at the event were; the Chairman of Occasion, Yobe state Governor and Chairman APC Caretaker Extraordinary Convention Planning Committee, Hon. Mai Mala Buni, who was represented by the former Senate President, Senator Ken Nnamani, minister of state for Niger Delta Affairs, Senator Donald Tayo Alasoadura, former deputy governor, Senator Iyiola Omisore, Engr. Ade Adetimehin and other important dignitaries.