Is the ghost of Alpha Beta haunting Nigeria’s proposed tax reforms?, By Uche Igwe

Whenever the bill is passed, compliance by citizens will be a challenge as resistance and sabotage may be widespread. It is no longer easily acceptable for Nigerians to take the message and leave the messenger. That is what the messengers of the proposed tax reforms want citizens to do. However, the sad truth is that the ghost of Alpha Beta company is haunting the ongoing tax reforms and may not go away in a hurry.

The ongoing conversation about introducing tax reforms in Nigeria has become quite fascinating. The debates have been informative, as both the proponents and opponents argue their cases to win public sympathy.  It represents a fiscal framework tailored towards sustainable economic growth. The Nigerian government has done well in breaking down the story, so that ordinary people can understand it better during engagement sessions. A study of the provisions and propositions of the reform suggests an intention to build an equitable, fair and inclusive economy.

The bill exempts low-income earners from the pay-as-you-earn (PAYE) tax, while offering reduced monthly rates to those earning less than N1.7 million. Eliminating value-added tax (VAT) on essentials like food, health care, education, and electricity will be quite helpful. Furthermore, excusing small businesses from company income tax and withholding tax could help the economy grow.

Overall, the proposals point to an intention to modernise the country’s tax system. However, the debate also offers an opportunity to interrogate the relationship between the state and the citizens, ensuring structures of transparency and accountability.

Lagos Tax Collection Firm Allegedly Linked To President’s Men

Research has revealed that trust in government is one of the most critical factors determining tax compliance in Africa. Citizens are more likely to pay their taxes when it is perceived that the government will be fair and transparent in using the tax revenue for public benefit. Data from Nigeria’s Joint Tax Board indicate that only about 10 million persons, out of an estimated population of 223 million, pay their taxes. Tax collection through third parties has been in vogue in Nigeria in the last twenty years, especially at the subnational level. These agents, often proxies of influential politicians, collect revenue using private accounts on behalf of the government and make deductions before remitting the balance to government coffers.

Despite the eloquent presentations and the screaming numbers, there are sections of Nigerian society who will neither listen nor comply. This is because they do not trust the president enough. It is indeed possible that President Bola Tinubu has the best intentions for the country’s economy to thrive. However, he has historical footprints full of baggage.

A company known as Alpha Beta Consulting LLP, incorporated in 2002, was awarded the contract to collect all the internally generated revenue due to Lagos State. It was later revealed that the company’s beneficial owners had links with Nigeria’s President Bola Tinubu, who was then the governor of Lagos State. The ownership and control of the company once became a subject of litigation and finger pointing, with one Dapo Apara demanding to be paid his entitlements. However, the parties involved quietly settled the matter out of court. Around the same time, Nigeria’s anti-graft agency reportedly dropped a probe into the case, while the contract remains active till date.

After a Contentious Electoral Victory, Appointments Do Not Appear Inclusive 

Furthermore, President Tinubu was declared the winner of one of the most controversial  and flawed elections in the country’s history. This was after a very intense campaign, which saw the unrestricted use of caustic and divisive language anchored on entitlement mentality and religious exclusivity. As if that is not bad enough, he has appointed every available position with people predominantly from one part of the country.

Even those who claimed to have campaigned for him have graduated from murmuring to expressing their discontent publicly in the media. Some loyalists of the president even allege that senior government positions are available to be purchased by the highest bidder, accusing the president’s chief of staff of complicity. The climate of frustration among the political elite and the ordinary people has been met with deafening silence from government quarters, as though all is well.

Citizens Do Not Trust the President’s Motives Enough

The prevailing hostile political atmosphere coincided with the introduction of the reforms, and that is why the level of resistance is unsurprising to the discerning. Despite the eloquent presentations and the screaming numbers, there are sections of Nigerian society who will neither listen nor comply. This is because they do not trust the president enough. It is indeed possible that President Bola Tinubu has the best intentions for the country’s economy to thrive. However, he has historical footprints full of baggage.

As the debates continue, there is an opportunity for introspection. The government must confront the erosion of trust between it and citizens. Rebuilding that trust requires much work involving decisive actions beyond PowerPoint presentations. Those wanting to raise additional revenue must convince citizens how it will translate to broader public benefits. This is urgent.

The reform he introduced as a governor was implemented and managed through entities purportedly linked to and intended to benefit him. The Lagos example is there in public glare. With that in mind, Nigerians will continue to suspect his motives, believing that he is on another mission to take public resources into his back pocket under the guise of reforming the tax system.

Trust Must Be Rebuilt for Citizens To Comply With Reforms

Many prominent Nigerians have spoken positively about the reforms – which is great. Both the former speaker of the House of Representatives, Yakubu Dogara, and the fiery cleric Sheik Gumi have endorsed it, dismissing insinuations in some quarters that the bill favours one part of the country more. The forum of Nigerian Governors has also supported it, with minimal suggestions.

As the debates continue, there is an opportunity for introspection. The government must confront the erosion of trust between it and citizens. Rebuilding that trust requires much work involving decisive actions beyond PowerPoint presentations. Those wanting to raise additional revenue must convince citizens how it will translate to broader public benefits. This is urgent. Nonetheless, the National Assembly will likely pass the bill very soon. These legislators do not seem to have the courage or independence to engage in any debate that could go against the executive’s wishes.

Whenever the bill is passed, compliance by citizens will be a challenge as resistance and sabotage may be widespread. It is no longer easily acceptable for Nigerians to take the message and leave the messenger. That is what the messengers of the proposed tax reforms want citizens to do. However, the sad truth is that the ghost of Alpha Beta company is haunting the ongoing tax reforms and may not go away in a hurry.

Uche Igwe, Ph.D, is a senior political economy analyst and visiting fellow at Firoz Lalji Institute for Africa at the London School of Economics and Political Science. He can be reached on u.igwe@lse.ac.uk  or @uche_igwe