The new tax drive

The Buhari government, coming to terms with low oil receipts resulting from reduced production quota and market volatility, is focusing on IGR to finance a huge budge deficit this year, amounting to some N13 trillion. The budget itself is worth N19trn. The attention is on getting big firms to pay taxes they have owed the government for years. 

It was reported last week that the government had recovered N600bn from oil and gas companies, made up of unpaid royalties, penalties and commission on rentals. It was with the help of Nigeria Extractive Industries Transparency Initiative (NEITI). Data seen on Friday showed that the total liabilities of the 77 oil firms that were involved as of 2019 amounted to N2.6tn, based on figures captured in the audit report of NEITI.

The House of Representatives took up the matter, forcing the oil firms to begin to pay up. Authentic sources Friday confirmed that while the total recovery pre-2021 was N900bn, the additional N600bn was recovered NEITI and the National Assembly came into the matter. NEITI conducts a financial, physical and process audit that assesses and reconciles physical and financial flows in the oil and gas industry in line with the EITI Standard and the NEITI Act 2007. The audit has the objective of confirming the outstanding payments (liabilities) due to the federation from each covered company through the respective revenue collection government agencies.

NEITI had repeatedly in the past expressed concern about the liabilities highlighted in its various reports considering the high demand for government revenue for development projects. The House of Representatives, during a plenary session, noted the statement by NEITI that 77 oil and gas companies were owing the Federal Government over N2.6tn. The House had also noted that the debts accrued from the failure of the firms to remit Petroleum Profit Tax, Company Income Tax, Education Tax, Value Added Tax, Withholding Tax, Royalties, penalties and concession on rentals to the Federal Government.

Speaking to select journalists on the development Friday in Abuja, the Executive Secretary, NEITI, Orji Ogbonnaya-Orji, said it was the duty of the agency to make data of the country’s extractive industries available to government. According to him, the audit report on the oil industry for 2021 would be ready before the end of this year. “The 2021 (oil and gas sector) report will be concluded and published before the end of the year. The scope of the report is to establish what companies paid to the government within the given the year of 2021 and how much of that money did government receive,” he said.

“We equally want to establish if those companies paid what they should pay and if the government actually received what it should receive, as well as the variances if any. We want to establish the quantity of crude that is produced, how much of that can be accounted for, and how much was stolen. We should establish the amount that was exported, reserved for local consumption and how what was reserved was managed.”

The golden goose stopped laying the golden egg a long time ago when militancy in the oil rich Niger Delta shut down production platforms. Even after the late President Shehu Musa Yar’adua negotiated an end to the violence and production picked up again,  revenue from crude exports dipped badly. However, governments after his continued to spend as though nothing had changed. Now the truth is no longer that Nigeria has so much petrodollar that it didn’t know how to spend it but that  the petrodollar has disappeared due to wastage and corruption.

It is an an empty national treasury that we are looking at. Thank God, there is something to fall back on. And it is, ironically, the abandoned old way of financing public expenditure: taxation. But even here, we must sound a note of caution. The government must ensure corruption does not also eat up the expected tax receipts.