About $2.9bn (N571bn) is being lost annually by the Federal Government to tax incentives given to some companies operating in the oil and gas sector under the Nigerian Liquefied Natural Gas consortium.
The figure was released by ActionAid Nigeria on Tuesday in Abuja during the launch of its report entitled: ‘Leaking revenue: How a big tax break to European gas companies has cost Nigeria billions’.
ActionAid Nigeria listed the companies to include Shell, Total and ENI, adding that the tax exemptions were for their investments in the NLNG Limited.
The NLNG is a joint venture between the Nigerian National Petroleum Corporation, Royal Dutch Shell, Total and Eni to exploit Nigeria’s huge reserves of gas.
It is the country’s major company in the liquefied gas sector and the three European companies hold 51 per cent stake in it, leaving the balance of 49 per cent to the NNPC.
The Country Director, ActionAid Nigeria, Ojobo Atuluku, said the amount being lost to tax incentives to the companies was capable of funding some key programmes in the country’s budget such as provision of health centres and schools, among others.
She said, “ActionAid researches from 2013 show that the tax incentives cost developing countries at least $138bn every year, part of which is an estimated amount of $2.9bn, or a whopping N577bn that Nigeria forfeits every year as a result of tax incentives.
“That amount is the equivalent of twice our national education budget and thrice the health care budget for 2015. This calls for serious concern in a country where over 20 million children do not go to school and almost 15 out of 100 children die before their fifth birthday.”
“There are incontrovertible evidence from researches conducted in many developing nations that corporate profits are soaring and corporate investments in low income countries had tripled since the 1980s. Yet, the corporate tax revenues of the countries where these profits are generated have flat-lined as a percentage of their Gross Domestic Product.”
She said there was a need for the Federal Government to review the tax incentives offered to companies operating in the country.
“ActionAid and their partners on the Tax Justice Platform want Nigeria and other resource rich developing countries to begin to review their tax incentive policies,” Atuluku added.
In his address, a member of the House of Representatives, Herman Hembe, said there was a need for the National Assembly to exercise caution in considering the proposed amendments to the Corporate Income Tax Act.
The amendment seeks to extend the granting of pioneer status to companies from five to 10 years.
This, according to him, may not be in the best interest of the country at a time when it was in need of more revenue owing to the decline in oil prices.
The NLNG, however, in a statement refuted the claims that the tax breaks were free, stressing that it was something that was obtainable in other countries.
It said, “The NLNG wishes to state that this claim is false and misleading. It is most instructive to note also that ActionAid itself admits in its report that its figure is a ‘hypothetical’ one.
“Contrary to ActionAid’s claim, the reality is that the Federal Government’s initial investment of $2.5bn, bolstered by the associated tax incentives, has so far yielded over $33bn in the form of dividends, taxes and feed gas purchases for the country over the past 16 years, with an additional $5bn accruing through corporate spend on local goods and services during the same period.
“The company paid $3.6bn in Company Income Tax and Education Tax between 2014 and 2015. This is in line with the NLNG’s corporate vision to help build a better Nigeria.”
It, however, admitted that it was granted a 10-year tax holiday, stressing that this was also obtainable in other countries.
The firm stated, “Considering the pioneering nature of such a company in Nigeria as well as the huge investments required, running to several billions of dollars in foreign investments, the NLNG was granted a 10-year tax holiday by the government of the Federal Republic of Nigeria under the provisions of the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act, CAP. N87, Laws of the Federation of Nigeria, 2004 (‘NLNG Act’).
“The concept of tax holidays is not an unusual practice in the global business community. Indeed, Angola has notably offered as much as 12 years’ tax holidays to encourage investments in their LNG industry, while other countries like Oman, Malaysia, Qatar and Trinidad have offered up to 10-year tax holiday to attract LNG investments.”
In The Fight Against Corruption, No Individual is Bigger Than The State – Buhari
In response to the suspended acting EFCC Chairman, Ibrahim Magu, President Muhammed Buhari, lamented that the anti-corruption war becomes endangered “when persons entrusted with the responsibility of that magnitude become suspects themselves.”
Buhari, whose vision is to put an end to corruption in Nigeria, believed that every aspect of the nation’s life is enshrined in corruption and it’s of major concern when leaders of institutions saddled with the mandate to fight the menace are found in the waves of the corruption they claimed to be fighting.
This act is a great abomination not only because it strikes at the root but it also trivialises and undermines the anti-corruption crusade itself, the President explained.
He further said that in a bid to put an end to this great abomination, he had set up Ayo Salami Panel to unravel the mystery behind the mystique of Magu’s alleged involvement in corruption that his administration is fighting.
Buhari said that his administration is ready and willing to go all out in the fight against corruption, and no one is too big nor above the law to become a victim of anti-graft’s sledgehammer.
The president said, “However, the stark reality of widespread corruption becomes poignant when allegations of corruption touch on the leadership of an institution set up by law to coordinate and enforce all economic and financial crimes.
“It is an abomination that strikes at the root and undermines the government’s anti-corruption programme.
“It was in response to the serious allegations against the Economic and Financial Crimes Commission that I set up a panel headed by the Honourable Justice Isa Ayo Salami, retired President of the Court of Appeal, via an Instrument dated 3rd July 2020 pursuant to the Tribunals of Inquiry Act (Cap T21, LFN, 2004).
“We recognise that there are more grounds to cover in the war against corruption, and we are prepared to go out to possess those lands by cutting off any stream that nourishes the seed of corruption and supports its growth.
“Let it be known that in the fight against corruption, no one is too big to tackle, as no individual is bigger than the Nigerian State!”
In Search For The New EFCC Chairman, Justice Ayo Salami Panel Advises Buhari to Look Outside The Police Force
Justice Ayo Salami’s panel advised President Muhammadu Buhari to look outside the Nigerian Police Force for the new Chairman of the Economic and Financial Crimes Commission (EFCC).
A credible source confirmed that President Muhammadu Buhari may have decided to follow the panel recommendation to avoid a similar fate to that of Magu, the former chairman.
The source also confirmed that the panel recommendation was a result of sleaze allegations against suspended acting Chairman, Ibrahim Magu. Also, that search team would be constituted in the next few days to slim down the possibilities of finding the right candidate to bring into reality the President’s vision of a corrupt-free anti-graft agency.
The source further confirmed that “the sleaze and abuse of office allegations against Magu, a commissioner of police, were overwhelming,” and that he may be put on trial.
As advised by the panel, the new EFCC chairman should be in interim position for two years.
It was suggested that the recommendation from the Justice Ayo Salami panel might have pinned Magu, according to Femi Adesina, the presidential spokesman, he advised president Buhari to consider looking into other law enforcement or security agencies, as well as considering important and diligent staff of EFCC in his plans to appoint the next EFCC chairman, as s provided in the EFCC Establishment Act of 2004.
Following the Justice Ayo Salami panel recommendation, Salami said “Your Excellency, permit me to say that four successive chairmen of the EFCC from inception have been drawn from the police. Therefore, in appointing a new chairman of EFCC, consideration should be given to candidates from other law enforcement or security agencies and qualified core staff of EFCC as provided in the Economic and Financial Crimes Commission (Establishment Act 2004).
“It is also important to point out that at the moment, 970 policemen (114 drivers, 641 mobile policemen and 215 operations), are on secondment in the EFCC.
“Therefore, an exit plan for the disengagement of the police and other personnel within two years from now should be considered. This will address the issue of non-promotion of core staff for over nine years.
“Your Excellency, our thinking here is that whoever you are appointing other than a core EFCC staff, should be in transitional capacity of two years during which period, the arrangement would be made for the appointment of any of the core staff who has been commended by National Crime Agency, UK and other international law enforcement for their professionalism”.
Justice Ayo Salami appreciated the president for giving members of the panel an avenue to serve the country.
Ezekwesili Presents Research Findings on Fixing Nigeria’s Politics
She stated this at the public launch of #FixPolitics, where she presented findings from her fellowship research on how to fix politics in Nigeria and Africa more broadly.
Ezekwesili invited 124 Nigerians from diverse fields of endeavour and geopolitical zones to collaborate on designing the research findings over the last one year as a Work Study Group. The group is the co-leadership organ responsible for an integrated citizens-led actions to fix the broken political system.
She pointed out that politics in Nigeria was not fulfilling the core requirement of a democratic system, which was to provide good governance for the common wellbeing of citizens.
“My research findings primarily reinforce that the poor state of affairs in Nigeria is the consequence of the quality of politics at play. Politics is at the heart of everything any society can or will become. The essential process of democracy is not complete without politics,” the 2019 Nigerian Presidential candidate said.
In her study, she established primarily that in a democratic system, “there are three triangular pillars which determine the kind of outcomes that politics will produce for the people.
Explaining the concept, the former World Bank vice president said, “On the right angle or demand side of the triangle is the electorate; on the left or supply side is the politicians, political class and parties; and at the top is the regulatory – constitutional, legal, electoral and institutional context within which the politics happen.”
According to her, these tripod pillars create an interconnecting network of actions that determine the outcomes of every political system.
“Every pillar or angle of the triangle must function effectively and concurrently with the other two to enable the right quality of politics that will deliver strong economic performance for a people.
“In evaluating the outcome of politics in Nigeria and Africa, my study established that the quality of the electorate, quality of political class and quality and lack of independence and capacity of political institutions constitute a structural and systemic problem for democracy and must therefore be fixed by citizens,” Ezekwesili said.
She also said, “The research found that Nigeria is ridden with politicians without competing ideas of how to solve the problems of citizens, who lack a culture of public service and subordinate the common good to their personal and narrow interests.
“The constitutional, legal, institutional and regulatory environment is compromised by the political class to more frequently act without independence, fairness and adherence to the rule of law. The political space is thus completely monopolised by the supply side of governance, that is the political class, thereby causing political, economic and social stagnation for the nation and people.
“Currently in our politics, voters generally lack the level of influence necessary to compel the right political processes and good outcomes that serve the good of all in society.
“The bright prospect is that evidence from the #FixPolitics research shows that citizens are the only angle of the triangle that can act and propel systemic change by collectively and decisively acting for their common good.”
To alter the status quo, Ezekwesili said only the electorate “have the incentive to correct the abnormality in a political system.”
She added, “It is the collective effort of citizens that can change the quality of political class and compel the kind of constitutional and electoral changes required to achieve good governance.”
Delivering a keynote address, former President Felipe Calderon of Mexico said there was an enormous gap between the interests of the citizens and that of the politicians, which he saw as a major problem to a democratic setting.
“To fix politics in Nigeria, the citizens and the politicians must work together and represent the same in practical life,” he said.
Calderon further said that “citizens must change their perception of politics and political participation rather than holding to a view that politics is for corrupt and dishonest people.”
According to him, corrupt people are quite the opposite of what politics stands. “To fix politics is what happens when the people participate and take responsibility to provide political participation with ethical sense and ethical parameters,” Calderon added.
In a goodwill message, former President of Malawi, Dr. Joyce Banda, said politics should be seen as an inclusive love affair and if institutionally implemented, “Africa will witness a great change in its democratic system.”
While dissecting the dynamics of democracy, three intergenerational panels with discussants like Prof. Atahiru Jega, Prof. Chukwuma Soludo, Pastor Tunde Bakare, Aisha Yesufu, Iyinoluwa Aboyeji, Jude Abaga(also known as M.I Abaga), Cynthia Mbamalu, Yemi Adamolekun, Samson Itodo, among others, agreed that there was an emerging consensus to fix politics in Nigeria as the status quo was untenable and unsustainable.
Speakers like Dr. Hakeem Baba-Ahmed, Ayo Sogunro, Ndi Kato, Adewunmi Emoruwa, and Dr. Usman Bugaje highlighted that “there is a need for young people and women to fully engage in partisan politics, create platforms for political engagement, use politics as a tool for framing a shared vision based on a new dominant value orientation of public service, connect the elite with the grassroots and mobilise the Nigerian public to mount pressure on the legislature for the right constitutional and electoral changes.”
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