By: Kayode Sunmola
Nigeria is Africa’s largest economy and the continent’s biggest oil producer. Despite these, Nigeria remains the poverty capital of the world, because nearly half of the population lives in extreme poverty.
Since the return of democracy in 1999, successive Administrations continue to adopt the same set of policies to combat this scourge known as Poverty. It will be recalled that President Obasanjo led administration negotiated debt forgiveness for the country and one of the conditions stipulated by our creditors was for the entire debt forgiven and related interests to be spent on pro-poor projects – this led to the setting-up of the Office of Millennium Development Goals which implemented projects ranging from Conditional Grants Scheme to Conditional Cash Transfer etc. The administrations of Presidents Yar ádua and President Jonathan inherited the same policy. The administration of President Buhari is implementing the Sustainable Development Goals and several Safety Net Initiatives including the Trader Money.
Despite the colossal amount of approximately N1.5trillion spent in the last 20 years on poverty eradication, the indicators are still looking south, in fact one is tempted to conclude that the more the Government spends to alleviate poverty, the worse the situation gets.
We do not need any soothsayer to know that the strategies implemented for 20 years did not work according to design and it then becomes imperative to adopt a change in strategy. The solution is the use of tax policies as a deliberate strategy to reduce poverty.
What is Tax Policy? – Wikipedia defined Tax Policy as a choice by a Government as to what taxes to levy, in what amounts and on whom.
Tax policies are yet to be used as poverty reduction mechanism in Nigeria even though they are more sustainable compared to budgetary policies that has not yielded any tangible result. The country has the capacity to implement reforms in its tax policies (no increase in the taxation rates is necessary for now) in order to reduce social inequality, reduce income disparities, improve disposable income thereby leading to consumption and consequently job creation. The attendant effect of these reforms will engender competition amongst the States of the federation, improve enrolment in our schools, strengthen our educational and health systems.
This is the time for Nigeria, like all other countries of the world to implement strategies in this regard to ignite the energy in our economy and bring millions of people out of poverty.
Kayode Sunmola, Partner (Moore RoseWater, Nigeria) is a Chartered Accountant, Licensed Auditor, Tax Expert and a Legal Practitioner.