Senator Ayo Arise, who represented the Ekiti North District, spoke with SANNI ONOGU on the performance of President Bola Ahmed Tinubu and the impact of the reforms on the economy.
What is your assessment of the Bola Tinubu administration, 18 months after?
Every Nigerian feels the impact of the removal of fuel subsidies and the floating of the Naira in the foreign exchange market, which is another subsidy. A situation whereby people will buy money at N500 in the bank and turn around and sell it for N700 or N800 in the black market, only to return to the bank the following week to repeat the same process leaves much to be desired. Such individuals were making stupendous wealth that was not adding value to society. In that state of affairs, the foreign exchange was not getting to those who needed it to run factories for instance. The racketeers were making easy money and had no incentive to bother themselves about production. But, it was the government and the people of Nigeria that were losing. Past administrations subsidised the forex market and it negatively affected our foreign reserves because scarce resources were being used to stabilize the Naira. Now market forces have taken over the forex market and would curb such propensities. As of last week, we have begun to witness an appreciation in the value of the Naira. This is responding to the fact that the supply outstrips the demand. Typically, every year during Christmas, when people come home for their holidays, they come with a lot of dollars. Now, nobody is carrying cash as much because there are so many of these apps that you can buy money from them. And once they saw the volume coming in, the rates started declining.
Your governor in Ekiti is believed to have done well in the last two years. In your opinion, what has the governor done differently?
He is a smart young man. He is polite because he has no air of arrogance around him. He has given all the other leaders in Ekiti their due respect; none can say he has opposed them. In this way, he has everyone’s support. At the same time, he is quietly working. I mean, people are seeing things that he’s doing. There might not be a lot of gap between him and his predecessors in terms of implementation but he has continued from where his predecessors stopped. He is doing things for the benefit of Ekiti people. So, it’s not a misplaced endorsement. It’s a good endorsement, and it would at least remove him from those that people would exploit during the next governorship primary in Ekiti.
What are your plans for the next general election?
Vying for the party’s ticket to return to the National Assembly is the only thing I can do for now, based on my antecedents. I can’t go to the House of Representatives; so I can only go to the Senate. I will wait to discuss this with the governor, as well as the former governor who is from my local government. He is a younger man and if he says he wants to go to the Senate, then as my leader in the constituency that might throw some spanners in my plans. But, again, if it is the people’s desire and if it’s what God wants me to do, I’m sure the doors will be opened and I will probably give it a shot.
What are your expectations for the 2025 budget?
Incidentally, I have not gone through the budget, but once the 2024 budget is fully implemented, at least up to 80 per cent, then the country is heading in the right direction. We should not wait till the last minute when monies are supposed to go back to the treasury before we start spending like no man’s business. I have confidence in those handling our economy. So far, we’ve been able to see the stability in the exchange rate and we’ve been able to see movement. The refineries have been fixed; they might not be functioning 100 per cent but whatever is left can still be fixed. I believe that will translate to a lot of succour for the public in terms of the cost of buying fuel and the government should continue to find a way of expanding the terminals for CNG and look at how our power generation will be commensurate with the demand that we have in this country.
What is your comment on the tax reform bills, which appear to have divided the country along ethnic and regional lines?
Many of the problems have been captured in the public domain. It’s a question of lack of adequate education and information. It is being concluded that it’s important that Mr Taiwo Oyedele to sell the tax bills to the people. He has been able to give a good account of the policy directions of where we should go with our tax reforms and I believe that as long as he’s able to carry as many people along as possible by way of explaining most of these codes and I understand there are different parts, different components of the tax bill. From all I’ve been able to see and the little I’ve been able to read, I think this is probably the best for Nigeria at this present time. I believe that even if there are areas that require adjustment, it should be perhaps the increase from 10 per cent to 15 per cent in a very short period.
Read Also: How states shared N5.3tr Fed. allocation in 2024
The bills propose an increase in VAT from 7.5 to 10 per cent but it will eliminate double taxation. So, the proposals are in the best interest of the country. Today, small businesses still pay about 13.5 per cent for VAT and Withholding Tax. In addition, we still have to pay almost three per cent of education tax, which is paid out of pocket. So, when you add all those things together, it goes far beyond the 10 per cent that this tax bill has proposed. There are so many other areas of assisting small businesses, by looking at their threshold and saying you do not have to pay any tax. An organization like mine, for instance, might be exempted from tax payments. It’s a way of stimulating the economy and relieving the debt burden on business owners. So, there are so many areas that people need to examine and make an informed judgment.
In essence, you support the current reform bills before the National Assembly…
Some areas may require adjustments but the bills are in the country’s interest. The bills are not against any particular section of the country. It is a universal tax that has reduced the burden for everybody. We should all embrace it. It’s only a question of letting people understand what these things are, and break it down, like Oyedele has been doing. He should continue in that effort. I have no objection to taking more time to study the bills before they are passed. However, this should not be a delay strategy because it might affect Nigerians negatively. Those exempted from paying taxes under the proposed laws will continue to groan under the burden of the old system if the new proposals are not quickly approved. So, I support the tax bills.
In your view, why are such reforms necessary now?
No nation can survive without one form of taxation or the other. Otherwise, there is no way the country can generate income. We have been talking about subsidy removal and everyone knows this country can no longer live on that single product. The president wants to see the country generate more revenue. If you look at the excise levies, Nigerians are now exporting more than under any previous government. These are part of the achievements of this government. People are beginning to be productive. They are exporting in droves. They are exporting our culture, including our clothes.
They are exporting our textiles and other items like cashews. I had an opportunity of speaking with the Comptroller-General of Customs and I asked him questions concerning our exports. In the past people used to bring in so many products but the ships returned almost with no cargo. That is no longer the case. So, things are improving in terms of activities at the customs because we are exporting more.
There appears to be a huge trust deficit because the government did not do enough in terms of consultation and because of the attitude of the political class. What is your comment on this?
Some policies of this government point in a different direction. There is the student loan, which is for indigent students. Once you have an education, what you do with it will determine how your life will pan out. So, such funds will be targeted at that and I’ve seen that our budget is getting friendlier towards infrastructure development. So, it’s no longer the case where you see the recurrent expenditure overtaking the capital infrastructural development money. Our foreign reserve has been going up under this government despite the difficulties. Yes, the removal of petroleum subsidies has caused some hardship. But, it has also brought some benefits to the country. We had no choice; it was the right thing to do. It was illogical that we were satisfied with enjoying the benefits of crude oil selling at maybe $70 or $75 per barrel but did not want to pay for the refined products at the prevailing international market price. If we had continued to subsidize, we would have reached a point where we would have no money to develop our infrastructure. The government is spending more money on security nowadays. Farmers and herders clashes faced some years back are subsiding. You are no longer hearing the problem or maybe, well, they might still be having cattle rustling and all that, but the danger to human life has started reducing somehow. We’ve got into a perfect solution but the situation is stabilizing. Now apart from Dangote, Port Harcourt Refinery is working. I understand Warri is going to come on stream soon. So, the government is working.
The argument is based on the derivation clause in the sharing of VAT proceeds, which the North believes would be inimical to its economic interests if the tax bills are passed. Are such fears justified?
I think we got it wrong ab initio. The Federal Government is not supposed to be the one generating revenue for the states. If we practice our federalism correctly, every state can determine what it wants and go for it. For instance, some states may establish many schools because they expect a population growth from A to B. There are businesses state governments will also support their people to start to make their economies more viable. But, the moment, you say VAT that is generated in X place, if they pay those people a percentage that you would be shortchanged, then the idea that we want to progress and move forward is already defeated. Every state should be able to say, okay, this is how much I’m generating. This is how to improve on it.
I don’t think there is any problem with any state taking the gauntlet and saying, I will not necessarily tax the people but would expand the horizon of business opportunities for them. If you put them into extensive farming, there are ways that you can generate money. I advise Governor Babagana Zulum, a very educated man, to take a second look and tell his colleagues that this is good for the country. There is nothing that lasts forever and you see countries that have been ruled for so long and all of a sudden, some rebels just came, and within two, or three weeks they have sacked Assad from power. So it’s because he has not been listening to the people.
What is your general assessment of the tax system under Tinubu?
You see, some of these arguments are neither here nor there. Some would say how do you get an omelette without breaking the egg? How do you get an egg without the broilers, or the layers producing the eggs? So, yes, productivity is very good. It’s a good driver for development. But you must be able to pass the test of stable power. If you don’t have power, how do you get into productivity? If you don’t have roads to travel on or even distribute your products, how do you contribute to society? Now you can go on and keep on asking the questions one to the other. If the factories are producing, they are selling, and you are not able to put anything back into society by way of taxes that can be used to improve the lives and livelihood of the people, even those in your environment. How do you say productivity will take the front burner? Of course, there are so many things militating against some of those assumed growth factors. You look at it, if for example, you say you want to produce; they have tax holidays for many factories. They can say, come and start production. Now when you start producing, we will give you a tax holiday for one year or two years and there are so many of them that have such tax holidays in the manufacturing sector. It is when you are balanced — and you have employees and in productivity — that you would be in a position to say, yes, I am paying so much in taxes. If you don’t make a profit, it’s difficult for you to get taxed. But once you start running your business and you are making money, it is moral for you to give back to society on such grounds. If you now look at it, it is not taxation that drives the economy. I look at it somehow because most of the advanced countries, if you look at the UK for example, in the industrial age, they were far ahead. But in this modern age, when you speak of creativity, most of these new ideas, either from Microsoft, Artificial Intelligence and all of that, the number of these things are driven by countries mostly like the developed countries and so you now look at it that okay if these countries have not been asking for taxes to develop their economy and their sectors, these opportunities will not be springing out into these nations. So first of all, we should not confuse the need for taxation, and then mix it up with the need for industrialization. Those who work pari pasu, hand in hand, and one cannot be slowed down in the place of the other. As much as when you want to start a factory in this country today, in any city that you go to, you ask for a tax holiday, they will grant you so that you can start a factory there. I don’t know how Oyedele has addressed it in the bills. I am not conversant with how he addressed the issue of tax holidays for manufacturers. But there are so many things, so many new waivers granted to manufacturers to ensure that we pick up our industrial base because we need it.
