UNDP, SDGs And Tax Argument: A Burning National Issue That Must Be Addressed

By Sola Ojo

Over the years, there have been several arguments around taxation in Nigeria – from what to pay, how to pay, who is to collect, and how to spend all manners of taxes imposed on individuals, and local and multinational companies operating within the territorial integrity of the country.

The primary purpose of government as enshrined in the Constitution of the Federal Republic of Nigeria 1999 (as amended) is the security and welfare of Nigerians.

To do that, the Country must plan and budget for these two critical responsibilities leveraging on taxes to finance them.

However, in keeping governments on their toes to deliver on their mandates, the United Nations (UN) came up with 17 Sustainable Development Goals (SDGs) to be achieved by 2030.

So, the United Nations Development Programme (UNDP) is opening governments’ eyes to another option to realise these goals by way of tax for SDG initiative where taxation is brought to the center stage of the SDG agenda which include but is not limited to SDGs 1 (no poverty), 2 (zero hunger), 8 (decent work and economic growth), 9 (industry, innovation, and infrastructure), 10 (reducing inequality), and 16 (Peace Justice and strong institutions).

Speaking on the sideline of a three-day capacity-building workshop on the Governance, Reporting, and Evaluation of Tax Expenditures organised to enhance the knowledge of Nigerian Investment Promotion Commission (NIPC), Nigerian Customs Service, and National Bureau of Statistics staff in the thematic areas, held at a hotel in Lagos, the National Coordinator, Tax for SDGs (public financing for SDGs), Saied Tafida Suleiman said the Initiative was supported by UNDP under the Integrated financial framework largely supported by the European Union, Norway, and Finland.

“The whole thing is about how do we support and enhance resource mobilisation in Nigeria. NIPC is key because you cannot be talking about generating more income without more investors. NIPC is also responsible for giving one important incentive which is called pioneer status.

“So, it is important that when there is investment in Nigeria, let it be genuine and when incentive is giving, let it be that it will not harm Nigerians”, he said.

Acting Executive Secretary, NIPC, Hajiya Gana Wakil noted that tax is important because it forms the bulk of government resources to deliver good governance to citizens as captured some of the SDGs.

“We approached the UNDP to come and train us in the tax regime. We were seen as giving away waivers whereas we don’t. What we give is an incentive to encourage investors to settle down, especially with the current harsh economy – deficiency in infrastructure, and multiple taxation.

“These investors use the tax holiday not only to expand but to also do their Corporate Social Responsibility (CSR) as companies operating in Nigeria. If these companies expand, they will employ people and the people they employ will pay PAYE tax”, she said.

Providing additional information on the importance of the training, the Head of Incentive Administration Division, NIPC, Mrs. Lovina Kayode said from the point of view of her agency, “we administer an incentive called pioneer status incentive which is a tax we grant to the new company between three to five years.

“Such a company must be in the production line listed under the pioneer service sector as well as activities that have been approved by the government. Such companies will not pay company income tax within that holiday window. In doing so there is a school of thought that says we are giving out revenues that could have come to the government wallet.

But, from the point of view of NIPC Gnaha for example is giving ten years. When we give three to five years of tax incentives, we are looking at a bigger picture which is the values that will come to Nigerians. Within that incentive window, these companies must have been able to transfer their knowledge to the employed people.

“However, in doing so, how do we link this tax incentive to the economy? What is impact assessment saying? We are hoping that at the end of the day, we will be able to go back and put what we have learned into practice.

“UNDP is coming from the SDGs perspective. That is, what is the impact of these incentives on SDGs? For example, they want to know whether these incentives are given to women, agriculture, environment, etc. This is what the NIPC will continue to push and keep advising the government”, she narrated.

Deputy Director, Policy Advocacy, NIDC, Abayomi Salami said “the training has exposed me to understand that we need to do more.

“For example, I learned that there is a need to harmonise the tax system of Nigeria, and there is a need to automate the management system of the tax in Nigeria so that the relevant agencies can synchronize the available data to work together.

“That means there is a need to simplify the system and for us as a country, there is an urgent need to eliminate the hidden taxes and multiple taxing system because it will make business very difficult and close the door against competitiveness.

“We all know that under ECOWAS, member countries do not need to present in one another’s country before selling so far they can situate factories in any African country.

With the commitment of President Bola Tinubu to tax and taxation reforms in Nigeria, it behooves on the relevant ministries, departments, and agencies of government to open themselves to new tax regimes and work collaboratively not just to enhance ease of doing business, build a stronger economy but to also help in realising the SDGs within the set target.