How States Agencies and LGAs Are Killing the Nigerian Economy -By Smart Adekunle

Smart Adekunle

Clearly, there is an urgent need to tackle the problem of multiple taxation and the opprobrious methods used by state and local government officials to extort money in the name of taxation from business entities across the country. Acts of brigandage by council officials will only drive away potential investors, as such making their communities unattractive for large scale investment possibilities along with its attendant benefits which include sustainable growth, job creation, and poverty reduction.

The death knell has sounded for many businesses in Nigeria as a result of multiple taxation and the over-bearing attitude of many state and local government officials who go about obstructing lawful business activities under the guise of revenue generation. Worse hit are the small scale industries that have no financial clout to muscle their way through these pernicious challenges.

Local governments are supposed to be the bedrock of governance and development because of their close proximity to the people at the grassroots, but a performance evaluation of how LGs have fared is disastrous owing to crass leadership, self-aggrandising motives and a citizenry that is not given to interrogating government officials. This dysfunctionality is even more glaring in terms of revenue generation.

A critical look at the revenue collection system in Nigeria reveals that indeed local governments are empowered by law to impose and collect certain defined taxes and levies within their jurisdictions as a means of revenue generation to fund the effective and smooth running of the affairs of the local governments. However, in a bid to generate funds by all means, many of these local governments act as if they are above the law by resorting to thuggery, violence and mounting barricades and road blocks that obstruct lawful commercial activities. So, how will commerce flourish in our states when there is this dangling sceptre over the heads of corporate organisations?

I recall an event that took place last month which provides an apt illustration of this monstrous and unacceptable behaviour, which is fast becoming the default mode for many LGs. The incident happened in Edo State. News reports monitored on July 23, 2015 claimed that operations at the Benin brewery of Guinness Nigeria were disrupted by officials of Ikpoba Okha Local Government Area of Edo State who mounted a blockade at the entrance to the brewery. What was their grievance? The council officials, who were led by Itohan Ogbeide, Chairman, Ikpoba-Okha LGA, claimed that Guinness Nigeria had been obstructing the local government from collecting fees from third-party logistics companies engaged in the provision of haulage services. The action reportedly caused disruption to the legitimate business activities of the company for several hours. In their response, Guinness Nigeria, which is the largest employer of labour in Edo State after the state government, called out the action for what it was – blackmail intended to force the company to assume agency for revenue collection from the logistics services providers on behalf of the Ikpoba Okha local government.

Laughable as it might sound, this shocking development raises some posers. One, a business can wake up one morning without prior notice and find that they have been shut out of their premises under the pretext of a very flimsy claim. Second, how do we get LGs to be more professional in their modus operandi? Alternative modes of dispute resolution could have been used in the scenario described above that provides all stakeholders a win-win outcome. Third, why should a corporate organisation that has paid its companies’ income tax, education tax, capital gains tax, amongst others, be saddled by the LG with a third party cost or be expected to act as revenue collection agent for a LG?

Till date, many stakeholders still complain about the quality of service from many mobile telecoms operators but how many people remember that these operators have suffered and are still being bludgeoned by the menace of multiple taxation and riotous activities of officials of local government and state agencies? Buoyed by what they assume are the jumbo profits of telecoms service providers, virtually every arm of government in the country has been up in arms against these operators, brandishing taxes and requests for payment in one form or the other. From local government to state government to airport authorities to the Consumer Protection Council, and officials of the Federal Capital Territory in Abuja, there have been never-ending demands for payments in one form or the other, even when the subsisting Telecommunications Act of 2003 is explicit on the organ of government with regulatory and tax oversight of the telecommunications industry.

A case in point is the issue of Planning/Building Permit fee, which is under the purview of the state government. However, LGs also demand for erection permit, installation permit, telecoms building permit, which are unknown to law. These extraneous taxes and levies have led to the closure of many Base Transceiver Stations across the country and resulted in poor network performance by the telcos.

Clearly, there is an urgent need to tackle the problem of multiple taxation and the opprobrious methods used by state and local government officials to extort money in the name of taxation from business entities across the country. Acts of brigandage by council officials will only drive away potential investors, as such making their communities unattractive for large scale investment possibilities along with its attendant benefits which include sustainable growth, job creation, and poverty reduction.

Also harmonisation of collectable taxes by the three tiers of government is increasingly becoming an urgent need. After the harmonisation, sensitisation of tax officials, particularly at the council and states levels is imperative. Because they are the closest arm of government to people and businesses, their actions or inactions will have immediate impact on business and economic activities.

Smart Adekunle is a policy analyst and writes from Lagos.