By Obike Ukoh
The suggestion by the International Monetary Fund (IMF), to the Federal Government to impose more taxes as a way of raising revenue was greeted with public outrage.
Citizens were disappointed that the international financial institution only harped heavily on tax increases, while closing its eyes to official financial recklessness.
Amid high cost of petroleum products, the IMF recommended introducing taxes on fuel products and telecommunications services in order create fiscal space for development spending and social interventions.
The recommendation was contained in the IMF’s 2026 Article IV Consultation Report on Nigeria.
The Fund argued that additional tax measures would be needed over the medium term, despite the recent overhaul of the country’s tax system.
“Further tax policy changes will likely be needed, such as increasing the VAT rate, extending VAT to fuel products, rationalising tax expenditures in particular VAT exemptions on extractive industries and some customs duties, and introducing telecom excises, to complement administrative gains.”
The IMF, however, stressed that, “The timing of reforms must consider the poverty and food insecurity situation and ensure that the cash transfer system is in place and funded.”
The Fund justified its position on the grounds that stronger revenue mobilisation had become increasingly important because Nigeria’s fiscal position remained under pressure despite recent reforms.
As a result of sustained criticism, the Fund explained that it was not calling for immediate tax hike.
The Fund stressed that future tax measures must be accompanied by improvements in social protection, public services and living standards.
IMF Resident Representative for Nigeria, Dr Christian Ebeke, who spoke on the issue, said the IMF’s fiscal recommendations have been widely misunderstood.
He insisted that the Fund is advocating a balanced approach that protects vulnerable Nigerians while strengthening government revenues.
“Our fiscal recommendation is actually balanced in the sense that we are not calling for an immediate increase in taxes. “We are saying these increases in taxes should go hand in hand with progress you make in terms of reaching out to the most vulnerable and reaching out to the ordinary Nigerian and improving their living standards,” Ebeke said.
The IMF official maintained that Nigeria would need to raise more domestic revenue, over the medium term to finance its development priorities, particularly as foreign development assistance continues to decline. “Nigeria needs to raise more domestic revenue,” he said.
The Federal Government was swift to add that the IMF’s recommendation was not mandatory for the country to implement.
The Head of Information and Public Relations Unit, Federal Ministry of Finance, Efe Ovuakporie, in a statement, stressed that recommendations contained in the IMF report were not binding on Nigeria and should not be interpreted as official government policy.
“The government has dismissed reports suggesting that it has adopted or is considering new taxes on telecommunications services and petroleum products following the publication of the International Monetary Fund Article IV Consultation Report on Nigeria.”
He said that decisions on taxation could only be made through constitutional and legislative processes and would be guided by national priorities and prevailing economic realities.
According to the ministry, “The IMF Article IV Consultation Report contains the Fund’s assessment of Nigeria’s economy as well as recommendations for consideration by the authorities. Those recommendations do not amount to government policy and are not binding on Nigeria.”
Even before the clarification by the IMF and the Federal Government, stakeholders had criticized the proposed policy.
Speaking on the issue, the National Association of Telecom Subscribers of Nigeria(NATCOMs) Deolu Ogunbanjo, said the IMF lacked a proper understanding of what is currently going on in the sector, as it currently faces over 40 different types of taxes.
Ogunbanjo said the body had earlier rejected a planned five per cent excise duties on telecommunications services, stressing that the body even went to court to secure an injunction against it.
The IMF said robust implementation of Nigeria’s newly signed tax laws should gradually improve revenue collection, but this alone may not be sufficient to meet the Country’s fiscal needs.
Other stakeholders, that commented on the IMF’s suggested windows for the Country to increase its revenue slammed the international financial institution for closing its eyes on massive corruption, wasteful expenditure and profligacy by public office holders.
The cited the recent judgment of a Federal High Court in Lagos, that voided the N110 billion spent by the National Assembly for purchase of vehicles for members and other allowances.
In the judgment, Justice Yellim Bogoro ruled that the planned expenditure of N40bn for the procurement of 465 vehicles for members of the National Assembly and N70bn in support allowances for newly elected lawmakers breached the provisions of the Public Procurement Act, the Code of Conduct for Public Officers and the oath of office prescribed by the Constitution.
The suit, marked FHC/L/CS/1606/2023, was instituted by the Socio-Economic Rights and Accountability Project against Senate President Godswill Akpabio and Speaker of the House of Representatives Tajudeen Abbas on behalf of members of both chambers.
Justice Bogoro also directed Akpabio and Abbas to ensure that all future procurements and expenditures of public funds by the National Assembly strictly comply with due process requirements and are guided by transparency, accountability and value for money.
The court held that the scale of the expenditure and the failure to demonstrate compliance with due process rendered the procurement unlawful.
“Looking at the magnitude of the expenditure, coupled with the absence of demonstrable due process, leads me to conclude that the procurement is arbitrary, disproportionate and inconsistent with statutory procurement standards,” the judge held.
Justice Bogoro further found that lawmakers stood to benefit directly from the expenditure they approved.
“The beneficiaries of the expenditure are the very officials approving it, and the expenditure confers direct pecuniary and material benefits.
“This, to my mind, constitutes a case of self-dealing and conflict of interest,” she held.
The court took judicial notice of the economic challenges facing Nigerians and criticised the allocation of public funds for lawmakers’ benefit amid widespread hardship.
“I have taken judicial notice of the economic realities in Nigeria and the widespread financial hardship affecting Nigerian citizens.
“In this context, the allocation of N110bn for the benefit of lawmakers demonstrates a failure to prioritise national interest,” Justice Bogoro stated.
“Public office must not be used for personal enrichment. Public officers must act within constitutional boundaries and in good faith. I hold that the conduct complained of is inconsistent with the oath of office,” she added.
The lawmakers are yet to refund the money, though SERAP acknowledged that , while the court did not expressly order a refund, the judgment when read alongside constitutional provision, anti-corrupt laws and Nigeria’s international obligations, provides support grounds for the recovery of the funds.
The suit by SERAP, which the court upheld, is just a microcosm of what is happening in Nigeria.
A reputable organization like the IMF, stakeholders strongly suggest, should assist Nigeria in drawing attention to this massive profligacy in the highest quarters.
There will be a lot of money in public treasury, if public funds are judiciously used.
People entrusted with public money should not be allowed to engage in reckless expenditure, while milking the people with new taxes. That will tantamount to tax the poor to increase the luxury of the rich. Financial prudence, will automatically boost economic development.
Obike Ukoh, Former Deputy Editor-In-Chief, News Agency of Nigeria (NAN)
