Ensure multinationals pay appropriate taxes, Akinwumi Adesina advises Tinubu

Akinwumi Adesina, president of the African Development Bank (AfDB), has urged President-elect Bola Tinubu to ensure that multinational companies pay appropriate royalties and taxes.

Adesina spoke at the presidential inauguration lecture held in Abuja on Saturday. 

He advised the next administration to pay attention to tax revenue, adding that leakages in tax collection must be closed. 

He said improving revenue collection will help to boost Nigeria’s economy, adding that this needs to be implemented with tact. 

Adesina presented a policy advisory to the incoming administration on how to handle taxation and its impact on Nigerians.

“This must include improving tax collection, tax administration, moving from tax exemption to tax redemption, ensuring that multinational companies pay appropriate royalties and taxes, and that leakages in tax collection are closed,” he said.

“However, simply raising taxes is not enough, as many question the value of paying taxes, hence the high level of tax avoidance. Many citizens provide their own electricity, sink boreholes to get access to water, and repair roads in their towns and neighborhoods.

 “These are essentially high implicit taxes. Nigerians therefore pay the highest ‘implicit tax rates’ in the world. Governments need to assure effective social contracts by delivering quality public services. 

“It is not the amount collected, it is how it is spent, and what is delivered. Nations that grow better run effective governments that assure social contracts with their citizens.”

‘NEW ADMINISTRATION MUST PRIORITISE FISCAL STABILITY’

The AfDB president said the new administration must prioritise macroeconomic and fiscal stability.

 “Unless the economy is revived and fiscal challenges addressed boldly, resources to develop will not be there. No bird can fly if its wings are tied. Nigeria currently faces huge fiscal deficits, estimated at 6 percent of GDP,” he said. 

“This has been due to huge federal and state government expenditures, lower receipts due to dwindling revenues from export of crude oil, vandalism of pipelines and illegal bunkering of crude oil.

 “Some will argue that the debt to GDP ratio at 34% is still low compared to other countries in Africa, which is correct; but no one pays their debt using GDP. Debt is paid using revenue, and Nigeria’s revenues have been declining. Nigeria earns revenue now to service debt not to grow.”

‘NIGERIA’S PETROL SUBSIDY BENEFITS THE RICH…NOT THE POOR’

 The AfDB president argued that for Nigeria’s incoming administration to move the economy forward, it needs to make bold decisions to end petrol subsidy. 

 “The place to start is to remove the inefficient fuel subsidies. Nigeria’s fuel subsidies benefit the rich, not the poor, fueling theirs and the government’s endless fleets of cars at the expense of the poor. Estimates show that the poorest 40 percent of the population consume just 3 percent of petrol,” he said. 

 “Fuel subsidies are killing the Nigerian economy, costing Nigeria $10 billion alone in 2022. That means Nigeria is borrowing what it does not have.”

He maintained that instead of the costly petrol subsidy payments, support towards establishing private refineries and modular refineries would lead to efficiency and improved services.

Photo credit: Emmanuel Osodi