Constitutional Amendments: 10 Fiscal Reforms that will set Nigeria on the path of progress

The ongoing constitutional amendment process presents an opportunity for bold decisions and decisive actions that will set in motion the process to actualize the Nigeria of our dream. It is now clear that we must act differently to achieve a different result. Here are my top 10 recommendations for constitutional amendment:

1. Reform the current fiscal structure to reflect fiscal federalism, promote healthy competition and drive productivity. States should be allowed to share revenue from VAT based on consumption within their territory where it is centrally collected in addition to personal income tax, stamp duties, property and resource taxes. Corporation sole and small companies operating in a single state should pay their companies income taxes to the state while the federal government collects income taxes from large companies, non-residents, import taxes, and a percentage of resource taxes from states. Local government taxes should be harmonised and imposed based on the developmental needs of their locality with actual revenue and expenditure reported quarterly at physical and virtual Town Hall meetings with copies available online. Payment of taxes in cash and collection by non-state actors should be made unconstitutional.
2. Establish a single tax authority structure per level of government to address the current multiplicity of revenue agencies and the attendant high cost of compliance for taxpayers, stem the rising cost of collection on the part of government, reduce inefficiency of administration including audits and block revenue leakages.
3. Impose a single digit cap on the number of taxes that may be imposed, collected or administered by any level of government. This will address the current spate of multiple taxation which is inimical to economic development. Empirical evidence shows that over 98% of tax revenue is collected from less than 10 tax heads in Nigeria (PPT, VAT, CIT, TET, PIT, Import duties, CGT, Stamp duty, and Property levies) yet there are over 100 different taxes including those which are disguised as fees, levies and charges in addition to implicit taxes all of which disproportionately affect MSMEs and the masses.
4. Honest tax declaration and timely compliance as a prerequisite for public office - It takes decency and high ethical standard to be honest with one's tax affairs in a country where tax morale is generally low. This amendment will ensure that decent people have better chances of gaining political leadership and coupled with an effective assets declaration regime will help tackle corruption, illicit financial flows and to a large extent insecurity.
5. Make provisions to harmonise national identity and tax identification such that every citizen is registered for tax without which they will have no access to social services and other critical needs such as telecommunication and banking. This structure can be built on the existing NIN registration infrastructure and be leveraged for tax purposes. This doesn't mean everyone must pay tax even when they have no taxable income, it means everyone must be registered for tax. This will provide data for planning, improve the tax culture and instill a sense of civic responsibility.
6. Protection for the poor and vulnerable individuals by exempting a minimum threshold of income from tax and providing for a social security system to be funded by mandatory contributions to cater for the unemployed, people with disability and those living in extreme poverty. Increases in consumption or income taxes must be accompanied by a mandatory corresponding minimum wage adjustment.
7. Introduce a citizen-led tax compliance culture which empowers any citizen to demand accountability for the utilisation of public resources and initiate legal actions against any public office holder, head of agency or institution for tax evasion or failure to comply with extant tax laws as the accounting officer responsible for a government owned enterprise.
8. Long term appropriation for long term projects. It is counter intuitive to budget annually (short term) for long term projects particularly infrastructure. Oftentimes when there is a change of government many of these projects are abandoned. The constitution should allow for the enactment of Appropriation laws which cover the full cost and timeframe of long-term projects, say a 5-Year Appropriation Act. Any deviation in timing should be reported during subsequent budgetary process and any variation in amount should be subjected to budgetary approval.
9. Let the people have a say in the utilisation of tax revenue. For instance, people of a community should be allowed to initiate a petition and obtain signatures of an appropriate number of the affected population to demand that certain projects such as roads, schools, health care centres etc be executed by the relevant government. This will improve citizens participation and engagement in governance. There should be an option for the process to be done virtually using the national identification and electronic taxpayer database.
10. Introduce a cap on the percentage of actual budget spending for recurrent expenditure. There should be a limit on the allocation in both the budget proposals and the actual spending for recurrent expenditure, say 60%. This will compel political leaders to be creative and efficient in the utilisation of public resources while setting aside sufficient funds for infrastructure and developmental projects.?