Distinguished Nigerians, Fellow Citizens from the North, Southeast, South-South, and Beyond,
I address you today on a matter of profound significance: the proposed Tax Reform Bill by President Bola Ahmed Tinubu. This bill, though presented as a transformative policy to improve Nigeria’s revenue base, is fundamentally flawed in its design and implementation. While it aims to expand tax collection and compliance nationwide, it is evident that its structure disproportionately favors Lagos State and select parts of the Western region with robust industrial bases, leaving other regions, including the North, Southeast, and South-South, at a severe disadvantage.
This bill is not just a financial policy, it is a wake-up call for all Nigerians outside Lagos to recognize the inherent biases embedded in our economic policies and to demand fairness, equity, and inclusion in national governance.
The Tax Reform Bill: A One-Sided Policy:
The Tax Reform Bill is built on the premise of increasing government revenue by:
1. Expanding the tax net, particularly targeting the informal sector.
2. Providing incentives for corporate tax compliance.
3. Streamlining tax collection mechanisms and imposing penalties for evasion.
While these objectives may sound commendable, the bill’s practical implications reveal a glaring imbalance. Its benefits are concentrated in Lagos and parts of the Southwest, regions that already dominate Nigeria’s industrial and corporate sectors, while other regions face the brunt of its burdens.
Why the Tax Reform Bill Disadvantages the Northern Region:
1. An Economy Built on Informality
The Northern region’s economy is predominantly informal, with the majority engaged in agriculture, small-scale trading, and artisanal work. Unlike Lagos, which thrives on industrial and corporate taxes, the North:
• Lacks a formal tax base: Most businesses operate informally and cannot bear the administrative and financial burdens of new tax requirements.
• Relies on agriculture: Subsistence farming and small-scale agricultural activities contribute little to formal tax revenue.
• Faces significant insecurity: Ongoing conflicts and instability have crippled the region’s ability to develop a taxable economy.
2. Infrastructure Deficit
The North suffers from severe underdevelopment in infrastructure, which hinders economic growth and tax generation:
• Poor roads and power supply: Without basic infrastructure, businesses struggle to grow and contribute to the tax base.
• Limited financial inclusion: Many Northern communities operate outside the formal banking and tax systems, making compliance nearly impossible.
3. Increased Burden on Informal Workers
The bill’s attempt to tax the informal sector will disproportionately affect the North’s low-income earners:
• Market traders, artisans, and small-scale farmers will face higher taxes without corresponding government support.
• The region’s high poverty rates mean that new taxes will push millions further into hardship.
Why the Southeast Is Also Disadvantaged:
The Southeast, known for its entrepreneurial spirit, faces unique challenges under the Tax Reform Bill:
1. Limited Industrial Base
• The Southeast’s economy is driven by small and medium enterprises (SMEs) rather than large industries, which are the primary beneficiaries of the bill’s corporate tax incentives.
• The region lacks the heavy industries present in Lagos and parts of the Southwest, making it less able to generate significant corporate tax revenue.
2. Infrastructure Challenges
• Poor road networks and unreliable power supply hinder the growth of businesses, reducing their capacity to contribute to tax revenue.
• Ports and export infrastructure, critical for the region’s trade-based economy, are underdeveloped, limiting economic expansion.
3. Burden on SMEs
• The Southeast’s reliance on SMEs means that increased taxes will disproportionately hurt businesses that already operate on thin margins, stifling entrepreneurship and innovation.
Why the South-South Faces Marginalization:
The South-South, despite being the hub of Nigeria’s oil wealth, faces significant disadvantages under this bill:
1. Overreliance on Oil Revenue
• The region’s economy is heavily dependent on oil, with little diversification into other taxable industries.
• The volatility of global oil prices means that the region cannot reliably benefit from the tax incentives targeted at industrial growth.
2. Neglect of Local Economies
• The focus on urbanized, industrial regions like Lagos leaves South-South states without the infrastructure needed to diversify their economies.
• Fishing, agriculture, and small-scale businesses in the region remain largely untapped and unstructured for tax purposes.
3. Environmental Degradation
• Decades of environmental degradation from oil exploration have crippled local economies, leaving communities with limited taxable revenue streams.
Why the Tax Reform Bill Favors Lagos and the Southwest:
1. Concentration of Industries
• Lagos is Nigeria’s commercial and industrial hub, home to over 60% of the country’s corporate headquarters and multinational companies. These industries stand to benefit from the bill’s tax incentives.
• The state already generates over 30% of Nigeria’s non-oil revenue, giving it a significant advantage under the reform.
2. Advanced Infrastructure
• Lagos boasts robust infrastructure, including ports, roads, financial services, and technology hubs, which facilitate tax collection and compliance.
• The state’s well-developed digital systems and administrative capacity make it the primary beneficiary of streamlined tax policies.
3. Legacy of Favoritism
• Lagos has historically benefited from federal policies and investments due to its status as a former capital and its political connections to the ruling elite, including President Tinubu.
The Consequences of Regional Inequity:
If implemented in its current form, the Tax Reform Bill will have dire consequences for regions outside Lagos and parts of the Southwest:
1. Widening Economic Inequality
• The gap between Lagos and other regions will widen, deepening regional tensions and undermining national unity.
2. Stifled Development
• Northern, Southeastern, and South-South states will struggle to generate revenue, leaving them reliant on federal allocations and unable to fund critical infrastructure projects.
3. Rising Poverty
• The increased tax burden on informal workers and small businesses will exacerbate poverty in already struggling regions.
4. Reduced Competitiveness
• Regions without the infrastructure and industries to compete will fall further behind, weakening Nigeria’s overall economic potential.
A Wake-Up Call for Nigeria’s Regions:
This Tax Reform Bill is a wake-up call for the Northern region, the Southeast, the South-South, and other marginalized areas. It highlights the need for us to unite and demand fiscal policies that reflect the realities of all Nigerians, not just those in Lagos and select parts of the Southwest.
What Must Be Done:
1. Demand Regional Equity
• Revise the Tax Reform Bill to include provisions that address the unique economic challenges of the North, Southeast, and South-South.
• Introduce special tax incentives for agriculture, trade, and small businesses in these regions.
2. Invest in Infrastructure
• Use part of the revenue generated from tax reforms to build critical infrastructure in underdeveloped regions, including roads, power supply, and digital networks.
3. Protect the Informal Sector
• Provide support systems for informal businesses to transition to the formal sector, including access to credit, training, and simplified tax compliance procedures.
• Exempt low-income earners and subsistence workers from new taxes.
4. Promote Regional Diversification
• Encourage industries to establish operations in regions outside Lagos by offering targeted tax holidays and subsidies.
5. Ensure Accountability
• Implement transparent mechanisms to monitor how tax revenues are allocated and spent, ensuring that all regions benefit equitably.
A Call for Unity and Action:
Fellow Nigerians, the Tax Reform Bill is not just an economic policy, it is a test of our commitment to fairness and unity as a nation. We cannot allow a policy that benefits a few regions to undermine the development and prosperity of the rest of the country. This is a wake-up call for the Northern region, the Southeast, and the South-South to demand their rightful place in Nigeria’s economic future.
Let us rise together, not as divided regions but as one nation, to advocate for policies that reflect the diversity and potential of all Nigerians. Together, we can ensure that no region is left behind and that Nigeria’s prosperity is shared by all.
Thank you, and May God bless Nigeria.
By: Hon Ross Erazele Agazuma, PDP Chieftain, Edo Central Senatorial District
