Omoba Olumuyiwa Sosanya, founding President of the Association of National Accountants of Nigeria (ANAN) has described as misplaced the federal government’s penchant for taking loans to increase the price range, saying it smacks of poor financial management on the part of the government.
Speaking in an interview with The Nation, the accounting guru said the easiest way the government can raise money without having resort to borrowing is via tax reforms.
The federal government, he said, can produce over N21trillion via taxes.
Particularly, he stated, "This is exactly where the N21trillion comes from. The federal government via the corporation revenue tax can produce N3.6trillion. For withholding tax, it’s N3.3trillion. Stamp duty is about N500billion. Spend as you Earn (PAYE) which is for the Armed Forces and other agencies. Now the worth added tax VAT that will accrue to the federal government will be N1.6trillion out of the N8trillion that is getting generated nationally. The independently generated revenue by the parastatals is about N8trillion. So that would give you N21trillion. So the government can budget N21 trillion without having borrowing money. And our calculation now is as far back as 2013. So if we are speaking about now we are talking about N24/25trillion and the revenue from VAT will now be about N10/11trillion. So we do not have any cause to borrow revenue if we place our tax program in order and my emphasis is decentralisation. It’s component of our restructuring. We have to reform taxation and start out from VAT."
Expatiating, he said, "If we need to move forward and place income generation from oil as secondary if not the third sector, this is the ideal time for us if we are talking about diversification to let every of the states to administer the VAT. And the starting point is that they would be able to register all organizations in their domain and they would administer and collect the VAT.
"So we have to decentralise the administration of VAT and permit the states to administer it. But the cash will go into a pool and then it will be distributed. But we have a difficulty and the difficulty is that the VAT is now element of our constitution and for this decentralisation to occur, it signifies the constitution has to be amended. But that would take heaven knows when," he reiterated.