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Don't rely on allocation, Obasanjo warns states

Posted by By Olasunkanmi Akoni& Bola Owolabi on 2005/08/23 | Views: 347 |

Don't rely on allocation, Obasanjo warns states


DETERMINED to discourage over reliance on revenues from oil and gas, President Olusegun Obasanjo Monday stressed the need for state governments not to rely on federal allocations perpetually’’ nor the federal government dependent on the revenues from oil and gas if the country must move forward, warning that “we have become so dependent on oil revenues that we are mortgaging our future to one singular commodity.”

LAGOS—DETERMINED to discourage over reliance on revenues from oil and gas, President Olusegun Obasanjo Monday stressed the need for state governments not to rely on federal allocations perpetually’’ nor the federal government dependent on the revenues from oil and gas if the country must move forward, warning that “we have become so dependent on oil revenues that we are mortgaging our future to one singular commodity.”

However, he urged the National Assembly to speedily ensure the passage of the Tax Reform and Fiscal Responsibility Bills sent by the executive before it and make provision for the creation of taxation enforcement unit at all level of governments in-order to ensure effective and efficient implementation of tax laws in the country.

Just as Governor Bola Tinbu of Lagos State advocated the need for National Assembly to make laws that would ensure true implementation of federal character in the administration of tax laws and also called for the expunction of Decree 21 of 1998 which imposes a limit on state and local government taxing powers and purports to dictate to them how and by what means they collect their taxes.

President Obasanjo, who was represented by the vice president, Alhaji Atiku Abubakar and Governor Tinubu, spoke at the flag-off of a three day of 1st National Retreat on Tax Reform tagged : “Tax Reforms in a Democracy” organized by Joint Tax Board, a body established under income tax Act and sponsored by Lagos State government held at Sheraton hotels , Ikeja, Lagos.

Eight state governors and four deputy governors, including members of the National Assembly , Nigeria Custom Service , representative of Economic and Financial Crime Commission (EFCC) as well as other relevant agencies attended the opening session of the retreat.

The state governors who were personally present included: Gombe, Bayelsa, Imo, Kogi, Osun, Plateau, Rivers and the host Lagos. Governors of Ogun, Oyo, Zamfara States were represented by their deputies.

Obasanjo explained that the federal government has pushed the proposed Tax Reform and Fiscal Responsibility Bills before the National Assembly for approval in order to improve overall revenue generation as well as holds government’s accountable for monies collected noting that it was high time to diversify from revenue base to taxes base which had been long neglected adding that tax is vital to the state as blood is to the body.

While commending Lagos State Government for various initiatives taken on its Internally Generated Revenue (IGR) in the area of taxes, Obasanjo urged other state government to emulate the ingenuity and borrow a cue from Lagos state if they must achieve the overall aim and objectives of improving the lots of its citizenry.

His words: “ The funding of a nation determines the development of the nation. This is because the revenue base has far reaching implications for the government’s ability to meet set objectives and ensure holistic socio-economic growth and development. If we get our funding profile wrong, we get the factors that truly drive economic performance wrong.”

He maintained that governments in Nigeria have taken the easy routes available today by overtaxing the weak and leaving the affluent in the society to flaunt their wealth, thereby increasing the inequities in the society.

President Obasanjo further stated: ““There is no way in which states can continue to rely on federal allocations perpetually; neither can we rely on the revenue from oil indefinitely if we must move this country forward. We have become so dependent on oil revenues that we are mortgaging our entire future to one singular commodity.

““There is therefore, an urgent need to work together to diversify our economic base. We should also be very careful about overtaxing the already weak. Bad governance, bad leadership, corruption, mismanagement and insensitivity to the plight of the poor in the past have combined to precipitate a lot of pain, despair and anger.””

He stressed that the challenge his government had faced since 1999 had been to reduce and eventually eliminate poverty, adding that there was need to be cautious in constructing a tax regime that is sensitive to the reality.

Speaking earlier, Governor Tinubu while blaming various past military regimes for introducing obnoxious laws that were inimical to the progress of the economy and the country at larger called for the expunction of Decree No 21 of 1998 a federal law which he said imposes a limit on state and local government taxing powers and purports to dictate to them how and by what means they may collect their taxes.

He maintained that under the 1999 Constitution, state taxing powers, being residual, are not closed. ””In that regard, we take the view that Decree No.21 has lost its validity and should be expunged from our statute books.

Declaring that the decree is incompetent, Tinubu stated in strong terms, that the state House of Assemblies need to determine what local government could collect from their jurisdiction.

Condemning that he called over dependent on federal allocation sourced from oil revenue by other state governments, Tinubu stressed that over dependent on oil has encourage government to take accountability for granted.

He boasted that Lagos state was able to survive the seizure of its local government’’s funds for over 18 months because it was able to generate about 60 percent of what its needs from IGR.
The Value Added Tax (VAT) that are applicable to the federal government the governor suggested, should be use to stimulate purchasing power of Nigerians and not to take away from them.””

Doubling VAT will depress the economy further because it did not give incentives to states to look inwards for development,”” Tinubu affirmed..

Welcoming participants at the retreat, the Chairperson Joint Tax Board, Mrs. Ifueko Omoigui explained that the retreat was in recognition that three tiers of government has a key role in pushing the tax reform agenda.

The retreat is expected to contribute to dialogue at a national level and provide additional and valuable input to tax policy development at both federal and state level among others.



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Fay(Katy, Texas, US)says...

Actually translates to bravehearted.