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‘BUHARINOMICS’ OF TAXATION

January 11th, 2022

Nigerian President Muhammadu Buhari has been criticized for failing to live up to his pre-election promises to improve economic conditions in his country. Mubeen Adewale Azeez, a 25-year-old correspondent from Nigeria, argues that the country’s situation appears to have gotten worse since Mr. Buhari’s election in 2015 as citizens, many of whom fall below the poverty line, are continuously being hit with new taxes. 

From Buharism to Buharinomics, Nigerians have coined several words to define President Muhammadu Buhari’s economic attitude as he presides over the affairs of the country. While in opposition, Buhari had harshly criticized previous governments and among other things, accused them of lying that there was a subsidy on fuel.  But since winning the country’s election in 2015, Buhari’s administration has failed to fulfill key economic promises and has overseen an immense rise in costs and taxes. 

Buhari’s penchant for taxation can be traced back to 2016 when he announced that the very subsidy on fuel he had earlier claimed was non-existent, would be removed. And if an increase in fuel prices was not already a bitter pill for Nigerians to swallow, they also had to endure the pains of inflation that naturally followed. Attempting to placate angry citizens, President Buhari suggested the move was indeed for the better. He appointed himself Petroleum Minister, although that did not stop the ministry from being marred with blemishes of corruption. 

After unleashing higher fuel costs in 2016, his junior minister vowed to resign if Nigeria was not self-sufficient in fuel production by 2019. In 2020 that plan was still not materialized as Nigeria continued to import fuel and paid subsidies for it. But in an infamous Independence Day speech in 2020, Buhari, in his usual machismo, suggested that it “makes no sense” for oil to be cheaper in Nigeria than in Saudi Arabia or other oil-producing countries. He made the statement without regard for the fact that Nigeria has repeatedly been declared the ‘poverty capital of the world’ with 93.9 million of its 200 million people living below the poverty line. The president also offered no apology for unfulfilled  promises to fix existing refineries and build new ones, neither did he apologize for the subsidy he claimed never existed but later “completely removed” to hike fuel prices. 

But perhaps Nigerians should brace for the fire after jumping from the frying pan. You see, despite the Buhari administration saying it removed the fuel subsidy, a subsidy still exists today as Nigerians continue to pay the highest price in the country’s history for fuel. Unperturbed by the confusion and the burden this has caused on citizens, President Buhari still plans to implement an estimated 100% increment in the price of fuel in 2022

Apparently, the government’s ruthless taxing appetite is insatiable. As done with petroleum, the president hemorrhaged Nigerians with power supply tariffs, even as poverty increases simultaneously. Like other unfulfilled promises, Buhari’s All Progressives Congress (APC) party had vowed in its election manifesto to provide over 4000 megawatts of electricity per year. Instead, after winning the election in 2015, the administration increased the electricity tariff by more than 40%, backing the increase with a resounding promise of improved power supply and metering. While those variables did not improve, Nigerians had to bare an increment of over 300% afterwards, with no recourse to the initial covenants

In the same trend, the Buhari-led government imposed another biting levy – this time on bank transactions. The levy joined myriads of charges Nigerians already had to pay for banking, including card issuance, maintenance and a fifty-naira stamp duty imposed in 2016. The touted justification was to encourage cashless transactions. Ironically, it appears to have simply been a ripe opportunity to levy more taxes.  After cashless USSD (or Unstructured Supplementary Data Services) transactions witnessed an 80% surge in 2020, a charge of seven naira was imposed on every USSD transaction under the approval of the Central Bank of Nigeria (CBN). The CBN justified the policy, pointing out the availability and convenience of the internet-based USSD transactions. While internet-based transactions might indeed be more convenient, it is important to note that Nigeria is among the region that pays the highest costs for the worst internet connectivity in the world

Defenders of the government may argue that it has assuaged the effects of   taxes/charges by increasing the long-overdue minimum wage. Still, it is worthy of note that the government charged Nigerians by increasing value-added tax (VAT) from 5% to 7.5% to fund the minimum wage. So in essence, the federal government taxed Nigerians to pay them minimum wage. Even then, about one-third of the 36 states in Nigeria are not complying with minimum wage laws while there is no exemption to the burden of the VAT.

As Nigeria’s poverty and unemployment continue to increase, so too is President Buhari’s appetite for taxing. But what effect will these continuous tax increases have on the lives of Nigerians? One will only have to wait to find out.

Photo Credit: Office Of The Secretary To The Government Of The Federation

About Mubeen Azeez: I’m a veterinary medical student, with a passion for social impact. I am also an advocate of justice and good governance. I work to materialize my vision of impacting the global community by righting wrongs with knowledge and experience, making the world a better place for all.

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Nigerian President Muhammadu Buhari has been criticized for failing to live up to his pre-election promises to improve economic conditions in his country. Mubeen Adewale Azeez, a 25-year-old correspondent from Nigeria, argues that the country’s situation appears to have gotten worse since Mr. Buhari’s election in 2015 as citizens, many of whom fall below the poverty line, are continuously being hit with new taxes. 

From Buharism to Buharinomics, Nigerians have coined several words to define President Muhammadu Buhari’s economic attitude as he presides over the affairs of the country. While in opposition, Buhari had harshly criticized previous governments and among other things, accused them of lying that there was a subsidy on fuel.  But since winning the country’s election in 2015, Buhari’s administration has failed to fulfill key economic promises and has overseen an immense rise in costs and taxes. 

Buhari’s penchant for taxation can be traced back to 2016 when he announced that the very subsidy on fuel he had earlier claimed was non-existent, would be removed. And if an increase in fuel prices was not already a bitter pill for Nigerians to swallow, they also had to endure the pains of inflation that naturally followed. Attempting to placate angry citizens, President Buhari suggested the move was indeed for the better. He appointed himself Petroleum Minister, although that did not stop the ministry from being marred with blemishes of corruption. 

After unleashing higher fuel costs in 2016, his junior minister vowed to resign if Nigeria was not self-sufficient in fuel production by 2019. In 2020 that plan was still not materialized as Nigeria continued to import fuel and paid subsidies for it. But in an infamous Independence Day speech in 2020, Buhari, in his usual machismo, suggested that it “makes no sense” for oil to be cheaper in Nigeria than in Saudi Arabia or other oil-producing countries. He made the statement without regard for the fact that Nigeria has repeatedly been declared the ‘poverty capital of the world’ with 93.9 million of its 200 million people living below the poverty line. The president also offered no apology for unfulfilled  promises to fix existing refineries and build new ones, neither did he apologize for the subsidy he claimed never existed but later “completely removed” to hike fuel prices. 

But perhaps Nigerians should brace for the fire after jumping from the frying pan. You see, despite the Buhari administration saying it removed the fuel subsidy, a subsidy still exists today as Nigerians continue to pay the highest price in the country’s history for fuel. Unperturbed by the confusion and the burden this has caused on citizens, President Buhari still plans to implement an estimated 100% increment in the price of fuel in 2022

Apparently, the government’s ruthless taxing appetite is insatiable. As done with petroleum, the president hemorrhaged Nigerians with power supply tariffs, even as poverty increases simultaneously. Like other unfulfilled promises, Buhari’s All Progressives Congress (APC) party had vowed in its election manifesto to provide over 4000 megawatts of electricity per year. Instead, after winning the election in 2015, the administration increased the electricity tariff by more than 40%, backing the increase with a resounding promise of improved power supply and metering. While those variables did not improve, Nigerians had to bare an increment of over 300% afterwards, with no recourse to the initial covenants

In the same trend, the Buhari-led government imposed another biting levy – this time on bank transactions. The levy joined myriads of charges Nigerians already had to pay for banking, including card issuance, maintenance and a fifty-naira stamp duty imposed in 2016. The touted justification was to encourage cashless transactions. Ironically, it appears to have simply been a ripe opportunity to levy more taxes.  After cashless USSD (or Unstructured Supplementary Data Services) transactions witnessed an 80% surge in 2020, a charge of seven naira was imposed on every USSD transaction under the approval of the Central Bank of Nigeria (CBN). The CBN justified the policy, pointing out the availability and convenience of the internet-based USSD transactions. While internet-based transactions might indeed be more convenient, it is important to note that Nigeria is among the region that pays the highest costs for the worst internet connectivity in the world

Defenders of the government may argue that it has assuaged the effects of   taxes/charges by increasing the long-overdue minimum wage. Still, it is worthy of note that the government charged Nigerians by increasing value-added tax (VAT) from 5% to 7.5% to fund the minimum wage. So in essence, the federal government taxed Nigerians to pay them minimum wage. Even then, about one-third of the 36 states in Nigeria are not complying with minimum wage laws while there is no exemption to the burden of the VAT.

As Nigeria’s poverty and unemployment continue to increase, so too is President Buhari’s appetite for taxing. But what effect will these continuous tax increases have on the lives of Nigerians? One will only have to wait to find out.

Photo Credit: Office Of The Secretary To The Government Of The Federation

About Mubeen Azeez: I’m a veterinary medical student, with a passion for social impact. I am also an advocate of justice and good governance. I work to materialize my vision of impacting the global community by righting wrongs with knowledge and experience, making the world a better place for all.