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By NBF News
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Looking at Nigeria, in comparison with other African countries relative to her economic potential and the level of realisation, she is not a poor country. But when you look at her from another perspective in comparison with the advanced countries, she is a very poor country. In between these, Nigeria can be self financing and sustainable within her huge population, talents and natural resources.

Were it not for the unwarranted insecurity that the northern Muslims unleashed on Nigeria, finance would have been the critical factor in the country today. However, finance affects all the segments of society with no exception. It has no political colouration. The issues today are how to generate enough revenue, safeguard it, spend some and preserve some, all without the need for the Government going cap in hand.

The budgeted expenditure of the Federal Government of Nigeria for the current year, 2012, is N4.648tr (£18.592bn) or ($ 29.05bn). The budgeted expenditure of London Assembly for 2012 is N3.5tr (£14bn) or ($21.875bn). Nigeria 's budgeted expenditure is just 25% bigger than that of London Assembly. The London Assembly is a skeletal Government that sandwich the Central Government and the seventeen Local Governments of London. London 's economy is just about a quarter of that of the country, United Kingdom (UK).

If we are to value Nigeria's economic potential today, she could just be about measuring up to the UK that is arguably the sixth largest economy in the world. This means Nigeria is yet to realise at least 80% of her economic potential. When you have this huge untapped economy, a huge gold mine for investors, do you need to look elsewhere to finance the country? Do you need to borrow money especially from outside the country to finance your projects?

In a country where those earning real money pay tax, the residue of the budget expenditure of N4.648tr could be financed from taxation alone. Such residue is the budgeted expenditure less the desired expendable revenue. The feature of a national budget is after you have determined the total expenditure. What you need to do thereafter is to ascertain how much of your expected revenue you will spend and how much of the expenditure you will finance with taxation, which is seen to be fair. In a situation where no revenue is expected, the taxpayers bear the burden of the whole budget expenditure. But a country is never short of other sources of revenue.

However, the government does not need to raise taxes more than necessary. Taxation is not a chargeable fund meant for saving, reserve for future use, to be embezzled or wasted but only for financing the current year budget. This is why it is an annual event with public presentation ritual of document flaunting. Looking at the matter crudely, discarding the formality of tax allowances, within the 130m population of the country as at date, (please it is not 160m), there is about 70m active taxable populace in both the formal and informal sectors of the economy.

As the western world is no longer in the position to dictate the prices of commodities on take it or leave it basis, can Nigeria now plan her economy and prepare the budget with reasonable certainty? After the determination of the necessary budget expenditure for the fiscal year, the government should be able to determine the sources of the revenue to finance it. So far, these are significantly from crude oil, less from all forms of taxation, duties and charges. As the minimum price of crude oil per barrel is today $100, the overnment should be able to use at least $80 per barrel as the benchmark for the budget. The world economy now dictates that crude oil price is not expected to 'recede' by more than $20 per barrel.

On the assumption that the 70m potential tax payers would bear the burden of the whole budget expenditure, the amount for each individual is, therefore, N66400 (N4.648tr/70m) per such payer. This does not mean every tax payer will pay this amount. The amount could be proportionately paid by those in this group. Within the formal and informal sectors of the economy, you have the cattle rearer, black market foreign exchange dealer, commercial farmers, traders, artisans, self-employed businessmen, employees, professionals in practice, incorporated entities, the heavy individual millionaire and billionaire categories that would each pay the N66400 in proportion of their income.

Given that the current year budgeted expenditure of N4.648tr could be crudely allocated to each of the potential 70m tax payers of individuals, businesses and incorporated entities in the country at N66400 but paid proportionately, the pattern of such payment could be as follow. The government should be able to set four scale rates for personal income tax on gross emolument, without any personal allowances. As those that earn certain amount of income must pay tax, the scales could be 5% on each tax payer who earns between N216000 and N299999 per annum. The second scale could be 10% on a tax payer that earns between N300000 and N599999 per annum. The third scale could be 20% on a tax payer that earns between N600000 and N1999999 per annum. The fourth scale could be 30% on a tax payer that earns N2m upwards per annum.

The government could extend the applicable scale to the amount that is found in a taxpayer's bank accounts and investments that were not accounted for but are tucked away in the country, abroad or safe haven, whose means are certain or uncertain. If they are found to be corruptly etc. acquired, the Economic Financial Crime Commission (EFCC) would move in to recover the net amount of the govwrnment appropriate tax. The yearly incremental of these could be so taxed. These days the means for tracing and locating such otherwise hidden funds and investments wherever they are in the world are there. Today, many individuals and corporate bodies in the country are holding billions of Naira that could be taxed in these manners.

The alternative to this is a fair and simple change in corporation tax assessment. This could even do a better trick of financing the whole annual budget expenditure. Many incorporated entities, businesses etc legitimately avoid paying fair and right amount of tax. Whose fault is this? It is that of the Government of the day which wants votes, makes rules, regulations and gives out undesirable tax allowances. The experts simply exploit them for their clients, pay the minimum tax and keep the government going cap in hand for further funds. As the government is cashstrapped from this, it simply goes on unnecessary borrowing spree.

If we look at the aggregate turnover from all the businesses in the country from the individuals to corporate entities, formal and informal sectors, it will be at least ten times the annual budgeted expenditure. You could imagine if ten per cent (10%) of this is taken as tax. Well, the government could adopt 10% rate of corporation tax on ordinary businesses and incorporated entities turnover. That is, tax on turnover rather than tax on profit. With these, there is no individual or business that would significantly evade or avoid payment of tax or payment of the right amount.

If the Federal Inland Revenue keeps adequate record, it should be able to have the aggregate annual figure of turnover of all those that bother to submit annual statement of account for tax assessment. An entity can tamper with its taxable profit but could less do so with turnover. In order to plug the legal loophole for tax avoidance and receive the right amount of tax, the government can switch from taxing profit to tax on turnover, however, with the same fair but proportionate rate of taxation according to the need of the current year budget. This would yield the amount of fund the government needs to finance its annual budget. Any entity that could not manage its business profitably or deliberately presents its financial statement to show a loss in order to avoid tax would only do such to itself. Such taxation on turnover, on every tax payer that trades, whether on individual or corporate entity could be conveniently assessed and collected quarterly in arrears.

Alfred Aisedionlen. London, UK .