At the close of 2024, one burning topic that divided the polity was the tax reform bill. While the federal government has tried to articulate the reform, shouting itself hoarse in the process, economic experts and financial analysts have also not relented in showcasing the inherent positives of the tax policy. “If they allow this to work and scale through, then believe me, this is a game changer for the country and her economy,” argued an economist, financial analyst, wealth creation coach and Chief Executive Officer, Common Sense Group, Dr. Olumide Emmanuel. Dr. Emmanuel, in this no holds barred interview with journalists in Lagos, also hailed the economic policies of the present administration, admitting that it takes a gestation period of two years for gains of any policies to set in. He spoke on this and other sundry issues. Muyiwa Lucas was there. Excerpts:
From all economic indices, how realistic is the N49.7 trillion budget for 2025 and how do you think it can revive the economy?
Our budgeting system needs to still go through a lot of review but one of the things I would say is that if you look at the budget in dollar terms, then it will give you a perspective. If for instance someone was to have a budget of let’s say N1 billion and this year the person moves the budget to N2 billion, that’s not an increase. It is an increase in naira but in dollars it is not an increase. The budget in naira may look big but in dollars it is small because many of the things that we need to do are still dollar dependent because we are not a production economy. Two, when you look at Nigeria as a whole, there are a lot of things that we have signed unto. Things like a percentage of our budget must go to education, a percentage to health and so on. Those things we have signed unto, we have not adhered to them. If those things were to be followed, there will still be a lot of adjustments. Three, we have said it over and over again that the cost of governance is over-bloated. In the recurrent expenditure vis-a-vis the capital expenditure, you will see that the investment in the capital expenditure still needs to be more because the recurrent expenditure is still taking a lot and one of the things that will bring down the recurrent expenditure is reducing what we call “padding and repetitions.” For instance, we keep having maintenance, we keep having renovations, you will just discover that there are things in that budget that have been there for the past 25 years and we keep having them over and over again. We budget for things like cutleries and furniture every year. Most of the furniture, even in accounting, we can let it go every four or five years if we do 25 per cent devaluation per annum. So, every four years, it has become zero. But if every year you are buying spoons, and every year you are buying furniture, it just shows that we still have a long way to go. Having a budget is one thing, but implementing it is another. Many of the things we put in our budget is an assumption of income, so it’s really going to be a bumpy road.
The Tax Reform Bill has caused a lot of furore. As a professional, what do you think an ideal tax system should be like?
There are different ways to look at taxation. It depends on the kind of economy you are running. If you are running a capitalist economy, the tax system therein is different from that of a socialist economy and a communist economy and if you have a hybrid economy, you can always adjust the tax system so that you can do Robinhood whereby you tax the rich to take care of the poor. You can as well do general or equality taxation where everybody pays the same thing. I am hoping that some of the things that are itemised in the Tax Reform Bill will be implemented because it will help us with reference to all these budget issues because of the things therein. For instance, there is a framework that is suggested that will guide expenditure. As someone that is in organisational management, I know that I cannot spend more than 30 per cent of my income. And now part of the framework of this Tax Reform is that as a governor, you cannot spend more than a particular amount on this and so and so amount on that. It is even now that they are talking about adjusting part of the constitution to ensure that if you as a governor violate that, it becomes an impeachable offence for you to spend more than necessary on XYZ. But a lot of people are trying to throw it out. For me, this current Tax Reform and some of the things that are there, even though they are not yet fully in the public domain, as there are a lot of things that are still being adjusted, it is fantastic. If we allow it to stand, it will change the game for us as a nation. If it pulls through, then I can say, Nigeria is about to change.
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How exactly does this help the economy?
Take for instance, before now if small businesses make less than N25 million a year, the business doesn’t pay tax, but the people are not aware. Now, they are increasing that N50 million. Then, all the people that are earning below N80,000 per month, no more PAYE (Pay As You Earn) for them. Even for people earning less than N1.8million per month, that one too has been reduced. Then, you ask yourself, how many people are earning up to that? Even withholding tax is being cancelled for manufacturing and small businesses. So, if this reform is allowed to go through, in the next two years, Nigeria will change. When you see people fighting it, it is because many times, when we have policies, we don’t educate people, making those with their own selfish agenda to come up with ideas. So, when you hear that Labour is fighting, it is either that they are confused or they don’t have a clear understanding of the content because how many people in Labour are earning N1.8million monthly. They (Labour) should be the ones championing this tax reform. If Labour is fighting something that will benefit more than 90 per cent of their members, then you need to ask them whether they are serious-minded, confused or just wicked and anti-Nigeria.
Everything in the tax reform is reduced and graduated; even company income tax. They tax reform is now presenting an opportunity to tax the rich people more. If you are earning like N20 million a month, the tax is now higher and because they know that most of you that earn that much are entrepreneurs, they have now reduced the income tax for companies.
Isn’t this going to have a sort of negative backlash in terms of revenue for the government?
The people that are not paying tax in Nigeria are the top 10 per cent. It’s the same thing anywhere in the world. The income from those people if they pay their taxes is more than all the remaining 90 per cent put together. Yet, we keep taxing the poor with multiple taxes because many of these people are like the cabals who move nations. Once we are able to succeed on these, in the next two years, we will see a massive transformation in this country.
What would you say about the deregulation policy of the government?
But I said it two years ago that the President Bola Tinubu government is making the right policies but that it will take about two years before we can see the results, all things being equal. So, removing subsidy is the right decision, even floating the dollar was the right thing to do. So they (government) are making the right decisions. However, you can’t make one decision in isolation because Nigeria is a country with hydra-headed problems that also needs hydra-headed solutions. So, it is a combo of solutions. You can’t do one size fits all. While those two policies are right, they have brought undue hardship to people and have messed up a lot of things. Companies have folded up, but it is the right decision. But when you are making that right decision there are other things you are supposed to have factored in in terms of possible backlash and how to cushion it. So you prepare them in advance. However, one thing is certain, people will suffer for a while, but water will definitely find its level. In marketing, forces of demand and supply will make things normalise with time.
Where is the place of the next generation-building?
The government is supposed to be involved. You know there is a bill, “Not Too Young To Run.” But most of the people that are in government are political appointees that are not patriotic or independent minded. I know that there are a lot of NGOs, churches, mosques, individuals and civil society organisations that are doing something in that regard and a new generation is being galvanised.
When people like us talk, we know what we are talking about. I consult for countries. They will come and carry us with private jets, we land, sit down with presidents and they ask us, all this wisdom you people say you have that you are bringing to our country, why can’t you use them in your own country? And we tell them, they don’t believe in us, they don’t respect us. But no problem; we will keep talking, one day, one good day, there will be a way out.
To the average Nigerian, the government is doing abracadabra. What advice would you give them on how to make life easier for themselves in terms of investment?
They need to understand that there is micro and macroeconomics. Some of those things are macro, for it to affect you on a micro level, there are many, many things that need to happen that are not happening. So for you as an individual, become financially intelligent. If you know better, you will do better. What you know determines how far you will go. If you put a banana and $100,000 before a monkey, 100 per cent of the time, the monkey will choose the banana over the $100,000. He does not know that from the money he can buy as many bananas as he wants or even have a banana plantation. Also, money flows in exchange for value. Money is not an emotional discussion. That is why if you like cry from morning till night, it will not produce money. So what is value? It is meeting needs, solving problems and answering questions. So, if you are in a country, I don’t care how bad the economy is, if you are solving problems, you will survive. As long as you are meeting the needs of the people, you will thrive, money will flow. The third aspect is creativity and innovation. The market is not saturated, it is the method that is saturated. I am into real estate. I have taught people different methods of making money in real estate. Some of my mentees are into short-lets, some are into farming, some are into hostels and several others. They could have decided to do what other people were doing, what we call the copycat principle because many people have ideas without money and many people have money without ideas. They carved a niche for themselves and chose a method that was not saturated.
With the president’s recent trip to China, the currency swap policy appears to be back on track. How can Nigeria key into the deal such that it will be beneficial to our economy?
Many times we see ourselves sandwiched into the battle of nations. And you know, they say when two elephants fight, it is the grass that suffers. There is also the battle for supremacy. Right now in the global world, the dollar is the official currency for the world. Because many people have their transactions in dollars, there is something elitist and psychological about the dollar that is causing a mental block for a lot of people to see that many of the things that you buy in dollars are actually produced in China. Well the policy is made but there is no implementation. But I believe that is one of the most fantastic policies of the government.
