Economy: Furor Over IMF Backing Of Taxes, Border Closure

By Uche Mbah

The International Monetary Fund has in recent times been making pronouncements on the Nigerian economy, proffering opinions on the economic policies of the country-a position that the new leadership of the International organization has taken to help bring the country out of the woods-apparently.

Recently, IMF has nothing but praises for the closure of Nigerian borders. There has been outcry by the West African sub region on the economic impact, with Ghana Chamber of Commerce threatening to boycott all Nigerian goods in retaliation.

Nigerians in Cotonou were reported to have invaded the Nigerian embassy in Benin republic, attacking and destroying cars. But the Nigerian Ambassador to Benin denied the story, even though there was a viral video that seem to confirm the story.

In the video, Some Nigerians were seen vandalizing an Embassy building and tearing the Nigerian flag.

Indications that the border closure may hurt the Nigerian economy was dismissed by Abebe Selassie, the Director of the African department of the IMF, who claimed that though the closure may impact negatively on Niger and Benin Republic, it is about illegal trade.

“On the border closure in Nigeria which has been impacting Benin and Niger, our understanding is that the action reflects concerns about smuggling that has been taking place.

It is about illegal trade, which is not what you want to facilitate,’’ he said, speaking at the sidelines of the World Bank/IMF Annual meeting in Washington.

“We are very hopeful that discussions will resolve the challenges that this illegal trade is posing.

“If the border closure is to be sustained for a long time, it will definitely have an impact on Benin and Niger which, of course, rely quite extensively on the big brother next door,’’ he said.

The border closure has already resulted in galloping inflation in the country, as foodstuff prices skyrocketed in a short time.

Though they showed reservations on the border closure on long term basis, they all but applauded the Value Added Tax increase by Federal government, tending to confirm the position of some analysts that government was acting on their dictates as a precondition for more loans.

“So now is the opportunity to look at a comprehensive reform to sustainably increase non-oil revenue. The government has taken welcome steps with tax audits, e-filling, closing loopholes, combating corruption in tax offices, increased exercise taxes and it also launched its strategic growth initiatives that calls for this high-level committee. All these are very welcomed. And the article IV consultation earlier this year had our staff recommend further VAT reforms and broadening the tax base by removing CIT exemptions and customs duty waivers”, said the  Assistant Director, Fiscal Affairs Department, IMF, Cathy Pattillo, at the same forum.

“For Nigeria, that is very important for a couple of reasons; one because right now, interest payments as a share of tax are very high. Around a third of overall federal government revenue is for interest payments, which is particularly high. Nigeria has one of the lowest tax to GDP in the world. It is not because Nigeria does not have big development problems.”

They did not take into consideration of the cost of governance in Nigeria, which is one of the highest in the world. Nigerians are taxed for infrastructures which the government does not provide.

“Nigerians provide their own water through private boreholes, electricity though generators-making the country a generator economy. They pay tax on roads that are never maintained. They provide chairs and desks for their wards, pay school fees and examination fees while government provides nothing-and collect education tax. The issue is not paying the tax, but paying tax for amenities not provided”, says an analysts over the weekend.” It appears the government is anti-poor people, since government officials receive humongous amounts for conspiring against the masses”.

Former governor of Anambra state, Peter obi, recently said that every six minute, a Nigerian slips into poverty.

“The border closure does nothing except enrich some custom officials, who now take over the smuggling business in the guise of stopping smugglers”, he concluded.

It will be recalled that the beginning of the devaluation of the Naira was on the instance of the IMF, which continues to play major role on the negative impact of globalization on African countries.