In the wake of the lockdown issued by the federal government to curb the spread of coronavirus, the top question on people’s mind has been, “would the government step up and do right by the people?” Answering this question has been the latest episode in this administration’s ongoing series on “HOW NOT TO GOVERN.” The federal government has experienced one epic fail or the other when it comes to making the right decision as it concerns the citizens. However, this COVID19 situation seems to be the tipping point, because it affects both individuals and businesses. You would expect the government to know there is a limit to how much people’s resolve can stretch before it snaps.
Like clockwork, there comes their decision-making swinging into action again. Just last week, the Federal Inland Revenue Service released a circular update on “Palliative Measures to Cushion Effect of COVID-19 on Taxpayers”. The problem here is that this circular did not offer a cushion of any kind; it was more of a hard landing. A cushion effect would have been a considerate tax policy to help businesses cope with this sticky situation. The government’s genius plan was to add more glue to it.
The circular was a bid to help the government bridge its budget strains. One of the effects of locking down an economy is the revenue generation problem for the government. Nevertheless, there is only one way forward, or two. Because you see while other countries are reworking their tax policies to help taxpayers, our genius government came up with the “Smartest” plan ever. Why not ask businesses who are already suffering a major loss, budget cuts, and staff downsizing to pay their annual tax in advance while also paying their regular monthly dues. This is tough because most of these businesses are already facing many financial challenges.
Businesses operating in strategic commercial centers in Nigeria – Lagos (the commercial capital), Abuja (the political nerve center), and Ogun (a very important industrial zone housing several big manufacturing companies) – have been seriously affected due to the lockdown. Although the government might argue that some sectors like telecoms, financial institutions, e-commerce, supermarkets, manufacturers, etc., are experiencing a boom due to the increased transactions because of the lockdown. You have to consider that the cost of production has increased exponentially, and the profit margin of some of these so-called “booming products” is relatively low.
I know there are two sides to every story, but the truth is that there could have been a more subtle approach to this. In many countries across the world, the government has been able to reach a compromise on how to approach this precarious situation. This means there are templates already for our government to follow to be able to come up with lockdown-friendly tax policies. So that begs another question, is this intentional? Especially in light of how other countries have been able to manage this crisis and allied with business owners. Is the government intentionally ignoring the plights of these businesses while laying heavy dues at their feet? Find out more in the sequel tomorrow.
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