The relative role of state governments in public service delivery has emerged as one of the most important topics of open and vigorous debate in the democratic environment of Nigeria. There have been increasing calls for improvement of fiscal policy in the States and fiscal relations between the Federal, States and Local Government Councils to be reassessed in the light of a widespread belief that although the states and LGAs are assigned primary responsibility for the delivery of basic public services, they are not equipped with adequate revenue resources to fulfill their expenditure obligations. In some instances and in recent times the debate has been on the economic viability of some states and how the states are not financially sustainable without a robust and sustainable internal revenue generation effort.
However, there is palpable lack of discussion around whether the current practice of assuming expenditure responsibility and undertaking its implementation is such that a mere shift in resource allocation will achieve the desired objective of delivering better services to the majority of Nigerians. A real issue at stake, which has not received much attention to date, is how effectively do the different tiers of government use their existing resources to perform their functions.
In fact, it may be argued that in the context of the Nigerian economy, states and LGAs receive substantial amount of resources, with their total revenues amounting on average to over 5 percent of GDP between 1990 and 1999, and over 10 percent of GDP after the oil price increase in 1999. Specifically, state administrations such as that led by Bindowo in Adamawa State have been the recipient of Federal Government fiscal transfers not only from the Federation Account but also from the Paris Debt Exit Funds. This has placed the Adamawa State administration in a position to make a most viable economic account of its performance in office since 2015. However, this question of accountability of the administration need not detain us.
It is in the area of development in Adamawa State and of the potential for developing non-oil local tax bases that the recent actions of the Bindowo administration appear to be displaying incompetency or a clear lack of consistent and coherent grasp of the instrument of tax policy framework – but then the administration is making a glaring display that it has not formulated a tax policy in the first place.
In Adamawa State as elsewhere in Nigeria there have been calls for developing other, more geographically dispersed natural resources, as a local revenue base. However, in an environment where the current sources are already generating government revenue in the tune of 50 percent of the country’s GDP, and conditions of actual service delivery remain poor, it is unclear whether the marginal benefit of an additional naira of public resources would justify the marginal cost of revenue creation. It may be argued, that the immediate challenge is not one of additional revenue mobilization but rather of undertaking public expenditures more effectively, under the current resource constraints.
Furthermore, since Adamawa State as other State administrations have jurisdiction over taxes like the personal income tax and property taxes, increasing economic growth may itself translate into a stronger local tax base. This therefore required the Bindowo administration to formulate a clearly enunciated tax policy framework for improving the tax base. Accompanying this is also the reforms for improving the tax collection efficiency, capacity and capability of the tax administration in Adamawa State.
It is in this context that some of us observers of the financial /economic terrain of Adamawa State were at a loss as to what to make of the recent criminal case instituted by the government against Professor Kyari, Vice Chancellor of the Modibbo Adama University of Technology, Yola and the University’s Director of the Centre for Distance Learning, who was also a former Secretary to the State Government (SSG) Professor Abdullahi L. Tukur.
What is the criminal arraignment all about? To improve revenue base? To enhance the tax collection efficiency? Or to ensure that the persons arraigned before the court are up to date in the payment of taxes due and payable by them or that they are prosecuted for default on tax payment? Yet it is on record that these two individuals have been meticulous in the payment of their personal taxes on a monthly basis as in the period of the last 20 years there was never a reported action on the part of the Board of Internal Revenue of Adamawa State to ask that these individuals pay their pay as you earn – these two individuals have their tax clearance certificate to bolster their position.
But our inquiries reliably divulged that Professor Kyari and Professor Tukur are not arraigned before the Court for a crime of default of payment of their taxes. Purportedly they are arraigned before the Court because, allegedly, they are to be held responsible for the non-payment/non-remittance of N460.0 million in pay as you earn of employees of the Modibbo Adamawa University of Technology, Yola. That, allegedly the University refused to remit to the state government Pay As You Earn (PAYE) deductions from the salaries of the University staff accrued for the period 2008, 2009 and 2010. At that time Professor Kyari was not the Vice Chancellor of the University. Also Professor Tukur was not the Secretary to Adamawa State Government, when the then administration of Adamawa State for policy considerations best known to that administration waived the remittance of the PAYE. Both the Professors got their appointments at the University in 2014.
It has been reported that the management of MAUTECH had in 2014 made a presentation to the acting governor of Adamawa State, for a waiver of the remittance of the PAYE on the consideration that deductions of PAYE was not made from staff salaries at the time. The then administration of Adamawa State accepted the position of management of the University and waived the remittance of PAYE on account of non-deduction.
The Bindowo administration exhibited its incompetency and lack of understanding of tax collection processes and proceeded to challenge the waiver in court, which they won at the court of first instance. The waiver was declared null and void. MAUTECH appealed the decision to the Court of Appeal but also opened a line of negotiation with the state administration with a view to settling the matter out of court. Without going into the merits of the appeal – it is doubtful if the administration of Bindowo would have been able to implement that decision any way. From which salary would it demand that the reinstated PAYE in the sum of N460.0 be collected to satisfy the judgment?
Then out from the left field, the state slammed a criminal charge against Professor Tukur before a Magistrate Court. On second thoughts, in trying to be clever by half and making it not look as if they are persecuting Professor Tukur, they amended their charge to include the Vice Chancellor. The apparent display of lack of good intention is glaring, in bringing a criminal charge while the management of the University has an appeal on the same PAYE. What point is the government trying to make? To arm-twist the Vice Chancellor and Professor Tukur to abandon the appeal?
The glaring ignorance of tax matters makes this action of the Adamawa State administration laughable and painful. The administration could not take a cue from the Voluntary Asset and Income Declaration Scheme (VAIDS) of the Federal Government, where the Federal Government issued an Executive Order aimed at broadening the Federal Government’s tax base and thereby offered incentive to tax evaders. It did not embark on “strong arm tactics” of criminal prosecution of chief executive officers of institutions of learning and such like.
The Executive Order provided a nine-month period, for all categories of taxpayers who are in default of their tax liabilities to declare their assets and incomes from sources within and outside Nigeria relating to the preceding six (6) years of assessment. Upon compliance the Scheme provided the following benefits for taxpayers:
Immunity from prosecution for tax offences;
Immunity from tax audit;
Waiver of interest;
Waiver of penalties; and
Option of spreading payment of outstanding liabilities over a maximum period of three years as may be agreed with the relevant tax authority.
Which of these approaches or steps did the Bindowo administration offer the citizens of Adamawa State? Including Professor Kyari and Professor Tukur before it resorted to the strong-arm tactics and intimidation of public officers discharging their statutory duties and responsibilities with criminal charges for non-remittance of PAYE that the previous administration of the State has waived? What is very clear however is that Bindowo’s administration has embarked on wasteful expenditure actions and inefficient tax collection processes that are not in any way likely to raise the competencies and efficiency of tax collection in Adamawa State.
Kyari and Tukur have been pioneer staff of the University and each of the duo have spent over three decades moulding our youth and in the process earning positive names and reputations for themselves. Each is a class act in his public comportment and actions. Each served the public in different capacities and each had opportunity to leave the confines of the thankless penury of academia to greener pastures to earn a few millions but chose to remain and nurture the young. In the process, they acquired class; they became known for their sterling quintessential qualities. Tukur had served the state as Chairman of the State Universal Basic Education Board for four years and Secretary to the Government twice. He acquitted himself very well on all occasions and all counts.
Now you have itinerant politicians who want to take away from the squeaky-clean reputation and upstanding character they have built over a lifetime. Anyway, psychologists said you always try to take away what you don’t have from those who have. When you lack class, you strive to destroy those who have. Same goes for integrity, honesty and character.
While there may be other ulterior motives that are providing the incentive for the criminal arraignment, the actions of the Bindowo administration are not responsive to the political economy dynamics that shape state fiscal performance and accountability. The complex and still evolving revenue administration practices on this particular instance of PAYE remittance from the University is characterized by incentives and interests that can hinder coordinated and cooperative action between the management of the University, its staff and the Board of Internal Revenue of the state. Understanding the factors that drive the behavior of key actors at the state is critical for designing a policy framework or reform of the tax collection processes and mechanisms that can provide the right incentives and enabling environment for implementing technical reforms in the areas of fiscal management and accountability.
Sad to say the criminal action against Professors Kyari and Tukur are not placing the internal revenue efforts of the Bindowo administration on a sustainable path of success – alas a sad outcome for the citizens of Adamawa State. This may be my last word on the administration of Bindowo.