2 months ago
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Chief Executive Officer of Constancy Nigeria Limited and the South-West representative on the Nigeria Extractive Industries Transparency Initiative Board of Directors, Mr Taiwo Olasupo, speaks about ways to improve the extractive sector and tax collection in the country, in this interview with FELIX OLOYEDE
How is your financial background going to impact your role on the board of NEITI?
NEITI is known as the chief auditor of all extractive industries. My background as an accountant and an auditor will greatly impact the role that we play there. It is about transparency and accountability. The way we operate here may be a little bit different from what is obtained in the United States.
How do you intend to balance this difference?
Well, I don’t really see much difference in the way we operate. Accounting is accounting, finance is finance. So, it is just common sense. All you need to do is make sure you comply with the rules and regulations. If there is any reason for anyone not to adhere to the rules and regulations, there will be enforcement. Once you have identified that you have not been complying with the law, we will enforce to make you adhere to the rules and regulations.
How do you think the issue of revenue leakages could be addressed in the extractive industry?
Find a way to checkmate loopholes and leakages. One of the things that I will say to strengthen accountability is to quickly have a timely policy decision on the extractive industry to meet the needs of our people. We need a timely policy decision to address that issue. Another thing that we need to do, as I have mentioned earlier, is to strictly enforce compliance. All investors, mining organisations, and corporations must register with the Mining Cadastre Office, the MCO. We need to make sure we have adequate data. We have to do data gathering. I know NEITI has a lot of data. They have done a lot of collection in terms of data, and that can be seen on their webpage. They have done a very good job with data collection, but there is more to what we can do. More importantly, from the zonal offices.
I gathered from the retreat that we just did, that there are some people they call artisans. I don’t want to use the word illegal miners. This environment is very polluted. I was watching NTA recently, and I saw in one of the states in the North that people are just doing what they like with the mineral resources. They go there with their digger and those local instruments to dig the mineral resources. They don’t even know the value. They don’t know what it costs. They don’t know what they need to do with it. But somebody who knows what that material is worth will come from somewhere, and just give them a peanut token and just take the stuff away from them. They make so much money at the expense of the people of that community and the country as a whole. So, there is a lot of stealing of our mineral resources. It is something that the government needs to quickly look into.
Multiple taxation poses a lot of challenges in the economy, especially in the mining sector. As an accountant and a finance person, what solution do you think should be explored to overcome this challenge?
I need to study what people consider to be the multiplicity of taxes. I know the mineral resources are on the exclusive list. I don’t know why that would be considered multiple taxes. If you work in the mining industry, you need to pay a tertiary fund. I know they have a tertiary education fund. I believe that is 3 per cent.
I was talking to the president of the mining association yesterday. I need to make sure I have the facts on that. There’s also royalty; I believe that’s 3 per cent that has to be remitted to the government. I don’t know if that is what they consider to be taxes. They have to pay withholding taxes. They have to pay company income tax as well to the government. States will bring a task force that will also come and collect.
There are things that the Federal Government has the sole responsibility to do. The state government will not even venture into that. The only tax that the state government could collect from the people who work in that mining industry is PAYE. Pay as you earn. That is the personal income tax. That is the only thing you pay to the state government. All other taxes in that aspect must be paid to the Federal Government. It is starting to be corrected. If there are local taxes as well, which I’m not too sure, but there are local taxes as well.
How do you think you will help the government as a member of the NEITI board in achieving its goal of improving the mining sector?
We have seen that there has been a lot of push by the government to improve the contribution of the mining sector to the country’s GDP. Well, on that note, first of all, we appreciate the President and Commander-in-Chief of Armed Forces, President Bola Tinubu, for his initiative and insight in recognising the importance of NEITI to Nigerian national development. That decision made him reconstitute the board. And he picked somebody at the highest level of this government, in the person of Senator Akume, who serves as the Secretary of Federal Government as well, to be the chairman of this board.
So, he can bring his wealth of experience to the board. In that aspect, having people like that on the board will make things easier, in terms of when there is a need for government policy, the government needs to change or introduce all other necessary things from the government. It will be easier to do that.
The governments are looking into diversification. We are talking about leaving the oil sector and concentrating on developing natural mineral resources because a lot of money has been lost there. I don’t want to talk about oil theft, but a lot of countries now are concentrating on how to develop their mineral resources. And with that, I think the government can make a lot of money, because of the cost that these mineral resources attract to the international market.
You represent the interests of the South-West on NEITI’s board. How do you think the South-West stands to benefit from your representation?
This region is rich in extractive resources. One of the things that I will bring on board is what my state governor has been doing. I’m going to share his perspective on the model of corporate governance that has made Lagos State the envy of all other states, particularly in Nigeria and on the African continent. So, having said that, well, what I have learned as a member of this board is the unique governance model of NITI, a unique governance model that brings government, corporate organisations, as well as CSOs, and civil society organisations, together to make decisions on how best to manage the existing natural resources.
With that being said, and all other important issues that have been raised and discussed there, what I’m going to bring back to my zone, my state first, Lagos State, and all other states in this South-West zone that I’m representing. And they are going to gain from what I have learned there.
What do you think can be done to improve the capacity of mining officers in the country?
We are going to have a meeting with Zonal Mine Officers and find out what their problems or challenges are. Then, we will find a way to look at the solution that can be profiled to resolve some of those issues. And meeting them will allow us to bring those challenges back to the board and address them.
I’m talking about my zone. I don’t know of any other zones. But the plan that we have had is to meet with all these people, identify all the problems, and look for a way to resolve the issue.
And I really want to thank the president of the mining association. He has volunteered to organise a meeting. Even the people in the ministries. He has promised me that he is going to have a meeting for all of us soon so that we can have some of this issue discussed. So by the next board meeting, those problems that have been identified can be discussed at the board. Then we’ll make sure that we bring awareness to the grassroots so that people will know what NEITI does, what NEITI is, and what they can benefit from this assignment that NEITI is doing.
In Nigeria, a lot of people are outside the tax net. In some economies, it is taxes that the government lives on. As someone who has been a tax officer in the US, how do you think we can bring more people into the tax net?
We just need to expand our tax net. I have said to you earlier that the only way to bring people into compliance is through enforcement. If rules are being enforced strictly, like there is no way you work in the civil service, you don’t pay your taxes. It is deducted from your salaries and that goes straight to the government’s coffers. Do you see some of the areas where I believe people dodge taxes and income taxes? Some of these businesses are not registered. I do not want to say the FIRS does not have an updated record, but when people register their businesses, I believe there should be a synergy between the CAC, where the business is registered, and the FIRS.
Once you are registered, you go straight there and get your tax identification number. Once you have been identified as having a tax identification number, if you operate within the first three years, let’s even say there is a time they call a tax holiday. Let’s say this is a new business, and the government wants to encourage those businesses to stay in business, to stay afloat, and to give them a five-year break. After five years, they can request to have a note of that business and see what they have been doing and if they have been paying their taxes or not.
The major thing to do, apart from getting all the businesses that are newly registered into the tax bracket, is the area of enforcement. If the government is very serious about this, by enforcing the rules to the letter, some of those people who are defaulting will be serious. Once you default, the government comes after you. You will pay what you owe with penalty and interest.
Don’t you think the issues of lack of trust and lack of transparency on the part of the government are some of the reasons some people are invading taxes?
No, you should not. It is even unethical for anyone to invade taxes. It is a very serious offence, even a criminal offence, not to pay. There are two or three things that are very sure in life, debt and taxes. You must have to pay taxes. Even if you have a business and you’re not making business, you should file a zero return. So the government complies. That is the law, it is the rule. And people are there to enforce the rules and regulations.
How do you compare our tax system in Nigeria and that of the United States?
Oh, it is quite different. Very, very different. The role, the place—there are times when people do progressive taxes. I don’t want to even want to compare them. The two are different, and the tax authorities in the U.S. are quite different from here. Like I said to you, I used to work for the state of New York as a tax auditor. There are various areas. We have the miscellaneous tax, we have the sales tax, we have the company tax, we have the petroleum tax section, we have cigarettes and alcohol, and a lot of taxes.
We even have the highway use tax there. It is called IFTA. If you have your business registered in Lagos State and you are travelling out of Lagos with all those outlet companies travelling from Lagos to Ogun, once you pass the federal road, you must record the number of miles, kilometres that take you from where you are to the next state. And when we are looking at the record, we say, within this period to that period. Here, there are no records. To do an audit, there must be a record.
