How Tinubu Should Handle Tax

Aliko Dangote

In this interview, Alhaji Aliko Dangote who sits atop the Dangote conglomerate speaks on inauguration of the Presidential Committee on Fiscal Policy and Tax Reforms, led by renowned tax expert, Mr. Taiwo Oyedele and other issues

President Bola Tinubu on Tuesday inaugurated the Presidential Committee on Fiscal Policy and Tax Reforms, which is led by renowned tax expert, Taiwo Oyedele. What is your take about the committee, the mandate given to them and the president’s drive to improve revenue through taxation?

I must thank the President for creating this Committee and also appointing credible people who are well tested, especially the Chairman, who is a tax guru and very objective. Taiwo Oyedele is actually one of the best when it comes to taxation in Nigeria. And I think it is really a very good thing and it is as good as other reforms that were done in terms of petrol subsidy removal and others. Government is losing billions of dollars or maybe trillions of naira in terms of non-collection of taxes. If government is able to improve tax revenue, the government would not need to borrow money to fund its activities.

All you need to do is to block the leakages in the system and by blocking the leakages, there is enough money for government to provide social services. I am really pleased and I wish the president God’s guidance to continue to do great job. We have different taxes and it is much better to harmonise them and also expand the tax net so as to make sure people pay taxes, because it is a social contract between the government and we that operate within the country. Government cannot offer social services without tax collection. So, I think it is a great thing that the president set up this committee.

Within the time given to them, I am sure that they would start submitting reports and I think those reports should actually be implemented. Maybe they should look at automating everything, just like what they did in India. If you go to India today, the country collects at least $1 trillion in various taxes. On petroleum products alone, India makes $100 billion yearly, because they charge 100 per cent on petroleum products. So, what I am suggesting is that people should pay tax and if you pay, you demand services from government. I think it is a social contract. Once people start seeing that government is using the money to do infrastructure, fund education, healthcare, whereby the citizens don’t need to go out to India or other countries for medical attention, then people would settle down and start paying taxes.

You have always stressed the need for governments over the years to work towards genuinely diversifying the economy; do you think the 18 per cent tax-to-GDP ratio target that has been given the committee is realistic?
It is very realistic. President Tinubu demonstrated this when he took charge of Lagos State and if you look at when he was first sworn in as Governor of Lagos, the state was earning meagre amount, but by the time he left office, Lagos’ collection was totally different. You hardly hear people complaining about paying taxes in Lagos, because you can actually see what the money is being used for and that is what I think we should replicate at the federal level. Once people start seeing that infrastructure is being addressed, education and healthcare are well funded, people would pay. Let me add, government is an investor in our businesses.
When they facilitate and give you good business environment, whether it is a tax holiday or good environment, they are stakeholders through those things.

So, when it comes to us as corporates, we have to be socially responsible by paying taxes in return. But when you look at it, you see a lot of companies that are actually not paying taxes. When you tell the taxman to go ahead and collect more taxes, they would go back to the same companies that are paying and put more pressure on them. No, that is not what it ought to be. What they should do is to expand the net and make sure everybody is brought in within that segment of taxation. But, without computerising things, people would continue to dodge payment of taxes. If the banks can computerise their systems and are able to attend to millions of customers, how can the tax offices not able to do same? Let them go digital like India.

In India, once you use your credit card, the taxman knows what you earn and when you are spending above your means, the taxman knows. That is why today as long as you have a bank account in India, you can’t dodge the payment of tax.  One of the areas that people would need to understand has to do with the issue of tax holiday. Tax holiday does not mean that when you make money and you are not expected to pay taxes because of the holiday, then you go and use the money you made to buy houses in Dubai and other places. No, it is for you to make money and re-invest into the business and expand. When we first built line one and line two at Obajana, our tax holiday was three years and an additional two years.

But see, that encouraged us to expand, and we are not at five million tonnes anymore; we are about 36 million tonnes. Even when the government two years ago decided that there would no longer be tax holidays in the cement sector, it did not stop people from investing. There are quite a lot of people still investing and we are also still investing and we pay our taxes. Today, Dangote Cement, we pay about N300 million per day, seven days a week as Value Added Tax (VAT) alone. So, if I didn’t invest and I didn’t create the business, how is the government going to collect the VAT? By the time you look at our tax as a company and the withholding tax, if you add both, it amounted to over N200 billion, just Dangote Cement alone.

Are we upset about paying taxes? No, the only thing is that we are upset because some people are not paying. So, people should be made to pay taxes and government must make sure that it collects its own share from people who are dodging payment of taxes. It is okay for you to have very good tax planning, but it is not good for you to avoid taxes. Tax avoidance should actually not be allowed. We pay tax more than the entire banking industry. So, this is a way of encouraging more Nigerians to pay tax. My view over the years is that people should give government their own share by paying taxes. If taxes are due, you pay.
People dodge payment of tax, they dodge Customs and there are so many scams happening, so the committee should look at how to address all these. Another thing is, when people talk about concession, we have never ever been given special concession. Let me even tell you something that people don’t know: Normally, when you are building a refinery, the government gives you concession or an oil bloc. We are the only company that were not given an oil bloc.

We didn’t even ask for it because we didn’t want it to be a controversial issue. Anything Dangote, people make it look controversial. The government gave oil bloc to the Koreans. Remember the Koreans that Tony Anenih brought were given two oil blocs and Mittal was given two oil blocs and they never built any refinery. But were we given any concession? No! We were given zero concession. In fact, it was a hassle to even get the licence. We don’t have any special consideration, all what we have is sectoral concession.

The main one people talk about is Dangote Cement. But Dangote Cement operates under the law that governs tax holiday, that even somebody who is producing water in Victoria Island is given that five years tax holiday – first three years and an additional two years. So, that was what we had in the cement sector and there was nothing more given to us. And after the tax holiday, we have been paying our taxes and government is reaping from the tax holiday it gave us.

As one of the biggest taxpayers in the country, the issue of multiplicity of tax agencies in the country would definitely be a challenge to you, how best do you think it can be addressed?

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