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Fashola, much talk, less common sense

How to set a common sense agenda for change for Fashola

Babatunde Fashola, the new minister for power, works and housing and former governor of Lagos State, had his fans in the Nigerian mainstream and social media cooing with delight after a news conference on Tuesday grandiosely titled “Setting the Agenda for Delivering Change”.

On crumbling roads, the minister said: “Maintenance would be our watchword. We are setting up a robust maintenance regime to keep our highways in good shape. This shows that tolling is necessary to support government funding. So, it will not be too much if we ask every road user to pay little to augment government funding for road maintenance. It is eminent common sense for us to find that money.”

Setting aside the fact that similar claims have been made by previous administrations, accompanied by similar hoopla, and to little effect on the condition of Nigerian roads, it is quite disturbing that Fashola seems convinced that tolls on roads is “common sense” and he is being applauded for this.

He also hinted that a private company would manage toll collection when he said: “We will manage that fund properly and we will hold those who we put there to account”. This is possibly similar to the arrangement he set up as governor of Lagos State with Lekki Concession Company (LCC) for the Lekki-Epe “expressway”.

The Lekki toll gate a money-spinner for some, a tax burden to the rest
The Lekki toll gate a money-spinner for some, a tax burden to the rest

Handing over roads to private operators amounts to another example of regressive taxation against poor Nigerians. These people already have to live under the damage to their finances of very high fuel costs. Running a road for profit means charging everyone for its use regardless of income. This is very unfair. Even folks without a car will have to pay this tax because it would be reflected on public transport fares. The choice of rail travel is already non-existent for these people. In addition, the toll charges will be transferred on to even non-users of the road in the form increased costs of essential goods and services.

Tolls shift the burden of taxation disproportionately to the poor and the middle classes because a larger percentage of their income goes towards those charges. So road charges only end up making poor Nigerians even poorer.

But Fashola has form in never caring about the poor.

The Lekki-Epe road was handed over to LCC – a company in which the then governor Fashola’s godfather Bola Tinubu is reportedly one of the beneficial owners. LCC were given a 30-year concession to collect tolls on a road – originally built by previous Lagos State governments. All LCC did was rehabilitate the road. Now they are free to charge whatever they like to users, who have to pay this regressive tax along with all the other taxes they pay to the government.

Fashola justified extending this type of extortion to federal level by claiming the shortage of funding due to the drop in oil price means new ways of maintaining roads have to be found.

But the Nigerian government doesn’t have to rely just on oil to fund infrastructure projects. It can raise the required funds through closing the loopholes that allow corporations in Nigeria to avoid tax.

Jesse Griffiths of the NGO ActionAid said: “Getting companies to pay more tax in developing countries represents an open goal that could make a vast difference to raising the public finances needed to meet the Millennium Development Goals.”

Many foreign companies operating in Nigeria use different schemes such as transfer pricing (whereby companies conduct transactions between different parts of the same organisation) to shift their profits to tax havens. An OECD/G20 report in October proposed that companies should pay tax in the countries where they operate.

On top of avoidance schemes, Ghana, Nigeria and Senegal are together losing up to $5.8bn a year through tax incentives for foreign investors.

Babatunde Fowler, time for a change in tax avoidance
Babatunde Fowler, time for a change in tax avoidance

Fashola should be discussing with that other political godson of Tinubu’s, Babatunde Fowler, the boss of the Federal Inland Revenue Service (FIRS), how revenue from corporations paying their fair share of tax in Nigeria could fund the infrastructure developments the country desperately needs. That would surely qualify as “eminent common sense”.

Getting poor Nigerians to foot the bill is not a viable option, as it would leave less change in their pockets and is not the “change” they voted for.

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