We have always argued on Naijiant.com multinationals operating in Nigeria should pay their fair share of tax and this should help the country increase its revenues for development projects, especially in this period with falling oil prices. Ordinary Nigerians should not pick up the slack for the fall in oil revenues.
This article, originally published in the Guardian explores the issue.
There’s no point praying for a hike in the global oil price if you’re giving away billions in tax breaks to energy firms
Friday 29 January 2016
Nigeria has lost billions of dollars because of a 10-year tax break given to Shell, Total and Eni, three of the world’s biggest oil and gas companies.
That staggering $3.3bn (£2.3bn) revenue loss, in a country where millions of people live in extreme poverty, is best understood through the social cost. The tax giveaway, which started in 1999, forfeited an opportunity to grant 70 million young Nigerians access to quality education, rebuild the university system and tackle entrenched problems in the health system.
Despite being Africa’s biggest economy, Nigeria has one of the highest child mortality rates in the world, with more than one in 10 children dying before the age of five. It also has the fourth highest maternal mortality rate: 814 women die for every 100,000 live births.
In a recent report, Leaking Revenue, ActionAid revealed how Nigeria lost the billions through a three-part tax break granted to the three multinationals.
It is a striking example of how a global race to the bottom on tax is harming resource-rich countries. Previous ActionAid research shows that tax breaks cost developing countries at least $138bn every year.
The lost revenue could have contributed to tackling Nigeria’s intractable education crisis. The country has the world’s highest number of school-age children who are not in class – more than 10 million. Nigeria has been struggling for decades to provide education for its young people.
Abuator primary school sits in the heart of the oil-producing Delta state. Immense wealth is piped out of the ground daily but, when Dafe Rose started as the school’s new headteacher, she was shocked to see that some pupils were being taught under a tree rather than in a classroom. The school has no library, no toilets, no blackboards and no educational materials.
Abuator is not unique.
Publicly funded education from primary to university level is under huge pressure. Poor financing of primary and secondary education since the late 1980s has forced many parents to turn to private schools. These are very expensive and have little or no space for children who are unable to pay. The wealthiest families now often send their children abroad to be educated, which is not an option for the vast majority of Nigerians.
Similarly, universities have been going through crises arising from poor funding. About 70% of qualified college-age Nigerians are without places in third-level education. The problems have led to strikes by teachers and student unrest.
Spent properly, the money lost to the tax break could have had a huge impact on education. It amounts to double Nigeria’s education budget for 2014. Our report shows that Nigeria is not broke, but that money has been given away in a show of magnanimous naivety.
At the same time as offering tax breaks to multinationals, the government is considering an increase in VAT on everyday goods, multiple taxation of poor people, increased reliance on loans and foreign aid, and even prayers for a rise in the global oil price.
Nigeria desperately needs investment to tackle poverty and improve the lives of millions of marginalised people. ActionAid is calling on Nigeria to publish and review its tax policies and collaborate with other countries in west Africa to end the race to the bottom on harmful tax breaks.
Corporations also need to be more open about their activities in Nigeria and other developing countries. Companies should pay their fair share of tax and publish their payments in every country in which they operate, including details of tax breaks they’ve been given.
We must not be silent on this issue. Harmful tax breaks must be consigned to history.
• Kenny Oleru is ActionAid Nigeria’s policy and campaigns officer