Today, Oxfam in Nigeria joins the rest of the world to mark the World Day of International Justice with the launch of the Fair Tax Monitor report as well as the Commitment to Reducing Inequality Index (CRII) report in Abuja, Nigeria.
The Fair Tax Monitor (FTM) is a research and advocacy tool developed jointly by Oxfam and Tax Justice Network Africa. Nine countries currently use the FTM methodology to construct a broad picture of their country’s tax regime, including how progressive, sufficient and transparent the tax system is, and whether monies collected are used to the benefit of the most marginalized in the country.
By identifying major bottlenecks, inequalities and barriers to revenue collection Oxfam developed policy recommendations and influencing strategies. These are used to advocate for a fairer tax system that helps to redistribute prosperity from the richest in societies to the very poorest. This is done both through in-country lobbying and advocacy work and through regional and global partnerships that aim to tackle these problems on every policy level.
Among many others, some of the main findings of the FTM research include:
- Tax incentives are not necessarily harmful. If properly designed and well-managed with transparency, they can enhance economic growth . However, the most striking challenges are the lack of transparency and fairness in the process of taking decisions on fiscal incentives in Nigeria. The implementation of fiscal incentives in Nigeria is undermined by weak institutions, weak macroeconomic environment, poor infrastructural facilities, inadequate policy monitoring and evaluation, poor regulatory/supervisory framework, corruption, country risk and unfavourable political climate.
- VAT in Nigeria could be make less regressive by making a distinction between luxury and essential goods and services, therefore applying differentiated VAT rates. Progressivity would be increased if luxury goods have a higher VAT rate, regular goods the standard rate and essential basic goods a zero-rate/exemption;
- Analysis of national budgets between 2011 and 2017 shows that education expenditure to an average of 8.7% of total budget. This is far below the 10-25% benchmark set by UNESCO for developing countries (Incheon Declaration). The performance peaked at 10.96% in 2015 and came to its lowest – 6.02% in 2017. Comparative analysis shows that Nigeria ranks among the lowest countries in terms of spending on education as percentage of GDP.
- In spite of the recommendation of National Health financing policy that mandated all tiers of government to allocate at least 15% of their budgets to healthcare, Nigeria is spending quite less than that prescription. According to BudgIT, a civic organization aiming to simplify budget and public data, Nigeria spent 4.13% of its total budget on health in 2016.
- In Nigeria, as in most developing countries, the poorest segment of the population gets its livelihood from agriculture, therefore, government intervention in this sector is a mechanism to address social inequality and poverty through strategic interventions that redistributes the common-wealth. However, Nigeria’s government expenditure in agriculture as a percentage of total government expenditure and in proportion to agricultural GDP is small. As depicted in the figure below, of the total government expenditure of Nigeria, the share of the agricultural sector is only 3.8%—on average—for the period between 2000 and 2010.
All the findings and the subsequent policy recommendations can be found in the full report by clicking the button below.
Fair Tax Monitor Report for Nigeria.