When Ceasar means business...

When Caesar means business “Give unto Caesar what belongs to Caesar’s” is a popular paraphrase of the answer Jesus gave to the Pharisees who planned on trapping Him with His words. People had a responsibility to pay tribute to Caesar and they did pay regardless of how inconvenient. In modern times however, Individuals and businesses seem not to be willing (as in ancient times) and do all they can to avoid paying tribute to Caesar. Having lost his patience at this point, Modern-day Caesar is making it clear that he will be taking it by “force”. The nation's budget is to rely heavily on internally-generated revenue in the form of taxes. Given the harsh economic times; falling oil revenue, depreciation of the Naira, rising inflation, high cost of living alongside low living standards, the government has embarked on an ambitious journey to turn the tides through aggressive fiscal policy aimed at spurring growth. With an aggregate expenditure of NGN 6.06 trillion, a target revenue of NGN 4.957 trillion has been given to the Federal Inland Revenue Service (FIRS) for the year 2016. The FIRS is therefore ready to use all arsenal at its disposal in realizing this target.The Big Boss of the FIRS, Babatunde Fowler, simply won’t be tolerating any laxity in national compliance. State Internal Revenue Services are sealing businesses in Lagos, Abuja and Ogun States. Last month, some business Offices had their offices marked down for default in remitting tax returns. Among them are Globacom and Swift network (both in Lagos) over non-remittance of VAT in the amount of NGN24.3 billion and NGN702 million respectively. The Ogun State Internal Revenue Service wasn’t to be left out of action either as it has recorded the stoppage of 45 businesses guilty of non-remittance since the last three years. NICON Insurance and NICON Luxury weren't spared in the wave of “remit or retreat” as their premises were closed over non-remittance of a total amount of NGN 6.2 billion representing a combination of Companies Income Tax (CIT) and Value-Added Tax (VAT) in May. The digital economy has provided an avenue for simplifying daily living and the Tax authorities are aware of the numerous opportunities this presents. Information Technology has necessitated the need for inventing electronic filing and online payment of taxes. As it seeks to draw tax eligible Individuals and Companies into its tax net, the FIRS is investing judiciously on technology. The online platform known as ITAS (Integrated Tax Administration System) was created in 2013 and has been upgraded for large scale tax transactions.The ITAS provides Individuals and companies the opportunity to file returns, obtain an e-TCC (Electronic Tax Clearance Certificate), view tax penalties,provide third parties the means of verifying Tax Identification Number (TIN), and so many other functions. The Babatunde Fowler era also introduced a Federal Engagement and Enlightenment Tax Team (FEETT), to provide adequate sensitization and awareness programmes to the masses on the moral duty of paying taxes, nonetheless the FEETT is yet to be on its feet as there has been no record of any engagement with the populace on tax related matters. Tax compliance in the country has been embarrassingly low. It's been noted by past and current finance ministers, Dr. Ngozi Okonjo-Iweala and Kemi Adeosun, that the nation records a very low tax compliance rate compared to the rest of the developing world. Mrs. Adeosun had earlier in April revealed the existence of 363 Companies that had never paid tax for seven months. Statistics has shown that Lagos has the highest tax returns, 40% of total revenue generated by all states (good reason for having the former LIRS boss to handle the helm of affairs at the Federal level); be that as it may, the FIRS aims at ensuring the stellar performances witnessed in Lagos cascades across the other states of the Federation. As the wave of ensuring compliance pervades the nation, I would like to cease this opportunity to encourage you to ensure you make your contribution. An understanding of the benefits of taxes in my view would help avoid evasion. In the words of Dalton Hugh "Tax is a compulsory contribution imposed by a public authority, irrespective of the exact amount of service rendered to the taxpayer in return, and not imposed as penalty for any legal offence." After all, God does concur that Caesar get his entitlement.

When Ceasar means business...

When Caesar means business “Give unto Caesar what belongs to Caesar’s” is a popular paraphrase of the answer Jesus gave to the Pharisees who planned on trapping Him with His words. People had a responsibility to pay tribute to Caesar and they did pay regardless of how inconvenient. In modern times however, Individuals and businesses seem not to be willing (as in ancient times) and do all they can to avoid paying tribute to Caesar. Having lost his patience at this point, Modern-day Caesar is making it clear that he will be taking it by “force”. The nation's budget is to rely heavily on internally-generated revenue in the form of taxes. Given the harsh economic times; falling oil revenue, depreciation of the Naira, rising inflation, high cost of living alongside low living standards, the government has embarked on an ambitious journey to turn the tides through aggressive fiscal policy aimed at spurring growth. With an aggregate expenditure of NGN 6.06 trillion, a target revenue of NGN 4.957 trillion has been given to the Federal Inland Revenue Service (FIRS) for the year 2016. The FIRS is therefore ready to use all arsenal at its disposal in realizing this target.The Big Boss of the FIRS, Babatunde Fowler, simply won’t be tolerating any laxity in national compliance. State Internal Revenue Services are sealing businesses in Lagos, Abuja and Ogun States. Last month, some business Offices had their offices marked down for default in remitting tax returns. Among them are Globacom and Swift network (both in Lagos) over non-remittance of VAT in the amount of NGN24.3 billion and NGN702 million respectively. The Ogun State Internal Revenue Service wasn’t to be left out of action either as it has recorded the stoppage of 45 businesses guilty of non-remittance since the last three years. NICON Insurance and NICON Luxury weren't spared in the wave of “remit or retreat” as their premises were closed over non-remittance of a total amount of NGN 6.2 billion representing a combination of Companies Income Tax (CIT) and Value-Added Tax (VAT) in May. The digital economy has provided an avenue for simplifying daily living and the Tax authorities are aware of the numerous opportunities this presents. Information Technology has necessitated the need for inventing electronic filing and online payment of taxes. As it seeks to draw tax eligible Individuals and Companies into its tax net, the FIRS is investing judiciously on technology. The online platform known as ITAS (Integrated Tax Administration System) was created in 2013 and has been upgraded for large scale tax transactions.The ITAS provides Individuals and companies the opportunity to file returns, obtain an e-TCC (Electronic Tax Clearance Certificate), view tax penalties,provide third parties the means of verifying Tax Identification Number (TIN), and so many other functions. The Babatunde Fowler era also introduced a Federal Engagement and Enlightenment Tax Team (FEETT), to provide adequate sensitization and awareness programmes to the masses on the moral duty of paying taxes, nonetheless the FEETT is yet to be on its feet as there has been no record of any engagement with the populace on tax related matters. Tax compliance in the country has been embarrassingly low. It's been noted by past and current finance ministers, Dr. Ngozi Okonjo-Iweala and Kemi Adeosun, that the nation records a very low tax compliance rate compared to the rest of the developing world. Mrs. Adeosun had earlier in April revealed the existence of 363 Companies that had never paid tax for seven months. Statistics has shown that Lagos has the highest tax returns, 40% of total revenue generated by all states (good reason for having the former LIRS boss to handle the helm of affairs at the Federal level); be that as it may, the FIRS aims at ensuring the stellar performances witnessed in Lagos cascades across the other states of the Federation. As the wave of ensuring compliance pervades the nation, I would like to cease this opportunity to encourage you to ensure you make your contribution. An understanding of the benefits of taxes in my view would help avoid evasion. In the words of Dalton Hugh "Tax is a compulsory contribution imposed by a public authority, irrespective of the exact amount of service rendered to the taxpayer in return, and not imposed as penalty for any legal offence." After all, God does concur that Caesar get his entitlement.

How powerful is the invisible hand?

How powerful is the invisible hand? The law of demand and supply or the price mechanism does tell us there exists an invisible hand that is responsible for the allocation of prices in a system. This is allured to the fact that when it comes to price determination, the market knows better. This was what the Scottish Economist Adam Smith in his 1776 book "An Inquiry into the nature and causes of wealth of Nations" meant when he said that "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” I have what you want and I want what you have, so therefore let price find its place in the contest of the intensity of both our wants. The Nigerian Foreign Exchange Market has been dominated with a large number of buyers than sellers, consequently tilting the weight of chain-saw to the demand side and raising prices upwards. This has been a concern for not just the country but also for Foreign Investors and the global community at large. Let’s look into the matter at hand. In line with the economic sense of the market determining prices, the Central Bank of Nigeria has acquiesced to the requests of Economists, Analysts and Businessmen in taking out currency controls which had been maintained for 16 months. On the 16th of June, it released its guidelines for players in the Forex market and indicated its decision to supply the market through Foreign Market Primary Dealers (FMPD). In ensuring a smooth process of availing forex to the public, the monetary authority would be using about 8-10 FMPDs and would also provide a Secondary Market Intervention Sales (SMIS) mechanism to end users. The FMPDs are to serve as retailers (duly regulated) to provide buyers with the needed Foreign exchange. Necessary to say, that the new system adopted excludes sale to the BDCs (Bureau de Change) and the 41 items excluded from assess to forex remain ineligible - hurting manufacturers who are in need for production. The workings of the Futures market is a welcome development as it promises to conserve scarce Forex and prevent any unnecessary panic demand for the dollar. The CBN has unveiled the tenors available for the OTC Futures market and these include; 1M, 2M, 3M, 6M, 12M, 18, and 24M. It will actively pursue the OTC Futures market applying rates from the FMDQ and employing the NIBSS as its active agent. (For more on this, please see the CBN article “How the CBN Naira-settled OTC FX Futures Market will work) Africa's largest economy worth NGN 94 trillion though facing economic woes of rising inflation of 15.6%, unemployment rate of 12.1% and at the brink of an imminent recession is however capable of overturning it's negative economic woes with quality leadership, strong-will and a stroke of good fortune. It is obvious already that we need to strategically diversify and focus on sustainable agricultural investment as the year 2016 has taught us that if the Glut in the Oil market doesn't bring difficulties in revenue by crashing down prices, the Niger Delta Avengers (NDA) and other unpatriotic coalitions, could do its own bit in bringing the nation’s foreign earnings to its knees. More so is the economic debate on the competence of the leadership style of CBN government in taking reactionary stances to challenges that could have been addressed long before their convolution. Donald Kaberuka's comment bears an optimistic view "A flexible exchange rate was needed. But time was lost, hence the need for a supportive fiscal stance. A good start". Fitch, a global rating agency, has also seen a ray of optimism after endorsing the decision of the CBN to take off currency controls. “Naira devaluation could lead to a further spike in inflation, which rose to a six-year high of 15.6 per cent in May. But we think the inflation pass-through from the official rate is limited and a fall in the parallel rate would be deflationary, which along with the increasing availability of hard currency could lower inflation." What would be the reaction of the Nigeria foreign exchange market to this new development? We'll keep our fingers crossed as trading officially resumes on the 20th June, 2016.