Govs to Buhari: Sack workers aged 50yrs, levy anyone earning over N30,000

By Adeleye Kunle

To avert the country’s impending economic collapse, Nigeria’s governors have advised the federal government to retire all federal civil servants over the age of 50.

The governors also want the government to raise taxes across the board and levy anyone earning N30,000 or more per month.

The governors made the proposal during a meeting with President Muhammadu Buhari in July, according to information obtained exclusively by Track News from sources close to the meeting.

The proposal also urged the government to begin implementing the updated Stephen Oronsaye Report, which advocated for the merger and closure of agencies and parastatals with duplicated or contested functions in order to address bureaucratic inefficiency and lower the cost of governance.

Officials familiar with the meeting’s details who spoke to PREMIUM TIMES said the governors were concerned about the state of the economy and presented the federal government with a proposal to restore fiscal discipline.

The federal civil service employs approximately 89,000 people but will spend approximately N4.1 trillion on personnel costs this year, out of a total N17 trillion budget for the country. It is unclear how many workers are over 50, or how much money they receive.

The suggestion comes as signs emerge that the country may be on the verge of economic collapse.

According to the online publication, Nigeria’s external reserves are only $15 billion, far less than the bank’s claimed $36 billion balance on gross external reserves. With the country spending N5.9 trillion on imports in the first three months of the year, $15 billion in reserves would barely cover four months of imports.

Last week, it was revealed that the balance in Nigeria’s Excess Crude Account had been significantly depleted, falling from $35.37 million to $376,655, leaving the country with no buffers to stabilize the economy and its currency. Another sign that the country was bankrupt recently emerged when debt service exceeded revenue.

According to the details of the 2022 fiscal performance report for January through April, Nigeria’s total revenue was N1.63 trillion, while debt servicing was N1.94 trillion, representing a N300 billion difference.

The governors advised the federal government to immediately reduce expenditure by eliminating petrol subsidies and NNPC-funded projects, to cap the Social Investment Programme (SIP) and National Poverty Reduction with Growth Strategy (NPRGS) budgets at N200 billion, to eliminate extra-constitutional deductions from FAAC, and to reduce SWV items for SDG and NASS Constituency projects.

According to sources, the governors also requested that the government reduce duplications (e.g., empowerment programs) and waste, reduce the one percent grant to NASENI to 0.2 percent, amend the Act in the 2022 Finance Bill, reduce personnel costs of federal government MDAs, and expedite the privatization of non-performing assets such as the NDPHC power plants.

Similarly, the governors urged that the 2023-2025 MTEF reflect the governors’ recommendations and the government’s commitment to restoring fiscal discipline, while the planned 22 percent salary increase in 2023 be reconsidered. They also stated that the fiscal deficit should be kept to no more than 2% of GDP in 2023-2025.

Reserves and Foreign Exchange

To conserve foreign exchange and increase reserves, the governors proposed that MDAs, including budgetary-independent agencies such as FIRS, NPA, NIMASA, and NCC, postpone foreign trips for at least one year.

They also urged the Ministry of Foreign Affairs not to issue Visa requests to foreign embassies for federal government officials and their families unless the presidency expressly approves.

The governors also proposed shifting from state income taxation to consumption taxation, arguing that with the implementation of a 3 percent federal income tax, state-level PIT should be eliminated.

Similarly, they proposed enacting state sales taxes (at a flat rate of 10%) for the 36 states and the FCT, increasing VAT levels to 10% with a timeline to raise it to 15% to 20%, and re-introducing and passing VAT into the Exclusive List. It was unclear whether all governors agreed with the move of VAT to the exclusive list.

To increase tax revenue, they proposed that the federal government impose a flat 3 percent Federal Personal Income Tax on all Nigerians earning more than N30,000 per month, with those earning less than N30,000 per month, whether employed or not, paying a monthly FPIT of N100.

Similarly, telecom companies and the NIMC should work together to ensure that this is deducted from individuals’ phone credit and linked to their NIN and BVN.

The governors also proposed that all federal oil and non-oil taxes be collected by a single agency, the FIRS, while Customs, the NPA, and others assess and issue demands.

They proposed that the Federal Government increase crude oil and gas production, resolve lingering issues of gas ownership in PSCs (e.g., Nnwa-Doro, OML 129) to help position Nigeria to take advantage of European gas needs, and provide incentives to accelerate development of vandalism-resistant deep offshore fields such as Bonga SW (Shell), Preweoi (Total), Zabazaba (ENI), and Owowo (Exxon).

The governors also advised the government to encourage (and, if necessary, pre-finance) the Dangote Refinery’s early completion in order to reduce massive future outflows of foreign exchange.

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