TETFund, Taxes and Tears – What Stakeholders Must Know By Afolabi Oluwaseun
A walk into a standard hospital comes with you seeing and/or hearing about blood and bloodbank. This leaves you with a boggling question of ‘what connection exists between blood and tax?’. For every state of the world, finance is critical to its functioning same way blood is critical to the life of humans treated at hospitals. Tax on the other hand is a major source of revenue for the state. Hence, its importance to a state can be likened to what blood holds in the life of humans.
An average economic man aims cost minimization and utility maximization both of which points to optimization. Like humans, tax in the hands of the state should be aimed at optimization where economic distortions will be minimized while social welfare will be maximized. The last two weeks in the country Nigeria has been enmeshed with multiple talks about the bill before the National Assembly which seeks to adjust and address some aspects which in line with the optimal theory of taxation should galvanize a positive trajectory.
The Tax Reform and Administration Bill before the National Assembly has generated debate across all classes of Nigerians. Controversy are not strange in tax administration or legislation, and this is not any different; the recommendation of the Presidential Fiscal Policy and Tax Reforms includes reviewing the VAT sharing formula, harmonizing NASENI, NITDA and TETFund’s taxes to dismiss multiple taxations. The over 200–page bill houses a large scale of proposals that can redefine our fiscal landscape. The ruckus isn’t in any way surprising, as provided for by the fiscal federalism theory, taxation powers are allocated among the levels of government in Nigeria thereby, widening the net of possible vested interest and stakeholders.
In line with the above, we have witnessed governors presenting their disagreements over VAT derivatives, and citizens kicking against upward review of VAT to 15% by 2030. However, the academic community is seemingly silent on the aspect of the bill that focuses on TETFund. Currently by virtue of its role and functioning, TETFund is the most consequential institution when it comes to public tertiary education most especially on area of funding in this country. It is also crucial to state that the Trust Fund model pioneered by Nigeria has been borrowed by countries like Ghana, while some others are at policy formulation stage to establish similar Agency. Therefore, why abandon a unique homegrown solution and a product of our native intelligence for foreign model? A model that is as well seeking for ways to review and realign to combat funding.
With closer assessment and going by precedents, borrowing foreign solutions to address Nigerian problems isn’t always productive not because the solutions are deficient but because they fail to capture the peculiarities of the Nigerian system. When it comes to development, Africa is suffering from lack of infrastructure, while Europe is suffering from decaying infrastructures. Therefore, our problems are not even closely related, they are distinct and separate, and the same is applicable to tertiary education. There is no singular model for funding education across the globe, and while we promote sustainable models for Institutions to take responsibility for their recurrent spending and overhead, it does not mean government should totally remove the support system that majorly and specifically bridges capital deficits and needs of the institutions TETfund research, ICT, book development and strives to improve the ranking of our journals for global recognition, not to mention the staff training in line with our local needs; to ensure we produce graduates that are needed specifically for economic prosperity.
The committee of Vice-Chancellors, Rectors and Provosts have been silent, ASUU, ASUP, COEASU have all given deafening silence reminiscent of a cemetery on such a consequential proposal. Nobody has come forth with a position or counter argument that can shape the perspective of National Assembly who are assessing public opinion or proponents of the bill. At a time they are expected to rise to the occasion, they are missing yet again, only to re-appear when all has been said and done. However, this fight is not limited to the stakeholders above, members of the public and the policy makers must also note that education is a solid base for the economic prosperity of any nation. According to the data of Federal Ministry of Education, only 25% of those who attended primary to secondary education make it to tertiary education. Indicating that the remaining 75% are outside of the school system. To compound these challenges, if you look at the data of JAMB, we have over 2 million admission seekers yearly; and we can only accommodate less than a million in our tertiary education system. This implies that we need to build more capacities and infrastructures. Our tertiary education actually needs more funding and complementary efforts than taking the most critical area of funding away.
As a democracy Nigeria portends to be, equity and equality are principles that are to be upheld. Therefore, institutions cum agencies in terms of treatment from the state should be something similar which the bill failed to keep. This is seen in the skewed perspective of argument given by the Committee that TETFund should be funded from the national budget instead of a special tax; the proposal before NASS is to stop the funding of the Agency by 2029, and NELFund retains the proposed 2% development levy.
If TETFund does not need any special funding because it is an Agency of FG, why is NELFund retaining 2% special levy when it is also an Agency of FG, why not fund both from national budget; or is NELFund an Agency of the international community or state government? In another case, why not expunge the capital provision for schools in the main appropriation, it is not like institutions are able to access it anyways, and mop up the money for NELFund since TETFund is already funding capital needs of these institutions? What gives NELFund an immunity against being funded from main appropriation, especially when it is struggling to spend what is currently allocated to it, why push more there? When institutions cum agencies are having unequal treatment from the state, it naturally births suspicion from different quarters which is not always good especially in a state as ours where suspicions from different entities is the very reason meaningful progress hasn’t been witnessed in the last decade and even before attaining independence.
It is actually surprising to see the head of the Presidential Fiscal Policy and Tax Reforms Committee express fear on Channels over some State Governments approaching the Supreme Court on VAT issues, saying the judgement which could be predicted could rob Nigeria the opportunity of a well-structured central system on VAT. One gets pensive at this point, if tertiary education does not need unique funding in line with global practice, why then should Nigeria have a unique VAT arrangement? The global practice is for States to determine and collect VAT in their domains. Therefore, his advocacy should have been for states to determined and collect VAT, not otherwise. This position should not be mistaken as protest against harmonization of taxes or other proposals in the bill.
The proposal on TETFund is fully clothed with an agenda and a determination to kill the Agency. If not, why will Taiwo OYEDELE take a dig at the tertiary education community over ranking, that none of our tertiary institutions made top ten?Faculty-to-student ratio, research, infrastructure, international community among others are key factors in ranking, which of these is Nigeria not suffering from? This calls for a review of our transnational policy on education as well. This is also an indicator that a much narrowed consultation took place on this subject, which reveals the limited understanding on the role and importance of TETFund. For a sector as critical as Education to the development of the country, it’s quite disheartening that the political economy was not largely put into consideration. For such an important sector, a tax bill that will be redesigning its operation, funding and outlook, it is imperative to have wide consultation with stakeholders in the formulation, implementation and evaluation. Tax policies should be rooted in ideology, and reflect what the sector needs and the consideration of stakeholders therein.
Conclusively, this position will end with predicting the future of TETFund to its stakeholders; like other agencies of government with similar model of revenue that the fiscal committee is recommending to NASS, TETFund will become a place where budget lines can be created with projects institutions don’t need, it will house irrelevancies like borehole and solar projects for legislators who want to take constituency projects home. Defunding TETFund and taking away the existing model of funding is nothing but an obituary, and ASUU, the tertiary institution community can only wail and scream, because that is what everyone does after the death of a person or an institution.
Olawale Oluwaseun, AFOLABI (AGBARISM) is an Educator, Political Analyst and an aspiring PhD Political Economy Student.
