Ngozi Okonjo Iweala, Finance Minister
By Nnamdi Duru
Stakeholders in taxation and capital market in the country have come down hard on the Federal Government over its plans to bail out distressed stock brokers with taxpayers’ money, saying it was uncalled for.
According to them, it was out of place for government to bail out private businesses that were out to profiteer by speculating on the performance of stocks on the floor of the Nigerian Stock Exchange (NSE).
The agitators made their case at the second edition of “The People’s Parliament” with theme, “Policy Review on the Taxation of Capital Gains on Shares and Stocks” which ended in Lagos yesterday.
They also alleged that government may have proposed the bail-out possibly to save owners of the broking firms who are people in government and top executives of relevant regulatory bodies in the country.
The Minister for Finance, Dr. (Mrs.) Ngozi Okonjo-Iweala recently announced a N22.6 billion debt relief package for stock brokers,
Government announced a 12 per cent tax relief package on stock exchange transaction fees comprising 5 per cent Value Added Tax (VAT) and 7 per cent in stamp duties. These taxes had in the past construed major disincentives to investment in the nation’s capital market.
Addressing stakeholders during the opening session, the Chairman of the Accounting Education and Research Service (ACERS), Mrs. Morenike Babington-Ashaye reminded public office holders that they were elected or appointed to act in the interest of the people and not in their own personal interest alone.
According to him, the decision by government to spend N22.6 billion of taxpayers’ money to bail out people in private business was not in the interest of the generality of Nigerians.
She reasoned that since the investors who lost billions of Naira during the capital market crash three years ago have not entitled to any relief package from government, there was no reason why government would contemplate bailing out the business people who created the bubble that busted and blew up people’s resources and put them in debts.
“When we set up government and we elect those who selected some of us to work for them, we must understand that those elected and selected are in a fiduciary position to act in our interest and not theirs.
“The recent pronouncement of bailing-out of stock brokers when the investors are yet to be compensated whether through the tax system or physical payment cannot be said to be in our interest.
“If capital gains tax on stocks and shares have been abolished, the investors would have taken succour in the tax law to relieve their losses. A law that accepts against must accept losses. This is one of the reasons why we need to deliberate on policy that will serve the capital market and the nation.
According to the Chairman of the Peoples’ Parliament and former President of the Institute of Chartered Accountants of Nigeria (ICAN), Alhaji Lateef Owoyemi, the issue of stock brokers and speculators bail-out programme among others is very important in capital market, tax development and sustenance of Nigeria’s economy.
According to him, the bail-out programme is questionable, and that government cannot assure Nigerians that the decision was taken in their own best interest.
He wondered when it became a national policy for government to undertake the payment of private and personal debts and what would happen to other big speculators in the capital market that were private individuals and investment companies who also had similar big debts against their names.
Owoyemi warned the federal government against laying foundation for another round of bubble and bust in the capital market, adding that the bail-out would like make the other stock brokers to resume reckless buying and selling activities on the Nigerian Stock Exchange just to raise the market index.
He insinuated that government officials may have mooted the idea of a bail-out because they have direct and indirect interests in the affected firms.
“Who are the owners and directors of these stock broking firms and how much has each of the affected companies previously paid in corporate taxes?
“Stock brokers apart, I am yet to meet any other Nigerian who believes that the proposed write off of stockbrokers speculative debt is a correct policy or in public interest. Most Nigerian are saying find out, those stock broking firms belong to those in authority or people supervising them,” people’s parliament chairman stressed.
He also raised some other pertinent questions bordering on the planned bail-out programme asking, “under which policy framework is the writing of private debts of private companies in Nigeria, when did it become a policy that government can write off private debt of private operators, has the National Assembly provided such bail-out funds, were the debtors on public service or on the quest for personal wealth when they ran into trouble, was their problem as a result of government policy or self inflicted.”
“If their gambles had paid off, would they have turned the stupendous wealth over to the public, what harm would come to the public if these companies fail as many private companies in various sectors are failing for new ones to take their place and be more proficient and why are irresponsible and crooked stock brokers being given golden handshake,” he further asked.
The people’s parliament chairman also wondered if government would extend a similar gesture to other sectors of the economy and if the programme would not promote further irresponsibility, reckless and unprofessional conducts on the part of stock brokers.