The Global Covid-19 pandemic has impacted severely on governance and administration at federal and state levels. Principle of federalism as entrenched in the constitution is being practiced partially to the benefits of all and sundry.
In the fight against Covid-19, the federal government’s role has been limited to providing general guidelines and supports while governors adopt strategies best suited for their own state without rancour.
State governments are in the forefront of fighting the pandemic within their states, increasing resources for public health efforts, imposing various forms of curfews and lockdowns which resulted in closure of schools, religious places, markets, businesses. Contributions of individuals and organised private sector toward fighting the pandemic have been considerable and extraordinary.
Covid-19 being health crises that affects all, stimulates public participation in governance and deliberation on solutions. Governors rightly devote more of their executive time to fighting the pandemic.
Winter is Here
As states relax curfews, lockdowns and open for business, state governors will have to come up with means of generating sustainable revenue to meet ever increasing demand for non-revenue generating social service delivery.
Unbudgeted but substantial investment in health sector across the states is the order of the day. Methods and means of conducting government businesses have to be remodelled against the background of physical distancing.
Palliatives are also being distributed to ease the burden of ‘stay at home’ on the most vulnerable members of the public. Considerable resources must also be deployed in enforcing public health laws and regulations.
However, drop in prices of crude oil, has resulted in reduction in allocation from the federation accounts to states. Staff layoffs, decrease in salaries and income also impact negatively on personal income tax which forms the bulk of most states’ IGR.
With drastic reduction in revenue, the temptation might be to borrow to finance budget and embark on aggressive tax collection.
At this time, it’s going to be very difficult for states to raise needed finance through borrowings. Likewise, tax payers will resist any form of aggressive tax collection. This is the time government is expected to show empathy and support businesses to weather the storm.
New IGR Architecture; Covid-19 Template
The Covid-19 pandemic provides opportunity for governors to build sustainable revenue architecture for their states. The efforts of our governors in effectively and efficiently managing Covid-19 are commendable.
As incident managers, governors are leading the fight from the war front.
They receive daily briefings on Covid-19, immediate and needed executive decisions taken. Most states have in place inter-ministerial task force made up of professionals with proven track records in their chosen field.
Up to date information are provided to the populace. Organised private sectors are brought on board in the fight against Covid-19. Where and when necessary, appropriate laws are enacted and assented to with dispatch.
State government have been firm in applying enabling law on Covid-19 without fear or favour; no sacred cow. There is unimaginable collaboration amongst ministries, departments and agencies of governments in the fight against the pandemic and service delivery improved upon greatly.
Government and majority of the populace are on the same page for the first time in several years. Generally, public perception of federal and state governments have been positive.
It is a known fact that 90 per cent of Nigerian states depend on allocation from the federation accounts to the tune 85 per cent to finance their budget. One of the principal reasons for this pathetic situation is the disconnect between the government and tax payers.
To survive the winter, government must build on the good will occasioned by their proactive management of Covid-19, sustain connection with public at large and adopt same template and energy used in dealing with Covid-19 pandemic in the IGR drive.
Internally generated revenue drive of the state must be a front burner issue for the governor as demonstrated in the fight against the scourge of Covid-19.
Revenue process and management should in the hands of tested professionals within proven records. Revenue leakages must be blocked immediately.
As IGR incident managers, our Excellencies must continually engage the populace on the need to pay taxes and take full ownership of IGR process.
Covid-19 pandemic has demonstrated beyond any doubt the importance of government.
Our governors must also ride on the goodwill and positive public perception to demand for payment of taxes as sustainable means of financing quality public service delivery.
It must be emphasised that this is not the time to increase tax rate or introduce new taxes.
Alli, a tax practitioner wrote from Lagos