FG Moves against States over Illegal Taxation in Mining Sector

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By Omololu Ogunmade

The federal government yesterday accused some states of the federation of imposing illegal taxes on investors in the mining sector and consequently asked the Ministry of Finance, Budget, and National Planning to deduct such illegal taxes from their federal allocations.

Briefing reporters yesterday in the State House, Abuja after the 11th weekly virtual Federal Executive Council (FEC) meeting, Mohammed said illegal imposition of taxes on companies engaging in mining activities in the states is scaring investors awway.

According to him, FEC’s decision was the fallout of the memorandum presented by the Minister of Mines and Steel Development, Mr. Olamilekan Adegbite, during which he highlighted the various challenges threatening the mining sector.

Mohammed listed such challenges to include insecurity, particularly in the North-west, which he said had resulted in the suspension of mining activities in the region as a result of activities of bandits and kidnappers, conflicts between stakeholders and traditional rulers, as well as double taxation by the governors.

He said the mines and steel minister also told the council that investors are being scared away from the mining sector as a result of previous government’s decisions on the storage of explosives being used on mining fields.

The minister said Adegbite who advocated the creation of special facilities for storage of explosives also highlighted the challenge of extortion on mining sites as well as the issue of illegal mining.

“The industry is also faced with the problem of collision between some stakeholders, sometimes, the traditional rulers. Also, the minister explained that the issue of double taxation is actually driving a lot of investors out of the country. He also reported certain decisions of past governments in the area of storage of explosives that are used for mining.

“Before now, the position is that any miner that wants to use explosives for mining must store them in either the military barracks or police facilities. So, he asked for special dispensation to build special facilities, at least, one in each of the geo-political zones of the country. He also complained about extortion, the position of community development agreement, and the issue of many illegal miners,” he said.

Mohammed said eventually the council approved some decisions to help the minister address the challenges, listing such approvals to include authorisation of the Minister of Finance, Budget, and National Planning to deduct from federal allocations to states, which have been shortchanging the federal government by imposing illegal taxes and levies on mining companies in their states.

“But at the end of the day, what the council approved for him and which we believe will be far reaching and really reposition the industry is that: the council noted that insecurity and illegal mining had led to a huge loss of money. But the council directed that the National Security Adviser (NSA) should set up a special unit domiciled in the Federal Capital Territory (FCT), Abuja, and coordinated by the Office of National Security Adviser (ONSA) to carry out targeted operations at identified and confirmed illegal mining sites nationwide.

“On the issue of double taxation, whereby mining companies are taxed by local and state governments, two decisions were taken. One is that the council directed the Minister of Finance, Budget, and National Planning to deduct directly from federal accounts allocations to states which have deprived federal government of Nigeria’s revenue due to its position of illegal taxes and levies on mining companies in their states.

“In other words, if a particular state engages in double taxation, you are imposing illegal taxes on a duly registered mining company, and it is reported to government, the Ministry of Finance will deduct that money from your allocation. The intent is to ensure that we don’t scare away investors, whether they be local or foreign. This will go a long way to reassure the investors that Nigeria is a safe place to invest now.

“It was also directed that the National Economic Council (NEC) should dialogue with the governors and let them understand that states can participate in mining as corporate bodies. In other words, states can register companies and participate in mining. But they cannot come there as sub-national authorities because the law is very clear.

“The federal government has exclusive right to mine and manage all mineral resources. Those are the major approvals that the minister of mines and steel development got today on his memo.”

In his own briefing, the Minister of Environment, Muhammad Mahmood, said FEC also approved a memorandum on National Gender Action Plan and Planet Change, which he said would enable Nigeria to achieve 45 percent reduction of emissions in 2030.

The minister, who said women are mostly affected by planet change, disclosed that as a result of the development, women would be actively involved at various levels of the implementation of the policy.

He enumerated areas of focus on the action plan as agriculture, forestry, health, water and sanitation, energy and transportation, saying implementation of the plan is in line with the Paris Agreement which he said Nigeria subscribed to.

Mahmood said in accordance with Nigeria’s commitment to the agreement to achieve 20 percent reduction of the emissions this year, the goal has already been achieved but Nigeria needs the support of the international community to achieve the 2030 emission reduction target.

He said various groups including the civil society organisations, academia, international organisations and the entire international community would be part of the implementation of the action plan.

“We presented a memo today on National Gender Action Plan and Planet Change. Planet change will not affect everybody across the world just as here in Nigeria. It affects men, women and children but we have found out that women bear most of the brunts of planet change and the purpose of this policy is to mainstream gender within the planet change action plan and what does it mean to mainstream gender?

“Women bearing the main brunts, implies that we will take particular steps to make sure that women are involved in planet action activities right from inception, design, development, implementation, monitoring and evaluation of projects. We will also involve women in the process of decision making. Also, we will make sure that women are carried along in planet change issues and also in areas where women are predominantly involved, like in agricultural activities.

Seventy percent of agricultural activities involve women.

“Therefore, some of the priority areas in the gender action plan are agriculture, forestry, health, water and sanitation, energy, transportation; and the same particular areas are also the areas that constitute meeting our indices. That is the nationally determined contribution to the Paris Agreement. What that means is that through these sectors, we can reduce the emissions in Nigeria, thereby meeting our indices as we committed ourselves during the Paris Agreement.

“Nigeria has committed itself by agreeing to reduce emissions by 20 per cent this year which we have achieved. In the same agreement also, we committed ourselves to achieve 45 per cent reduction of emissions by the Year 2030. But this time around, Nigeria will need the assistance of international organisations or the international community in general to be able to achieve this commitment.