The report says while the amount is more than Nigeria’s annual budget for education, West Africa may be losing up to $9.6 billion a year, causing a ‘race to the bottom’ as the region’s governments vie to attract foreign investment.
According to ActionAid Nigeria coordinator, Ojobo Atuluku, granting tax incentives, especially to foreign investors, is depriving governments of money to pay for essential public services like health, education and infrastructure.
She said: “There is little evidence that tax incentives have increased investment; rather, the increased investment in the region is largely due to the presence of natural resources, especially oil.”
According to Kwesi Obeng of the Tax Justice Network, a number of statistics, including a recent one by IMF, say that, in reality, tax incentives are not what investors look for; rather, they look for infrastructure, education and the quality of the workforce.
“What is the reason for which our governments continue to give a range of tax incentives to huge multinational companies who really do not need them,” he queried.
He remarked that even in countries where there are conflicts, multinationals still mine for gold and go for the oil, adding that in times of peace, there is really no need for incentives.
“What it means is that ordinary Nigerians are the ones subsidizing these companies. The Nigerian government is actually taxing ordinary people while forfeiting the taxes it could make from the multinationals to fund basic infrastructure.
“If Nigeria is to become the giant that it ought to be, it must manufacture and invest in manufacturing, but most of these companies receiving these tax incentives are in the extractive industry. Even the profit that these companies make, they don’t pay the appropriate taxes on them. They use all sorts of tax planning strategies to take this money off the country,” Obeng said.
He noted that a 2014 report by Trade and Development Report indicated that what countries like Nigeria need to transit into development are investment in agriculture, manufacturing and infrastructure. -Leadership