Tax Credit: Unique, workable approach to infrastructural development
It is undoubtedly no longer strange to Nigerians from all walks of life that the country has been engulfed in life-threatening crimes such as terrorism, banditry, cattle rustling, kidnapping, armed robbery, drugs peddling, rape and a lot more that have become a cog in the wheel of progress of Nigeria and Nigerians.
Similarly, the dwindling fall in oil prices triggered by global economic meltdown and recessions have impacted negatively on Nigeria’s match to growth, progress, economic and infrastructural development.
This made it very imperative for the Nigerian leadership from 2016 to seek alternatives to bridge the wide budgetary gaps created by the situation for good governance aimed at serving the people.
Resorting to taking domestic and foreign loans to take care of the budget deficits over the years became the only available option to breathe life into good governance.
In his determination to serve the people well, President Muhammadu Buhari recently took the option of “thinking out of the box” and brought to the fore a strange, unique and workable option of “tax credit” to finance sustainable governance and infrastructural development of the country.
The pilot scheme of implementing the tax credit scheme by the Buhari’s administration was executed by Dangote Industries Limited (DIL) when the Obajana-Kabba Road was constructed in 2018. Dangote’s 10.25 mtpa capacity Cement Company is located at Obajana in Kogi State.
What makes this road unique are basically two. First, it was done under the government’s new approach to infrastructure financing through tax credit. Secondly, it is unique because it is the longest concrete road ever in the country.
The 43-kilometre Nigeria’s longest rigid pavement project has been described by motorists as the country’s most strategic highway that is aiding travel between the North and the South. It is DIL’s contribution to road development in line with its corporate social responsibility, (CSR) project.
Some of the advantages of the concrete road include durability, less susceptibility to potholes and repairs like asphalt roads and its likelihood to reduce incidents of road accidents.
Next, is the 35-kilometre Apapa-Oshodi-OworonsokiOjota highway in Lagos State constructed by Dangote Industries Limited under the government’s tax credit scheme.
Work on the road kicked off in 2018 as part of a bargain between the company and the Federal Government for DIL to enjoy a 10-year tax rebate that accrues to N72.9 billion. The road has been subject to heavy traffic flow. An initial attempt to work on the road at N15 billion in 2013 stopped after the 2015 general elections.
Concerned by the congestion at the ports which result in gridlock which cost the company about N25 billion in revenue between 2017 and 2019 financial year, DIL decided to take the bull by the horn having gained from the concrete road project at Obajana.
The Apapa road will revive commerce around the Apapa area, open up the economy and bring a lot of jobs.
Convinced by the workability of the tax credit scheme in the area of roads development in the country, the Federal Government in July this year again awarded another set of contracts for 5 federal roads spread across the country to DIL.
The minister listed the roads to include the 49.15 km Bama to Banki Road at N51.02 billion and 49.58 km Dikwa to GamboruNgala at N55.5 billion in Borno State and also the 21.48 km Nnamdi Azikiwe Road, popularly known as Western Bypass in
Kaduna, from Command Junction to Kawo at N37.56 billion.
Others are the 54.24 km deep seaport access road sections 1 and 3 in Lagos State, through Epe to Shagamu Expressway, that links Lagos and Ogun states at N85.84 billion and the 100km Obele/Ilaro/ Papalanto to Shagamu Road in Ogun State at N79.99 billion.
He said: “Council considered and approved this memorandum to facilitate the construction of 274km of concrete roads. So, this will be the largest single award of concrete roads ever undertaken by the government of Nigeria in one award.”
Works and Housing Minister, Babatunde Fashola while speaking on the conditions surrounding the contract explained that the award was consistent with government’s multiple funding options which include engagement with the private sector.
It is on record that the tax credit initiative was in existence during the PDP days but was regrettably
not utilised but this administration revised and expanded it to serve the Nigerian people.
The minister further revealed that the initiative was not unique to Dangote as there was also interest from many other companies which are being reviewed.
The issuance of tax credit certificates followed the signing of Executive Order 07 of 2019 by President Muhammadu Buhari, which is on road infrastructure tax credit.
The order encourages companies to develop infrastructure around their operational area as long as it will enhance their delivery and their businesses.
Under the Credit Tax Scheme, participating companies are to recover the cost incurred by them in the construction or refurbishment of eligible roads as credit against Companies Income Tax, CIT payable.
A tax credit is an incentive given to taxpayers, usually subtracted directly from taxes owed or expected to be paid to the government.
Babatunde Fashola, the Minister of Works and Housing, stated this while briefing State House correspondents at the end of the FEC meeting presided over by President Muhammadu Buhari.
Fashola explained that the road contract, which was the second approved for ministry by the council, would be executed on concrete and would be the largest of such projects in the country.
From all indications, the tax credit scheme is a win-win for the government, the private sector and all Nigerians. Nigerians from all walks of life must lend their support to make it work for the country and her people.
PMB has proved that the scheme is not only unique and workable but also a strong catalyst that will expedite the country’s infrastructural development.
Musa Ilallah, Emeka Anyaoku Street, Abuja.