On the Matter of Budgets, Revenues, Expenditures and Taxes in Nigeria {Re: Malaria taxes or basket water? — Business — Feyi Fawehinmi

[Mobolaji Aluko]

Afis Odidere and my People:

Much of what I read in "Malaria Taxes and Basket Water" is indeed populist - and more wailing.

We should be ENCOURAGING activities - both public, both ESPECIALLY private - that will lead government to INCREASE total revenue from TAXATION, and not to oppose taxation.  Yes, the citizens should hold government to account, but it is MORE ETHICAL to hold government to account for what you contribute DIRECTLY to government, because simply being an unproductive citizen REDUCES the accountability government owes to that citizen.

For example in Nigeria, taxes contribute no more than 15% - 29%  of total revenue:  I have repeated this flow diagram several times on these forums:

FIGURE 1:  Annotated Budget Flow Diagram of Nigeria

By placing so much emphasis on our revenue on the sale of oil, calculated as:

  TOTAL REVENUE FROM OIL (D)  = amount of oil sold in barrels (A)  x cost of oil per barrel in US$  (B) x Conversion rate of US $ to Naira (C) 

                  or D = A * B * C

we become captive to three UNCERTAIN factors  A, B  and C, which AMPLIFY the problems that the product D experiences.   That is what we are SERIOUSLY experiencing now, where ALL of A, B and C are DOWN all at the same time.  In fact, the product of A*B has a negative feedback on C, making D go into its present paroxysm.

It is as if our government is an OIL TRADING COMPANY, not a modern structure of governance, with the President as the General Managing Director, and the citizens as passive and/or grumbling shareholders.

So we must SMASH this revenue model once and for all - without compromising D - and ensure that whatever is earned from oil is NOT of government concern as such, but we see its effect COMPLETELY through all kinds of taxation - corporate, income, excise, etc.   That is, the dichotomy between oil and non-oil should be COMPLETELY  smashed, and we see all Government revenue in terms of taxation.

Take, for example, the United States of America:  Its budget has been increasing over time, until the 2016 figure of about $4.4 trillion.

USA - Federal Budget Over Time.

In this 2016, as in previous years, the total percentage of taxes in the total revenue of the USA is virtually 100%:

Figure 3:  USA Budget 2016 Revenue as percentages

In absolute figures, this table is relevant

https://en.wikipedia.org/wiki/2016_United_States_federal_budget

TABLE 1:  2016 USA Budget: Receipts by source: (in billions of dollars)

Source	Requested[32]
Individual income tax	$1,645.6
Corporate income tax	$473.3
Social Security and other payroll tax	$1,111.9
Excise tax	$112.1
Estate and gift taxes	$21.3
Customs duties	$38.4
Other miscellaneous receipts	$122.5
Total	$3,525.2

:

As well as this historical diagram:

Figure 4:  USA Budget  Revenue Over Time as Amounts

But the way to ensure responsible expenditure is NOT to discourage taxation, but to TIE UP spending in legislature in such a way that THE PEOPLE derive maximum benefit.  For example, in the 2016 USA budget, $2.44 trillion is in MANDATORY expenditure, while only $1.1 trillion is in DISCRETIONARY expenditure:

Figure 5:  Discretionary vs. Mandatory Expenditure in USA 2016 Budget:

 

That is the other model that must be SMASHED:  that as governments change, their appetite to spend our money should not be FICKLE.  Legislation must TIE up as much money as possible for the PEOPLE, so that WHENEVER there is shortage, it should be the GOVERNMENT - not the PEOPLE - that should make the sacrifice - BY LAW.  It is ONLY after they have made the sacrifice, and we still cannot balance the budget, should they then be able to go the People for relief.

As to the employment of citizens by GOVERNMENT, Nigeria has a population of 180 million, but ALL levels of government - national, state and local government - do not employ tops no more than 2 million, with the Federal Government employing about half that amount.   I believe that includes even the Military.

That may look like a lot, but the USA with a population of 300 million people employs about 2.7 million civilians at the federal level (does not include over 1.5 million in the uniformed Defence forces), and a total of 21.8 million nationwide:

QUOTE

http://federal-budget.insidegov.com/stories/13693/government-agencies-most-employees

The Government Agencies that Employ the Most People

By Alex Greer on May 20, 2016

Who’s the largest employer in the U.S.?

When people hear that question, they tend to think of giant companies, like Wal-Mart, General Electric and McDonald’s. But the runaway leader isn’t a giant company. In fact, it’s not even a company.

With approximately 2.7 million civilian employees, the U.S. government is the largest employer in the country. For reference, Wal-Mart has 2.2 millionemployees worldwide. While this number reveals the enormity of the federal government, it doesn’t tell the full story of where these 2.7 million people work. After all, the U.S. government consists of dozens of departments and agencies, each with distinct goals and purposes.

That’s why the team at InsideGov decided to take a deeper look at employment in the U.S. government. Using data from the Office of Personnel Management, we found the 25 government departments and agencies that had the most employees in September 2013. Non-civilians, like uniformed military personnel, are not included in these figures.

It’s also important to note that these numbers only include federal personnel. The Bureau of Labor Statistics estimates that with state and local government positions, the total number of government employees in the U.S. jumps to over 21.8 million. 

UNQUOTE

From the information above, I put together this Table on the USA:

 

TABLE 2:  USA – Top 25 USA Federal Agencies with Largest Civilian Employees (As of September 2013)

 

S/N	Agency	No. of Civilian Employees Worldwide	Comment
1	U.S. Postal Service	584,027
2	Department of Veterans Affairs	323,208	General Electric had 307,000 employees worldwide as of Dec. 2013.
3	Department of the Army	264,906	This does not include more thana million soldiers in the Regular Army, the Army National Guard and the Army Reserve
4	Department of the Navy	194,923
5	Department of Homeland Security	192,073
6	Department of the Air Force	169,440	This does not include approximately twice as many active duty personnel.
7	Department of Justice	115,616
8	Department of the Treasury	112,461
9	Department of Agriculture	95,223	President Abraham Lincoln createdthe Department of Agriculture in 1862 and later referred to the agency as “The People’s Department.” The USDA heads initiatives on food, agriculture and natural resource conservation.
10	Other Defense Activities (Excluding Defense Logistics Agency)	75,223	The Department of Defense consists ofmultiple levelsof departments and agencies. Some of the defense agencies included in this category include the Defense Commissary Agency and the Defense Intelligence Agency.
11	Department of Health and Human Services	72,703
12	Department of the Interior	71,543	Employees of the Department of the Interior are distributed across a variety of different bureausand offices, including the National Park Service and the Bureau of Indian Affairs.
13	Social Security Administration	62,549	SSA employs roughly 5,000 more people than Googledoes worldwide.
14	Department of Transportation	55,288	As the government repairs its aging highway infrastructure and builds more efficient transit systems, spendingon the Department of Transportation is expected to rise sharply over the next few years.
15	Department of Commerce	45,035	The Department of Commercewas created in 1903 with the goal of creating jobs and promoting economic growth. In 2012, President Obamaannouncedhis intention to eliminate the department, but Congress has not approved the changes.
16	Department of State	41,768
17	U.S. Courts	33,271	This number does not include employees of the Supreme Court.
18	Defense Logistics Agency	24,331	As its name suggests, the Defense Logistics Agencyprovides logistics support for the U.S. military. This entails a wide variety ofservices, ranging from the provision of necessary materials to sustainability programs.
19	Corps of Engineers	23,230	The Corps of Engineers has undertaken some of the most ambitious public works projects in U.S. history, ranging from the construction of the Panama Canalto thedammingof the Columbia River.
20	National Aeronautics and Space Administration	18,001	With its goals of space exploration and uncovering the unknown aspects of the universe, NASA employs some of the most brilliant minds in the nation. The agency hopes to send humans to Marsin the 2030s.
21	Department of Labor	17,187
22	Environmental Protection Agency	17,002	One of the newest agencies on this list, theEPAwas created in 1970 byPresident Richard Nixonwith the goal of protecting human health and the environment.
23	Congress	16,432	This includes  personnel in the House of Representatives and the Senate
24	Department of Energy	15,213	With the rising threat of global climate change, the Department of Energy has increased its efforts to developrenewable energy resources and promote energy efficiency throughout the country.
25	Tennessee Valley Authority	12,612	Unlike most of the agencies on this list, theTennessee Valley Authorityis a federally owned corporation that receives no taxpayer funding. It provides electricity to the southeastern U.S.
	TOTAL	2,653,265

 

This most interesting thing is that over decades, this number of civilian workers in the USA Federal civil service has not changed much.  In fact, the TOTAL federal work force has declined::

TABLE 3:

Data, Analysis & Documentation

USA FEDERAL EMPLOYMENT REPORTS

Historical Federal Workforce Tables

Total Government Employment Since 1962¹ 

(numbers in thousands)

Year	Executive branch civilians (thousands)	Uniformed military personnel (thousands)	Legislative and judicial branch personnel (thousands)	Total Federal personnel (thousands)
1962	2,485	2,840	30	5,354
19632	2,498	2,732	30	5,260
19642	2,470	2,719	31	5,220
1965	2,496	2,687	32	5,215
1966	2,726	3,129	33	5,888
1967	2,968	3,413	34	6,416
1968	3,020	3,584	35	6,639
19693	3,040	3,499	36	6,575
19704	2,944	3,104	38	6,085
19714	2,883	2,752	40	5,675
1972	2,823	2,360	42	5,225
1973	2,781	2,289	44	5,113
1974	2,847	2,198	46	5,091
1975	2,848	2,164	49	5,061
1976	2,833	2,119	50	5,002
1977	2,840	2,112	53	5,005
1978	2,875	2,099	55	5,028
1979	2,823	2,063	53	4,939
19804	2,821	2,090	55	4,965
19814	2,806	2,122	54	4,982
1982	2,770	2,147	55	4,972
1983	2,820	2,163	56	5,039
1984	2,854	2,178	56	5,088
1985	3,008	2,190	58	5,256
1986	2,966	2,206	55	5,228
1987	3,030	2,213	58	5,301
1988	3,054	2,176	59	5,289
1989	3,064	2,168	60	5,292
19904	3,067	2,106	61	5,234
19914	3,048	2,040	64	5,152
1992	3,017	1,848	66	4,931
1993	2,947	1,744	66	4,758
1994	2,908	1,648	63	4,620
1995	2,858	1,555	62	4,475
1996	2,786	1,507	61	4,354
1997	2,725	1,439	62	4,226
1998	2,727	1,407	62	4,196
1999	2,687	1,386	63	4,135
20004	2,639	1,426	63	4,129
20014	2,640	1,428	64	4,132
2002	2,630	1,456	66	4,152
2003	2,666	1,478	65	4,210
2004	2,650	1,473	64	4,187
2005	2,636	1,436	65	4,138
2006	2,637	1,432	63	4,133
2007	2,636	1,427	63	4,127
2008	2,692	1,450	64	4,206
2009	2,774	1,591	66	4,430
20104	2,776	1,602	64	4,443
2011	2,756	1,583	64	4,403
2012	2,697	1,551	64	4,312
2013	2,698	1,500	63	4,231
2014	2,663	1,459	63	4,185

Notes:

¹Data comes from agency 113 monthly submissions and covers total end-of-year civilian employment of full-time permanent, temporary, part-time, and intermittent employees. Executive branch includes the Postal Service, and, beginning in 1970, includes various disadvantaged youth and worker-trainee programs. Uniformed Military Personnel data comes from the Department of Defense.

²Excludes 7,411 project employees in 1963 and 406 project employees in 1964 for the public works acceleration program.

³On Jan. 1, 1969, 42,000 civilian technicians of the Army and Air Force National Guard converted by law from State to Federal employment status. They are included in the Federal employment figures in this table starting with 1969.

⁴Includes temporary employees for the decennial census.

In the Nigerian case, this is what the Minister of Finance Adeosun said recently:

QUOTE

The Minister of Finance, Kemi Adeosun has said that the N165 billion civil service monthly wage bill is over-bloated and can no longer be sustained by the federal government. The minister spoke on Thursday in Lagos at a meeting with the Newspaper Proprietors’ Association of Nigeria (NPAN) attended by her counterparts in the Ministry of Information, Alhaji Lai Mohammed, Ministry of Environment, Ms. Amina Mohammed, and Ministry of Agriculture, Chief Audu Ogbeh. Adeosun, who provided details on the economic reform agenda of the federal government, said the N165 billion being paid to federal civil servants monthly represented 40 per cent of the total spending of government, reported the News Agency of Nigeria (NAN) She said the figure was too high and the government was pursuing aggressive measures to detect and prosecute ghost workers and other saboteurs in the system. “We spend N165 billion every month on salaries and when I came in there was no checking. “Now, we have created a unit assigned with the sole responsibility of checking the salaries and catching those behind the over-bloated salaries,” she said. Adeosun said the Integrated Payroll and Personnel Information System (IPPIS) introduced by the previous administration was defective and sabotaged by the elements benefitting from the salary fraud. She said many federal government establishments including the police were yet to be captured in the system. According to her, it was shocking that the Nigerian Railway Corporation (NRC), which is not fully functional, still had 10,000 workers in its payroll serviced by government.

UNQUOTE

So the problem in Nigeria is not so much the number of employed persons, but three-fold:

1. the compensation model:  the basic rate and the employment fringe benefits are skewed.  For example, as Federal University Vice-Chancellor, my annual basic salary - ANNUAL - was N2.5 million, but my ALLOWANCES package was N10 million, which became CONSOLIDATED at N12.5 million.  In Nigerian terms, that is a lot of money, but at the current exchange rate of N400 to $1, that is barely $25,000.   On the other hand, in the United States, the average federal worker in 2014 earned $84,153, with a average benefit package of  $35,781.  In fact, even though you will find some INDIVIDUAL private  sector workers earn far more than Federal workers, federal workers in the US earn far more than average person in the private sector, and even better benefits:

Source:  http://www.downsizinggovernment.org/federal-worker-pay

FIGURE 6: Average US Wages Fed vs. Private

FIGURE 7: Average US total Compensation Fed vs. Private

2.  Second problem in Nigeria is un-productive employment.  There is either 

  (i)  UNDER-EMPLOYMENT - not enough work for a given person; this may be due to the creation of an

        unnecessary position, or too many people (qualified or unqualified) employed to do a particular job

  (ii) MIS-EMPLOYMENT:  a person employed  

         (a) NOT qualified to do the job he or she is in. or 

         (b) TOO QUALIFIED for the job he or she is in.

  (iii)  GHOST WORKERS - a situation where NO WORKER exists, and yet money is being paid to SOMEBODY for NO WORK DONE.

3.  Financial Fraud on the Job in Nigeria

    There are many government agencies that should be returning MONEY due to services rendered by government (eg motor vehicle registration), or taxation, transportation tolls or fines/sanctions.  When government workers POCKET these monies, then Government cannot have enough money to run itself.

So in addition to SMASHING the revenue and expenditure model of our Government, the compensation and employment model of our government at all levels must also be smashed.

Finally, Federal government itself must DEVOLVE to state and local government, because that is REALLY where the action should be.  There is no FEDERAL citizen as such - except persons in the Military, federal workers and persons living in the federal territory.  All others are bound up in their states, and the Federal Government must re-structure such that states take greater control of their affairs.

For example, from Wikipedia, in the US, the total budget of the states for the axis 2016 year is about $1.86 trillion, compared with $3.5 trillion for the federal government.

TABLE 5: List of U.S. state government budgets as enacted by each state's legislature.  (Wikipedia)

Note that a number of states have a two-year or three year budget (e.g.: Kentucky) while others have a one-year budget (e.g.: Massachusetts).

TABLE 4:  STATE BUDGETS IN THE USA

State	Budget (billions $)	MY	Reference
Alabama	29.2	2016	[1]
Alaska	7.2	2017	[2]
Arizona	36.6	2017	[3]
Arkansas	28.6	2016	[4]
California	170.9	2016–17	[5]
Colorado	27.1	2016–17	[6]
Connecticut	20.4	2017	[7]
Delaware	4.1	2017	[8]
Florida	92.3	2017	[9]
Georgia	23.7	2017	[10]
Hawaii	13.5	2017	[11]
Idaho	7.6	2017	[12]
Illinois	87.4	2015	[13]
Indiana	31.9	2017	[14]
Iowa	8.4	2016	[15]
Kansas	15.9	2017	[16]
Kentucky	66	2014–16	[17]
Louisiana	29.2	2017	[18]
Maine	8.3	2016–17	[19]
Maryland	42.3	2017	[20]
Massachusetts	39.1	2017	[21]
Michigan	54.0	2015–16	[22]
Minnesota	71.3	2016–17	[23]
Mississippi	6.4	2017	[24]
Missouri	27.4	2017	[25]
Montana	10.1	2016–17	[26]
Nebraska	9.0	2016–17	[27]
Nevada	23.8	2015–17	[28]
New Hampshire	5.7	2017	[29]
New Jersey	50.5	2017	[30]
New Mexico	18.4	2017	[31]
New York	149	2017	[32]
North Carolina	43.3	2016–17	[33]
North Dakota	14.2	2015–17	[34]
Ohio	65.7	2017	[35]
Oklahoma	6.8	2017	[36]
Oregon	70.9	2015–17	[37]
Pennsylvania	31.5	2016–17	[38]
Rhode Island	8.9	2017	[39]
South Carolina	26.3	2016–17	[40]
South Dakota	4.5	2017	[41]
Tennessee	34.9	2014–15	[42]
Texas	106.3	2016	[43]
Utah	15.1	2017	[44]
Vermont	5.8	2017	[45]
Virginia	51.8	2017	[46]
Washington	93.7	2015–17	[47]
West Virginia	12.2	2015	[48]
Wisconsin	36.9	2016–17	[49]
Wyoming	9.3	2015–16	[50]
TOTAL	1853.4

However, the federal allocations per capita are almost even, meaning that populations of states should be de-emphasized in federal allocations.:

 

Table 4: Average real percapita federal outlays by state during 1982-2000 2000 real US Dollars percapita

 

STATE	Average federal outlays per capita US Dollars
Alabama	5,339.52
Arkansas	4,713.85
Arizona	4,992.98
California	5,210.48
Colorado	5,277.46
Connecticut	5,912.66
Delaware	4,477.32
Florida	5,238.06
Georgia	4,564.36
Iowa	4,564.12
Idaho	4,682.08
Illinois	4,183.07
Indiana	4,057.55
Kansas	5,107.32
Kentucky	4,810.72
Luoisiana	4,748.89
Massachusets	6,112.77
Maryland	7,428.26
Maine	5,345.58
Michigan	4,030.17
Minnesota	4,316.81
Missouri	6,176.43
Mississippi	5,324.57
Montana	5,512.15
North Carolina	4,137.82
North Dakota	6,182.13
Nebraska	4,836.17
New Hampshire	4,371.64
New Jersey	4,670.97
New Mexico	7,279.27
Nevada	4,585.21
New York	5,108.39
Ohio	4,442.29
Oklahoma	4,861.50
Oregon	4,320.66
Pennsylvania	5,074.75
Rhode Island	5,493.86
South Carolina	4,815.52
South Dakota	5,430.08
Tennessee	5,002.15
Texas	4,403.46
Utah	4,475.27
Virginia	7,636.12
Vermont	4,430.62
Whashington	5,482.99
Wisconsin	3,942.40
West Virginia	5,016.49
Wyoming	5,065.97

  

So, in the final analysis, the current FEDERAL ALLOCATION model in Nigeria to states should also be SMASHED, in favor of more local control, and a federal allocation that is based more on equality and need than on population and politics.

And there you have it.

Bolaji Aluko

On Tue, Sep 13, 2016 at 12:49 PM, afis 'Deinde <odide...@gmail.com> wrote:

This is a business advice, not from populist perspective, that's from Greed.

In any modern country, those who hate to pay taxes more than others, are business owners.

I hate taxes, and I will be tempted to vote for a Romney if not for one black guy named Obama. I would have been tempted to support Trump if not for his Racism, homophobia, islamaphobia and all Human-phobia, except his Love for "basketful of Deplorables".

So what is new if a Feyi Fawehinmi advises business people against taxes and fabricates  reasons he/she believes are why govt is taxing the rich. Feyi has to give a reason why he/she opposes taxation.

On whether the govt will use the taxes to pay wages, that's in the interim, a short term usage. In the long run, if I can get recollect, Lagos, Ogun and others under AC/APC have at one time or the other, trimmed down the workers number. I am quite sure their first step is to computerize the labor force, and to wean out the ghost workers.

At least that was what Tinubu did in Lagos, and many were caught inflating their age, backdating their employments so that they could collect huge retirement funds.

Without knowing what's going on in the federal govt at present, but since Adeosun, a trusted hand is there, I bet they are reconfiguring the computers and making sure ghost workers that Okonjo-Iweala and her partners in crime placed on paper, are AloNtilo, dey go dey go dey gone!

You can't stop paying workers on an assumption. After removing the ghosts, then government can use money for malaria.

Shikena  Afis

Sent from my iPhone

On Sep 13, 2016, at 4:59 AM, 'Joe Attueyi' via AfricanWorldForum <africanworldforum@googlegroups.com> wrote:

 Feyi Fawehinmi's writings are worth following. An economic education in its own right 

Joe

http://m.guardian.ng/business-services/malaria-taxes-or-basket-water/

"....All of this perhaps explains the desperation with which FIRS has been hounding businesses to pay taxes. It is not looking for money to treat malaria in children. It is looking for money to pay salaries. It is true that the current budget has the largest capital spend on record but this was achieved by dramatically increasing the size of the budget. That is, it did not take money away from unproductive spending designed based on high oil prices, it just added the capital spending on top of the old system. You can see how dangerous this is – we are now looking for money to pay salaries as well as to build roads and treat malaria while oil prices have crashed. But why should taxes be used to pay salaries that have done nothing for Nigerians?

Please pay your taxes – it is the good and proper thing to do. But oil money is different from tax money. So if you want your taxes to go towards building roads and treating malaria in children, do as my friends at BudgIT say you should do – Ask Questions. Or else your money is going into a leaking basket."

Sent from my iPhone

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