A new report by ActionAid and Tax Justice Network Africa has revealed that Nigeria loses N580 billion ($2.9billion) by awarding unnecessary tax incentives to multinational corporations.
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.”
Though countries were advised to give a lot of incentives to draw foreign investors but 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,”
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.