IN a display of leadership-by-example in these belt-tightening times brought about by the slump in crude oil price at the international market, President Goodluck Ebele Jonathan has ordered a 30 per cent pay cut for all political appointees in the Executive arm of government including himself and the Vice President.
But there is a new twist over the pay cut initiative by the President yesterday as a dependable source at the Revenue Mobilisation, Allocation and Fiscal Commission (RMFAC) told The Guardian that the President lacks the power to implement a pay cut unilaterally without the Commission’s approval.
The source who asked not to be named, however, confirmed that the Commission was in receipt of a request from President Jonathan on the matter but said the request may not sail through because it does not for now see the need for the pay cut, pointing out that a similar development played out around 2009 and 2010 when the late President Umaru Yar’Adua made the request of pay cutin the face of falling oil prices.
With crude oil mineral resources constituting more than 80 per cent of Nigeria’s revenue stream, the country’s liquidity condition has, expectedly, been jolted since the third quarter of last year when prices at the international market headed downwards until recently when it began a gradual recovery.
The slide downwards has made it very difficult for the funding of the capital components of the 2014 fiscal plan as envisioned. Consequent upon this, the current fiscal plan still with the National Assembly presents a very tight and austere budget with some of ministries, departments and agencies (MDAs) getting zero allocations for capital expenditure, the scrapping of certain redundancies within the public service and introduction of alternative areas of revenue generation to make up for the more than 50 per cent drop in revenue from the petroleum sector.
Now, in addition to those unveiled earlier by the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala when she presented the 2015 spending plan on December 17 last year, which include the introduction of taxes on luxury items and first class and business class air travel taxes, Jonathan has directed a 30 per cent pay cut for all political appointees in the Executive arm as part of sacrifice to free up revenue for funding of the yet to be passed plan.
The Director -General of the Budget Office of the Federation, Dr. Bright Okogu, who revealed this at the weekend when he spoke to The Guardian exclusively in Abuja, said the directive takes immediate effect. All classes of political appointees including Permanent Secretaries and Heads of Federal Government agencies are affected by the pay cut order.
His words: “Political office holders’ salaries are being cut by between 20-30 per cent, ranging from permanent secretaries, directors’ general and so on all the way to ministers. This, however, does not amount to very much, but the purpose is to show the commitment of this administration that if they want to make adjustment, they want to do it and lead by.
“Beyond this pay cut, you can also look at the expenditure side and see pruning measures such as some of the things the people do on a yearly basis to decorate offices. We are encouraging government officials to delay such things like getting new office buildings or such things. We are going to focus on things that are really important for recurrent spending.
‘‘And the final point I wish to make relates to the Oransaye Report which you may have heard of. The Federal Government initiated this and has gone through the whole process. The report has been submitted, the White Paper is out but what has happened is that some merging entities may lead to loss of jobs.
‘‘The aim here is to streamline the activities of these agencies and save government some money and then fund the ones that are left, better. If necessary, you can deploy such staff to other areas of government where they are needed, so you are not laying people off.
‘‘The President has told us severally, that the ideas he has are not to deny people their jobs. He knows that every single person that is working and earning salary is taking care of other five, six extra people in the immediate and extended families. So this is not a matter of saying you want to throw people out of jobs.
This is very clear, when it comes to job protection and creation. The President is very concerned and he supports us 100 per cent in some of the policies we have developed as a team over the years.”
The Director- General also gave an insight into the Medium-Term Expenditure Framework (MTEF) and fiscal plan still with the National Assembly as well as how the plan is fashioned to protect the vulnerable and ordinary Nigerians from the pangs austerity.
“We have an oil production level which has fallen from last year and the years before. We are hoping that the actual production that comes in will match what I have just described. We have chosen a benchmark price currently lower than the market price at about 52 or 53 dollars per barrel. Whatever it turns out to be, we have initiated a lot of measures including some of the ones you have heard of.
“Number one, some of the entities that were enjoying tax exemption status, such as in the oil and gas sector, are now going to pay. They were making profit before. The forbearance given to them was to the point and we should be able to get revenue from that. This is an innovation. You also have the tax on luxury items. But when it comes to things to protect the lower income class, the President told us not extend the tax.
This is a demonstration of the President’s concern, those are some of things he has been passionate about, that is trying to protect the lower class. Like I mentioned, the Federal Inland Revenue Service will bring in more non-oil revenue and we are hoping that down the road, some conversation about Value Added Tax (VAT) can be concluded.
‘‘The Federal Government gets 14 per cent only and the states where more VAT is generated get 85 per cent. One per cent goes to FCT, so the Federal Government is pushing this to help the state governments and they also have interest to see the VAT rate move down the road. We are not saying we are going to do it today, because the atmosphere is not ripe now but we are talking and preparing everybody’s mind and consulting to see what Nigerians think about it.
“Then look at the expenditure side, just to round up, because you have the revenue side and the expenditure side. The government has initiated and introduced a circular with respect to training being done in Nigeria. There is no reason why if Ministry of Finance or any body wishes to train staff, such staff must go to Ghana or Dubai or anywhere else.
‘‘We’ve always said that this is not the best way to go.
We have beautiful places here in Nigeria like Tinapa or Lagos or even here in Abuja. Several other areas around the country can be good for trainings. But this year it’s actually being put into action,” Okogu further revealed.
But according to the RMFAC source: “The remuneration package for political, public and judicial office holders in use now remains the February 2009 to June 2009 approved package because the last time the late President Umaru Yar’Adua attempted to revised it suffered a setback because the commission which role is to among other things fix political office holders’ package didn’t see the need based on economic realities then. You know it was during the same oil price fall. So the package has not changed.
“Yes, President Goodluck Jonathan has actually made the same request. But unfortunately, the commission has still turned it down because there is no merit in the move.
I can tell you he has no right to temper with the salary of any political office holder.
“However, the President in his own capacity can say he would not receive a part of his salary or all of it, saying he is donating it for charity or related cause but he can not order his or any other person’s pay as approved by the Revenue Mobilization Allocation and Fiscal Commission,” our source insisted.
Under the sustaining pay package for political office holders, annual take home pay is N14.058 million which translates to a month pay of N1.171 million. The Vice President takes home annually the sum of N12.126 million broken down to N1.010 million every month. For senior ministers, the Secretary to the Government of the Federation (SGF) and chairmen of constitutional bodies, their annual package is N7.801 million with a monthly value of N650,136.65 kobo while ministers of state and members of constitutional bodies take an annual package of N7.536 million which gives them a monthly pay of N628,056.91 kobo.
For the categories of special advisers, which included others like speech writers, their yearly pay is N7.09 million and per month, N590.957.81 kobo.
For the Auditor General of the Federation, the Accountant -General of the Federation; executive secretaries; chief executives of parastatals and INEC Resident Electoral commissioners, their annual package is N7.414 million which translate to a monthly pay of N617, 881.68 kobo.
The package is exclusive of some other emoluments which are annually or monetised entitlements.