Tax, Tax Everywhere: But where goes the money?

October 9th, 2019


Suddenly, the Nigerian federal government has realized the importance of taxation. Unlike before, when the government solely depended on petroleum prod­ucts for its income generation, the present administration has woken up to the need to diversify its revenue earnings, particularly through taxation.

In the last couple of months, the federal govern­ment has come up with dif­ferent forms of taxes aimed at making more money for the administration. First, it jerked the Value Add Tax (VAT), from 5% to 7.5%. Lat­er, the Central Bank of Nige­ria (CBN), decided that any­body making bank deposits or withdrawing money above N500,000 must pay a certain percentage of tax, ranging from between two to three percent, for each transaction.

The government is also proposing to reintroduce payment of toll gate fees that was earlier cancelled by the Obasanjo administration, even when most of the roads in the country are in deplor­able state, while the Nigerian Electricity Regulatory Com­mission has equally proposed increase in tariffs paid on elec­tricity consumption, whether or not the people have elec­tricity.

Now, Senator Ali Ndume from Borno State has laid before the Senate a bill that would make Nigerians be­gin to pay tax for every con­versation made through the telephone, otherwise known as Communication Tax Bill. Very soon, they may even ask us to begin to pay for the air we breathe!
In the real sense of it, no­body is against payment of taxes, after all no government can survive without its citi­zens paying taxes. In most ad­vanced societies, governments depend mainly on payment of taxes by their citizens.

In Nigeria, before the dis­covery of oil, particularly during the colonial era, the erstwhile British colonial administration depended mainly on collection of taxes for its revenue earnings. In fact, it was the necessity to tax the people that led the colo­nial government to introduce the Indirect Rule system and the appointment of Warrant Chiefs through whom they could reach the local popu­lace.

The warrant chiefs were government agents used in collecting taxes and rates from the people, and they did the work very perfectly, and re­ceived the appertaining com­missions. My father told me how these tax and rate agents made sure that they promptly paid their taxes and rates, while those who failed in the obligation were sentenced to prison terms.

Today, how many people in Nigeria pay taxes? Only very few, mainly salary earners, those who could be directly taxed. Most of our business­men and companies hardly pay taxes. When they do, either because they want to contest election, or that they want to get something from government, they pay only peanuts. Our governments are so lazy that they hardly bother whether or not citizens pay tax so far they are sure of go­ing to Abuja every month for their handouts. So, citizens must pay taxes for govern­ment to survive.

But the question is: where does the money collected from these taxes go? Is it into government coffers or into some private pocket? During the colonial era, the admin­istration had endeavoured to make proper use of the money they collected through taxa­tion. They built schools, built dispensaries or health clinics, constructed or graded roads, and provided pipe borne wa­ter and electricity, at least, for those living in their newly created urban centres. These were basic necessities of life.
They equally ensured that none of their workers or those retired from service was owed any salary, pension or gratuity. In other words, the people saw the effect of the taxes they paid, how they were utilized.

With the discovery of oil in commercial quantity, the Nige­rian government, however, was no longer interested in taxation and other forms of revenue generation because oil money was flowing. General Yakubu Gowon, the helmsman at that time, told us that Nigeria’s prob­lem was “no longer money, but what to do with money”.

Accordingly, he began to embark on frivolous and bo­gus spendings and on white elephant projects, including opening the country’s borders to let in all sorts of manufac­tured goods from Europe. Many Nigerians, overnight, turned to emergency contrac­tors, importers and exporters, forwarders and “backward­ers”, etc. Corruption became rife, both in private and in public places.

Successive administrations had not quite departed from that laid down precedent. In other words, money was en­tering into government cof­fers, but this was not reflected on the people, which means that Nigerian money was go­ing into some private pockets. Any wonder that twenty-two years after a former Nige­rian Head of State, General Sani Abacha died, we are still talking about repatriating “Abacha loot” from America and Europe. Perhaps, Abacha might not have been the only thief that stole Nigeria’s money, but he has become a thief, be­cause he is dead!

Our concern therefore, is not just about the so many taxes being introduced by the present administration, but equally about what the govern­ment is doing with the money being realized from those taxes? May be, it is not about how they are fixing the dilapidated infra­structure, bad roads, epileptic electricity supply, lack of health facilities, collapsing school buildings, etc., something that will benefit the poor.

Or, is it the case of robbing Peter to pay Paul? Perhaps, the money they make from the nor­mal sources, particularly from the sale of petroleum products, was no longer enough to lubri­cate or service their systems. They therefore decided to milk the starving cow through mul­tiple taxation, in order for them to continue to remain on top.

You can imagine a system where someone would retire as an Army General. He al­ready had collected his gratu­ity and continues to receive his monthly pension. Later, he puts on babariga, enters politics and is elected President. He then begins to enjoy the perquisites of office as President, plus his monthly pension as a retired Army General.

Or someone one who served for eight years as State Gover­nor. At the end of his tenure, he immediately transits to the Sen­ate and begins to enjoy the fab­ulous salaries and allowances as a Senator, plus his very fat pen­sion for life as former Governor.

For the past two years, the federal government has been dragging its feet over whether or not the Nigerian civil servant is qualified to be paid N30,000 every month as minimum wage. While the debate is still on going, the government now comes up with multiple taxa­tions, perhaps, to drag the un­willing horse to death.

Nigeria is a country where those who are at the top will make sure that they continue to remain there, so that they would crush the many others lying flat on the floor, rather than assist them to stand on their feet. It is a country where the rich will continue to get richer at the expense of the poor.
Eze, veteran journalist/public affairs commentator, lives in Enugu.

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