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The new IGR rage

By Morenike Taire
DESPITE all the trouble in the beginning, it may be said without risk of sounding patronizing, the Tinubu administration in Lagos State turned out to be one of the most innovative, insightful, modern and courageous Nigeria has ever heard.

The term “IGR”, outside of finance and accountancy circles, has come, from the beginning of that administration to the present one, to become common parlance; almost colloquial.

Ten years down the line, superior infrastructural development in Lagos State has been attributed to “IGR”, which translates, to the layman, as nothing much more than monies collected from motorists and other offenders, by officials of state government agencies such as LASTMA and  LAWMA.

For the most part, they are not far from the truth. The fiscal federalist in BAT cannot find expression, except through taxation and taxation, even in a wildly populated city such as Lagos, cannot be exploited to best levels except through creativity.

The taxman must, if he would survive, pay people to come up with more and more ways his people can be taxed without them feeling as though they are overtaxed; or he dies. Lagos has done this and continues to do so most admirably, putting more emphasis on identifying the better-to-do and taxing them accordingly.

There are business people who have accused the state of multiple taxation and these, more often than not, have a point; and there is the on-going issue of the hotel industry consumption tax, which has been most violently rejected.

Yet it remains plausible that the only way to achieve a good balance between prosperity and peace/security is to tax the rich(er) for the benefit of the poor(er), and of all.

Upheavals in the Niger Delta area in the last decade and a half have made it easy for hinterland states to buy the IGR idea, if not jump on the IGR states. The more sharing formulae of oil revenues became problematic, the more ideas of fiscal federalism held ground and the more this happened, the easier it was to see how Lagos survived the dark years of the LG funds suspension. Clearly, states like Ogun and Sokoto  caught on faster than the rest.

The greatest achievement of those who have made the best use of internal taxation is that they have managed to convince their people that paying taxes and levies is good for them. Again, Lagos is the place where this is best illustrated, with business people actually going over to the tax office to declare profits and pay tax almost as happily as the teeming masses of Pentecostal Christians pay the 10 per cent to their church leaders.

The easiest way to achieve this, of course, is by psychology, but it is not the only way. The more governments spend on good public communications, the more it will achieve in terms of putting the taxable populace in a taxable mood.

Humans, despite what they think of themselves, are herdable animals, and the more often they hear the same thing, the more they tend to believe it.

Another important persuasion factor is the evidence, or even perception, that government is using tax money well. On the other side of that is the fact that people tend to want to evade tax more when they perceive their taxes not to be put into good use.

By far the most important tool for success, once a state has decided to put the spanner to the taxation wheel, is good technological support in terms of data management. This, in turn, is significance to two major factors. First, it is essential to good monitoring and calculation. Second, it will eliminate, if properly done, 99  per cent of fraud. Anyone who can crack the remaining one per cent …

Well, he deserves the loot! The final, but not the least, factor is the identification and punishment of tax offenders. Of course, we are very far from this now, fair enough. We will get to that bridge, and then cross it.

Of course, generating revenues internally, for a state government, goes further than taxation. Indeed, non-tax revenues will eventually be the only way to sustain infrastructural development and maintenance, once diminishing returns begin to set into taxation.

Policies for generating revenues must necessarily jumpstart the economy, particularly bearing in mind the local economy and its elements, such as tourism, local foods, and agriculture and so on. Lagos State recently ruled for landlords to paint their facades or have their premises shut down. You get the impression that particular ruling was not on account of environmental beauty alone. On the other side of that is the older Lagos State regulation to de-install all street gates in the State.

That did not work, and part of the reason for this is clear. What is supposed to happen to the thousands of individuals employed by the vigilante security apparatuses?

If fiscal federalism via internally generated revenues is to work on the long term, governments must as a matter of policy drive entrepreneurship and gainful employment.

Perhaps there are more gainfully employed, honest folks in Sokoto.


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