By Obi Nwakanma
Muhammed Buhari, President of this sad republic has promised not to inflict any more hardship on Nigerians. He said this in the backdrop of growing criticism of his administration’s proposals to hike the Value Added Tax (VAT) from its current 5% to 7.2% next year. This is necessary, the administration has said, to shore up declining revenue from oil receipts, and reduce government’s traditional reliance on crude sales.
“Besides,” the Minister of Finance who announced the plan said, “States need the additional revenue to be able to meet the obligations of the new minimum wage.” Two things needs be said at this point: first, normally taxing is a legitimate means for governments to raise revenue for public services and for infrastructure funding: roads, schools, bridges, municipal services like fine public transportations, well-managed streets, park services, provision of adequate public housing on need bases, and so on and so forth. Secondly, taxes are civic obligations. Good citizens are expected to pay their taxes.
Bit no taxes are ever imposed without agreements between the citizens are their representatives in the various chambers of parliament who must pass such the tax and revenues laws before the executive begins to collect. Taxation is the basis by which the citizens begin to assert control over their elected governments, for as the saying goes, there can be to taxation without representation. So in any sense, the emergence of a new tax regime might just be the signal that Nigeria is finally entering into a relationship with its citizens who have hitherto being nothing other than fictional numbers. The decline in oil revenue will continue as systems and markets that hitherto depended on oil begin very gradually to move towards cleaner energy, and Nigeria will have either to sell more domestically in the short run, or reappraise its energy policy in terms of revenue accruals in the long run.
We long predicted this moment, that oil revenue will decline, and Nigeria might have to depend on its other real potentials. Clean gas energy and a high gas deposit might still bring some revenue, but the era of free money, and easy rents are over for the governments of Nigeria and her merchants of misery.
Ironically, Nigerians have been shielded from high taxation as a result of a long run of oil revenue. Nigerians do not pay taxes substantially. As the Finance minister in fact says, Nigeria’s VAT tax, introduced and designed by Dr. Chu S.P. Okongwu in the Babangida military dictatorship, is considered possibly the lowest VAT in the world. But Nigeria also has a high consumer population, and very often this tax has never been fully reported to the Nigerian population. How much tax is generated by Nigeria, including the Value added Tax? I do not think the Nigerian public knows. There is a whole lot of opacity in Nigerian Public Finance reporting. And much of this has never really bothered the average Nigerian who has always believed that crude oil receipts make up the quantum of government’s public spending.
Because Nigerians generally do not pay tax – the only group of Nigerians that pay any kind of tax are public servants who pay income tax because it is remitted straight out of their pay checks monthly – nobody know the exact tax worth of Nigerians. Tax assessment is primitive. There are no effective Assessors office, and very often flat taxes are generally imposed and are generally ignored. Sometimes, Governments rely on “motor park” taxes and “motor park” collectors, the kind called the Agbero tax collector. Sometimes these ubiquitous muscles harass and embarrass the public, steal from them, waste productive hours, cause public nuisance, and much of what they collect is never reported to the Treasury and Revenue office.
The corrupt police mount road blocks especially in the East (I’m still not sure why mobs have not organized to chase these out of the streets) and pry money off the hands of travelers who pay tax indirectly to the “Wetin You Carry” Police, because the drivers routinely hike the fares to cover the bribes. And so, for a very long time, particularly since the discovery of oil in good quantity, tax and Nigerians have been like the ram and its shadow. It is there, but it is not there. But inevitably governments will begin to depend on taxes as oil revenue dry up. They will have to understand that businesses must be encouraged to come and invest, and that businesses require healthy investment environments. Why do people come to live in a place and contribute to its economic growth? They come where there is clean, abundant and accessible water; where the roads are safe and well-built; where the housing stock is adequate and beautiful; where there are great public schools and well-built universities for the education of young, productive families who actually drive the engine room of economies, because they consume and engage in serial and rapid exchange; where there is an active young population and healthy youth culture; where there are avenues for great recreation; where there is safety and security, and men and women who have worked hard can retire in very comfortable and manageable spaces to spend their pension, visit museums and theatres, enjoy evenings at country clubs and restaurants with their old friends and pals; have their grandchildren and children visit them in peace, and so on and so forth. Investors look for great opportunities.
Governments provide the great social environment that sustain and build communities for the comfort of all who reside where they superintend. Citizens who pay the taxes could then demand real accountability for the taxes they pay, and if governments do not become transparent and accountable with tax revenue, are either forced out or the citizens withdraw their tax until the government would have no revenue with which to operate.
Massive tax boycotts are the means by which citizens demonstrate their power over unpopular governments and unpopular economic and administrative policies. That moment is coming, and indeed must come. Now, this Buhari administration’s plan to raise VAT raises a number of questions and possibilities. First, President Buhari has not fully accounted to Nigerians how much Nigeria is currently getting in oil revenue, or has derived in oil revenue since 2015 when he became President and the putative Minister of Oil. Nigeria’s oil revenue receipts remain opaque.
Nigerians must refuse to pay this proposed VAT until this administration opens up the books and account to Nigerians how much in actual revenue the government gets from oil, and to what actual use it is being put. Nigerians do not see any public infrastructural impact made by the Buhari administration since 2015. State governments have become practically bankrupt, but doing what? Public services are still primitive. There is the black hole called “Security Votes.” What exactly do the various governors do with “Security Vote?”
Every year, the federal and state legislatures allot money for police, military, and other National Security Services. Yet the President and the State governors appropriate money illegally from the treasury, unbudgeted, unallocated, and unappropriated by the legislature to their own uses, no questions asked. Dr. Kayode Fayemi has offered a very lame defence of this very illegal and unconstitutional appropriation of state resources, claiming it is legal. It is not legal if there is no oversight by the legislature which is the only constitutional body empowered to approve any money spent by the executive, and which is constitutionally required at every legislative session to scrutinize the public account and verify that all allocations are spent as mandated by the financial laws passed each year.
It is the failure of the various parliaments that have led to the corrupt misuse and misapplication of public funds, and thus the decay of the public system. But if people ask questions about their taxes, governments will stop treating public money as if it were private money. Presidents and Governors will stop privatizing public funds without consequence.
Indeed, the public itself may rise to demand full accounting of the tax paid. And that is the problem: as the columnist Farooq Kperogi very aptly discerned it, Nigerians expect providence to order their lives perfectly without their intervention. It is called the “cargo cult” mentality. Ayi Kwei Armah explored this in in his novel, Why are We So Blest. Nigerians expect things to change, but they are not yet angry enough.
Perhaps this raise in VAT might finally bring out the beast in us. I say then to Nigerians who should be outraged by the salaries of the president, the Vice president and the Senators and Members of the various Houses, boycott all the services where you pay VAT, until this government accounts to you. Resist this attempt to make you tax slaves.