By SUNNY IKHIOYA

IN his State of the Union address, on Tuesday March 5, President Joe Biden vowed to raise taxes on wealthy Americans and large companies. His comment generated widespread reactions from different corners of the globe. But, long before Biden’s speech, on February 5, 2024, at the Pholax Hotel & Suites, Anthony Village, Lagos, a patriotic Nigerian, Chief Blakey Ijezie, a chartered accountant, organised a very insightful conference that dwelt on wealth tax. In his usual manner, it was free of charge- pro bono, to all attendees. 

The focus this time was on wealth tax as a tool for sustainable development for the country. Even in America, the reactions on the proposed wealth taxes are still reverberating. Biden’s comment drew a sharp rebuke from the U.S. Chamber of Commerce  which concluded that the policy “would actually result in lower economic growth, fewer new business starts, less job creation, and fewer choices for American families”. 

In his presentation, Pastor Felix Jarikre noted that: “Wealth tax is going to be a tough sell in Nigeria, even though it is necessary..Nigerian politicians who got rich mostly through corruption would oppose wealth tax. They are the ones who make laws and govern. Even the poor would be corralled to shoot down wealth tax because they too aspire to become rich, an aspiration which they see to be realistic and worth pursuing. When money is allowed to be the agency that determines the judgement and decision-making of a person, wealth tax would discourage investment.. But when money is made to be a pliable tool in the service of mankind… wealth tax will encourage investment. The productive and resourceful person will not resent wealth tax.” 

Chief Ijezie’s keynote address focused on the very pertinent question: “Is there an alternative to wealth taxation in Nigeria?” He answers with quotes from Ben Akabueze and Doyin Salami. For Ben Akabueze, former Director General of the Budget Office of the Federation: “I don’t see any other option. We have to tax the rich. They should pay taxes commensurate with their earnings… We have extremely wealthy people existing side-by-side with extremely poor people. I describe it as ‘elite conspiracy’ not to distribute a fair share of the nation’s resources”. 

For Doyin Salami, Chief Economic Adviser to former President Muhammadu Buhari: “Nigerians must pay tax for the country to generate revenue or be forced to pay higher interest rates on borrowed funds… The income disparity between the wealthy and the poor in the country is frighteningly wide. We have to raise more taxes from the rich for social balance”. 

 For Blakey: “Indeed there is no alternative to taxing these politicians and billionaires who have sucked the treasury and wealth of Nigeria. The government needs to enact a Wealth Tax Law to get them to pay reasonable taxes from their largesses for the sustainable development of the country.” 

What is wealth tax? He defines it as “a tax based on the net fair market value of a taxpayer’s assets.”  Some people consider property taxes, land use charges as forms of wealth tax, as the government taxes the same asset year after year. It is worth noting that countries like France, Norway, Spain, and Switzerland all practise wealth taxation. He recommends that it be included in our tax laws as “a way to distribute the tax burden more fairly in a society with immense economic disparity such as Nigeria.” 

He talks about ‘taxation and social justice ‘. Tax Justice refers to ideas, policies, and advocacy that seek to achieve equality and social justice through fair taxes on wealthier members of society and multinational corporations. While Social Justice refers to a fair and equitable division of resources, opportunities, and privileges in society. It is the belief that the social benefits and privileges of a society ought to be divided fairly. It emphasizes fairness in how society divides its social resources. Businesses, wealthy citizens and multinational corporations must pay their fair share. 

A just tax system should help us build a more equitable society and begin to reverse the damaging inequality created by tax breaks designed to benefit the wealthiest. Our nation faces rising challenges, and we need revenue to fund vital programmes that support life and dignity. Tax revenue should pay for valuable public investments and set us on a sustainable path. 

What are the motivations for wealth taxation in Nigeria? Dr Tunji Adeniyi lists out the following: low tax to GDP ratio, high and rising budget deficit, high and rising inequality, extravagance, and corruption of luxury. Our tax to GDP ratio is very low at 6.7 per cent. Quoting Oxfam on our high inequality in Nigeria,  Adeniyi said: “The combined wealth of Nigeria’s five richest men -$29.9 billion- could end extreme poverty at a national level, yet five million face hunger. More than 112 million people are living in poverty in Nigeria, yet the country’s richest man would have to spend $1 million a day for 42 years to exhaust his fortune. 

The amount of money that the richest Nigerian can earn annually from his wealth is sufficient to lift two million people out of poverty for one year. On the prevalent economic wastes and distortions, he highlighted the following: wasteful spending, consumption of luxury and  sudden wealth. The following are advantages of wealth taxation: taking money from those who really don’t need it; the money it will cost them will have zero impact on their quality of life, fairness and equality by taking into account tax payers overall economic status and thus, their ability to pay tax. 

It is also a means of meeting revenue targets and eliminating or reducing budget deficit and consequences thereof in the short run. There are challenges in running wealth taxation such as: difficult to administer, encourages tax evasion, drives wealthy people out of the country and hinder foreign investment; but it also determines good versus ostentatious lifestyles- needs vs luxury, networth and liquidity, fair implementation- problems of valuation; it discourages high productivity and accumulation of wealth, may discourage investment where the underlying objective is high propensity to consume luxury, dampens socio-economic motivation, reduce productivity and national income. 

*Ikhioya wrote via: www.southsouthecho.com