By Prince Justice Faloye 

In progressive societies that consciously move towards equity and egalitarian values, the highest tax receipts come from what is called progressive tax, whereby the rich pay a higher proportion of their income, followed by proportional taxes whereby everyone pays about the same proportion of their income. Telecoms and banks already pay the highest progressive income taxes, why also extract regressive taxes from their customers? Nigeria appears to be a regressive nation in not only tax but all aspects economically, and politically, because ever since independence, the people have been regressing back to slavery.

VAT is a regressive tax that makes poor families pay with a greater percentage of their income. Unfortunately the arrowhead of President Tinubu’s tax reform to increase government revenue is by doubling the VAT rate, thereby making the poor bear the highest tax per income contribution. With manufacturing, employment and income falling, the expected 100% increase in VAT receipts targets the telecoms sector, through which the poor market their ideas and goods cheaper, followed by bank charges where 90% of balances are less than N500,000 .

Neocolonial elites share the exploitative mentality of our colonial masters that governance is about exploiting the masses with nothing much in return due to warped social contracts between masters and slaves. Taxation without representation. They haul away our human and natural resources for a pittance that they spend on themselves as cost of governance, failing to provide basic amenities required – poor roads, no water, poor electricity, underfunded education, inadequate social housing etc. The people are like slaves.

The current president is the archetype of a neocolonial elite, an emotionally detached foreman that bleeds out life of the slaves to balance the books of the slavemasters, through International finance institutions neo-liberal economic policies. He sees himself as a reformer with magic wands, by increasing energy costs (removing petrol and electricity subsidies), devaluing wages through forex devaluation, and now the doubling of regressive taxes. Though he started his political career with Afenifere, the Welfarist ideology of Action Group, once he became Lagos state Governor he implemented the most socially regressive policies in guise of increasing internally generated revenue (IGR).

Tinubu’s taxation drive in Lagos to increase IGR was based on taxing the informal sector through market and transport levies and other flat rate regressive taxes. The low waged informal sector paid majority of the taxes, but there were no visible benefits since government investment in education, health and other social services suffered. He built little or no social housing, preferring to invest in housing for the super rich in Banana Island and Eko Atlantic City, while 70% of Lagosians were homeless or lived in substandard housing. The majority of Lagosians survived on retailing of manufactured imports and Food, beverage and tobacco processing industries left by the colonists.

Instead of a productive mentality that focuses on increasing production to enable increase in tax receipts, Tinubu’s focus is that of a rentier system that takes Owo Omo Onile from anyone that dares to be productive. Instead of building the required 160 kilometers of Metroline to spur heavy manufacturing, he empowered tax collectors of the private transport system. So, instead of creating captains of industry from potential inventors and manufacturers of components and energy used to run a railway system, Lagos became awash with street warlords and transport touts that act solely for his economic and political benefit. 

While Governor Lateef Jakande invested heavily in building and funding tertiary education like Lagos State University and several Polytechnics, Governor Bola Tinubu built none. Therefore it is not surprising that the President’s 2024 Tax reforms doesn’t only increase regressive taxes, it breaks the social contract of the government to fund education by phasing out NETFUND, the funds from taxes to fund our universities and polytechnics, replacing it with TETFUND, funds from the taxes to be used as student loans. The government only has the moral right to tax the productive use of our skills if it is a joint investor through subsidized education, but if we have to take student loans for our education then our taxes should also be loans.

Unfortunately public discourse on the proposed tax reforms have been intentionally warped with tribal regionalism. Northern leaders came out to protest that the change of VAT distribution among states to derivation unfairly targets the Northern region, while Southerner leaders kept quiet despite it being a national issue that will negatively impact Southern states like Ondo, Osun, Bayelsa etc There has to be devolution of power through Restructuring to enable states to be totally in control of their economic resources and productivity, before thinking of reforming tax structures to justify a unitary system.

Some Northern leaders accused Lagos of trying to colonize them in penury, while Southern leaders retorted that Northerners are scroungers that want to feed on Southern consumption tax. They point to the fact that the Islamic North frowns on alcohol consumption, which is merely the seventh highest VAT contribution, while ignoring that the North accounts for the largest tobacco consumption frowned upon by Christian South. Even then, both pale in significance to telecoms tax which all will suffer from its overtaxation, as phone and Internet will become unaffordable like petrol and electricity.

The tribal baiting discourse prevents a comprehensive analysis of the moral and economic implications of the government overtaxing the telecoms industry. Taxation is like a share of the profits of government investment in productive capacities, from education to economic infrastructure. The Nigerian government’s failure to invest in our telecoms killed NITEL. But unashamedly, right from the importation of mobile telecommunications technology, the government has been using it as a cash cow, starting with huge entry fees of hundreds of millions of dollars, and currently is the second highest contributor to tax receipts, both corporate and VAT tax. 

However, the telecoms industry has been a main economic growth driver, stimulating growth in retail, transport and banking sectors. Now, should President Tinubu kill the golden goose with overexploitation, especially as the world is moving into AI technology and governments are decreasing telecoms costs to make it more accessible. Also, in addition to excessive bank charges, high interest rates are killing business. If we look closer we would see a trend of anti-business policies, whereby the government removes production subsidies in petrol and electricity to deflate our economic activity, which has moved from hard production to online production.

We might criticize and advise the political class as much as we want, but it appears to fall on deaf ears, so it is up to the masses to rise and demand a favorable social contract of the Free and not slaves, monkey dey work baboon dey chop. Before President Tinubu comes with a tax reform, he should first reform his idea of governance and the social contract between the government and governed. We are not here to fund the exorbitant cost of governance but to pool our resources, proportionately to our income, to get cheaper education, housing, health and employment infrastructure. Otherwise, he should stick to loans from those he owes his power to.

Prince Justice J Faloye, author of The Blackworld: Evolution to Revolution, President ASHE Foundation think tank and Afenifere National Publicity Secretary.