By
Madaki O. Ameh
Introduction
The evolution of the Nation-State in pre-historic times brought with it some attributes, which was designed by early thinkers to make it easier for the State authorities to carry on its assigned roles in society. As the citizens of the Nation-State subdued their individual rights to that of organised civil society where they agreed to be governed by uniform rules and regulations of human conduct, and also confer on the State some rights to sanction deviant behaviour, the modern day society as we know it today gradually evolved from the “Hobbestian state of nature”, where life was nasty, brutish and short, and might was right.
One of the mechanisms through which the State, not being itself engaged in any income generating ventures, was expected to generate resources with which to provide for the common good of all, was to take a little of that income which accrued to individuals, and create a pool of funds from which common amenities like security, roads, utilities, schools, healthcare, etc., could be provided. Thus evolved the concept of taxation, as we know it today. From humble beginnings when taxation was no more than 5% of average income of individuals, the appetite of the State to more funds grew as the needs of society became more complex. Different taxes and levies started being imposed on individuals and corporate organisations, and what initially started as a voluntary contribution to the State gradually assumed a compulsive nature, such that laws were made to punish evasion of taxes by different governments.
This essay attempts to examine the various facets of life in Nigeria from the point of view of the respective obligations of the citizens to pay their taxes, and the duty of the State to provide amenities, and comes to the inevitable conclusion that nowhere in the world is there a better justification for evasion of taxes than in Nigeria, as the governments here have done little or nothing to deserve any form of contribution from the citizens by way of taxes.
To date, the average direct tax rate the world over is 30% of earned income, with variations from country to country. Tax relief became a tool of manipulation and political campaigns at election times. The governments which promised the most tax relief were more favoured by the citizenry, who often paid taxes under duress, obviously having better things to do with their incomes than handing it over to a bogus apparatus called the State, as they were not always able to tell the direct benefits they obtained from the government for payment of those taxes.
The level of resistance to taxation in different places differs in degree and complexity. Whereas citizens of most underdeveloped and developing countries rely on the non availability of population and income data in the hands of the taxing authorities to evade taxes, thereby leaving the burden of taxation to be borne by a few in regular employment, in the more advanced and sophisticated economies, people rely on the services of tax planners and other experts to cleverly avoid tax through lawfully recognised means. One common feature in resistance to taxation is however the perception of the populace towards their governments in the area of effectiveness in meeting their common needs. In areas where the governments are perceived to be up and doing, and people can visibly assess the impact of government on their daily lives, governments have been more able to rely on taxes as a major chunk of their national income than other places where governments are perceived as non-performing.
It must however be borne in mind that the basic justification of the state in collection of taxes remains the need to raise funds to provide amenities for the common good. Where those amenities are either lacking completely, or where they exist, are largely provided by the citizens themselves without any input from government, then the moral or legal right of the State to impose such taxes becomes suspect.
This essay attempts to examine the various facets of life in Nigeria from the point of view of the respective obligations of the citizens to pay their taxes, and the duty of the State to provide amenities, and comes to the inevitable conclusion that nowhere in the world is there a better justification for evasion of taxes than in Nigeria, as the governments here have done little or nothing to deserve any form of contribution from the citizens by way of taxes. That being so, the paper advocates a well articulated and structured resistance to taxation, especially by workers in the oil and gas industry in the country, who are undoubtedly the most unjustly taxed sector of the Nigerian economy.
For the purpose of this essay, the amenities legitimately expected from Government can be classified into Personal Security, Roads, Public Utilities, Schools, Social Security, Medicare, Housing, and a general enabling environment for economic and social activities to thrive, as would be expected of any civilised human setting. These different aspects will be discussed in turn, to establish that in all these areas, successive Nigerian governments have failed woefully in its social contract with the citizenry, and that any form of taxation in Nigeria is unjustified and amounts to blatant stealing by government.
Personal Security
It is a generally accepted fact that Nigeria is a very insecure place to live in. Crimes are committed against decent and law-abiding citizens on a regular and routine basis, and there are no effective avenues to redress those wrongs. The sense of insecurity pervades the living pattern of the people, and reflects even in the way they build their houses. Unlike most places in the developed world or other saner environments in neighbouring African countries where people just build their houses without needing to erect fences, in Nigeria, when one thinks of building a house, the first thing that comes to mind is putting up a high fence. Apart from helping you to secure the land from encroachment, which in itself is a criminal offence, the high fence gives a feeling of obtaining at least a temporary reprieve in the event of an attack by hoodlums, which is sure to come. Thus, in many cases, the fences are higher than the houses themselves, giving the feeling of living in prison.
This essay attempts to examine the various facets of life in Nigeria from the point of view of the respective obligations of the citizens to pay their taxes, and the duty of the State to provide amenities, and comes to the inevitable conclusion that nowhere in the world is there a better justification for evasion of taxes than in Nigeria, as the governments here have done little or nothing to deserve any form of contribution from the citizens by way of taxes.
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Even after those fences are erected and the houses are built, they have to be fortified with burglary proofs, which pose a real hazard in the event of fire. Entire families have been known to roast to death in such houses, but because of the pervading feeling of insecurity in the land, there is hardly any house in Nigeria which does not have re-enforced burglary proofs, with all the added costs.
This essay attempts to examine the various facets of life in Nigeria from the point of view of the respective obligations of the citizens to pay their taxes, and the duty of the State to provide amenities, and comes to the inevitable conclusion that nowhere in the world is there a better justification for evasion of taxes than in Nigeria, as the governments here have done little or nothing to deserve any form of contribution from the citizens by way of taxes. At the end of the month, these persons have to be paid from the after tax income of the citizen, thereby further reducing his purchasing power. In an environment where everyone is up and doing, there would be no need for the individual to be put to the extra expense of providing his own security, as such roles properly belong to the State. But alas, not in Nigeria.
Even when crimes are committed, the lack-lustre attitude of the Police to investigation and prosecution of the offenders leaves so much to be desired, and even emboldens prospective criminals. The rate of success in criminal prosecution in Nigeria is abysmally low, as the Police, not being interested in the prosecution process, usually abandons it midway, leading to the escape of known criminals from justice. But for the total lack of crime data in Nigeria, the country could easily pass as the one with the highest number of unsolved crimes in the world! People are murdered daily and their corpses left on the roads to decay and disappear into the dust, often in very close vicinity to Police checkpoints where they perpetually stop to collect bribes from law-abiding but helpless citizens.
The state of insecurity and decay is so much that most Nigerians have resigned to their fates and come to realise that as far as their personal security and safety of their lives is concerned, they are entirely on their own. Meanwhile, bogus budgetary votes are made yearly for security agencies, but the impact is not felt anywhere. The only time heinous crimes attract attention is when prominent Nigerians are involved. Even then, the outcry lasts only for a few days, and pales into insignificance as the days go by and other more important news takes their place. As soon as the public outcry disappears, the interest of the Police in the case also disappears, often after parading some people they allege to be the suspects, which most people know to be false! To date, the brutal murder, in his own house, of the former Chief Law Officer of the country, Chief Bola Ige, remains a subject of politicking, with one of the principal suspects having been sworn in as a serving Senator of the Federal Republic of Nigeria, having won his election while in detention for the offence of murder! That feat is almost certainly a world first, and a sure material for the Guinness Book of Records!
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The Police checkpoints which have sprung up everywhere, as a show of government effort at providing security, has more often than not, served as avenues for brutalisation of Nigerians. It is a known fact that in spite of the much touted and sermonised anti-corruption posture of the present Nigerian government, the country remains one of the most corrupt in the world, with Policemen openly extorting money from citizens on the roads, with the threat of being shot with guns purchased with taxpayers money, should they be bold enough to refuse. Demands for all imaginary manner of documents and “particulars” are used as the guise for extortion by the Police, thereby making road travel within Nigeria a major nightmare. Meanwhile, the criminals, who are all well known to the Police, roam the streets and hold the people to ransome, whereas the law-abiding citizens live in perpetual fear of the Police, who are forever able to come up with all manner of mischievous guises to deny them their legitimate rights to liberty.
Extra judicial murders are rampant in Nigeria, even in the so-called democratic dispensation. Innocent citizens who dare to stand up to the extortionist tendencies of the Nigerian Police, are routinely arrested and detained on trumped up charges. It is not unusual for such people to be shot dead while in detention, and be branded armed robbers who were killed in a shoot out with the Police! Even when that happens and there is public outcry, as is sometimes reported in the papers, there is never any investigation conducted to ascertain the truth or otherwise of the story. The Police carries on with business as usual, and terrorises the citizenry at will!
It is possible to go on and on, but suffice it to say that life, not really having progressed from the Hobbestian state of nature in Nigeria, there is no justification on the part of any government to demand and collect any taxes from Nigerians for provision of an amenity like security, which is clearly non-existent at the moment, or grossly inadequate.
Roads
Another aspect of public infrastructure which governments are expected to provide in the civilised world, are motorable roads. Roads link different places to each other and facilitate commerce, social interaction and the wellbeing of the citizenry. In times of emergency, roads are also used to access areas of distress to bring help and succour to distressed people.
In Nigeria, due to the largely unplanned nature of most settlements, there are no roads, or where they exist, they are mere death traps and tracks created by the residents to be able to get to their places of abode, no matter how miserable the process may be. In Rivers State where I live, work and pay my taxes, there are hardly any roads of note in the entire place. Even where the few tarred roads exist, there are no drains, so whenever it rains, the whole place is flooded, with residents practically needing canoes and flying boats to get by! When this occurs along major tarred roads, one wonders what the fate of those who live in other places with untarred roads would be. The houses are flooded, and people live under sub-human conditions, amidst captivating government propaganda that all the problems of the people have been solved! The situation is not any better in other parts of the country.
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To ameliorate their suffering, it is not unusual for residents to come together and contribute money to construct their roads, and at least provide access to their houses. Due to the swampy terrain of most areas, such exercises are usually very expensive but ineffective, as the next major rain is sure to wash away such roads and return the people to their erstwhile misery. The funds contributed for such community development efforts in the face of government neglect are not tax deductible, thereby further reducing the disposable income of the taxpayer on a service, which the government has already been paid through taxes to provide.
Public utilities
This comprises of electricity, potable water, sewage and refuse disposal systems. There is no doubt that these amenities, which are largely taken for granted in other places, are hardly in existence in Nigeria.
Electricity supply in Nigeria has been as epileptic as it can ever be. Most of the country is still not connected to the National grid. In the few towns and cities which enjoy this facility, the service is more often than not, never available. Governments have, from time to time, paid lip service to improving the availability of electricity, and recognised the fact that genuine development will continue to elude the county as long as power remains epileptic. Different deadlines have been set by the government to provide stable power. The last of those deadlines, announced by President Obasanjo himself on National television, was 31st December 2001. Almost two years since that deadline expired, Nigerians have continued to witness more epileptic power supply, even as so much money has been squandered on the National Electric Power Authority (NEPA), which is generally recognised as a haven of official corruption. Electric transformers bought by government to aid in electricity distribution are routinely sold to individuals and residents of layouts, and the monies shared by NEPA officials. Residents of areas who genuinely need these transformers are denied their installation, unless they comply with the demands of NEPA officials and pay huge sums of money to them. When they have to comply, such payments are not tax deductible and further impoverishes the taxpayer and reduces his purchasing power on an item the government should legitimately provide.
In the meantime, individuals are forced, due to the epileptic nature of power supply, to spend huge sums of money on generators. Apart from the initial cost of purchasing the sets, the cost of maintenance and fuelling, especially in the never ending regime of fuel price increase and black marketeering in Nigeria, further serves to impoverish the taxpayer.
As for potable water, the story is even a more sorry one. Unlike most places in the civilised world where public water works exist and are taken for granted, in Nigeria, plans for house construction are never complete without provision for a private borehole. Any attempt to overlook this very important item will result in dreadful consequences, as there will be no water to take care of basic needs in the house. And to rub salt in an already sore injury, some Local Governments go about demanding payment for private water borehole licenses, when the failure of government to provide this all-important natural resource is responsible for people embarking on the needless expense of providing private boreholes for themselves!
Sewage and refuse disposal systems are also non-existent in Nigeria, even though these are legitimately within the purview of government to provide. Every house has to have its private septic tanks, and the cost of regular dislodgement is borne by the individual residents. The same goes for refuse disposal systems. Failure to make private arrangements, at own costs, for these items means that the residents are on their own, and will therefore bear the consequences of any ailments that arise as a result, including the cost of Medicare. In other civilised countries where the government is alive to its responsibilities to the citizens, integrated sewage systems are provided, and run by the state as part of public utilities.
Schools
Education is recognised the world over as a veritable tool for economic, social and political advancement of the people. Since the discovery of education in its modern form, responsible governments the world over have invested heavily in this invaluable resource, as the only sure way to salvage their peoples from the trappings of poverty, ignorance, and want. No amount of funding and efforts is seen to be too great in this area, since the benefit to society at large is immense. In many counties, education is either absolutely free, or heavily subsidised by the government. Expenditure properly incurred in the education of one’s children and wards is treated as tax-deductible, to encourage people to give their children the very best education possible, in the sure realisation that the larger society stands to benefit immensely from it.
However, in Nigeria, the story is entirely different. Everyone is on their own as far as education is concerned. The few available public schools are never known to have functioned well in a long time. Instead of things improving with time, the Nigerian educational system has deteriorated over time. The schools are poorly equipped; teachers are very poorly motivated, and are hardly paid their salaries in time, if at all. The popular saying in Nigeria is that the reward of teachers is in heaven, after they would have long died from starvation on earth! Successive governments have paid little or no attention to education, thereby leaving majority of Nigerians ignorant and illiterate, with no hope in sight.
Schools are closed most of the time because the teachers are embarking on one strike action or the other to press home demands for something as basic in other places, as salaries, wages, allowances, and teaching aids! And the government officials are not bothered because most of their children are not affected, since they can afford to send them to expensive Ivy League schools outside the shores of this country on funds stolen from the public purse!
It has also been argued in some quarters that the neglect of education in Nigeria is a deliberate design by government officials to ensure that the people are kept in the dark, so that only their own children and relations will be equipped with the requisite knowledge capital to take over from them when they die off in old age!
As a result of government neglect of education, private schools have sprung up everywhere, some of them with suspect practices and curricula. Due to near total absence of supervision to ensure that standards are maintained, these schools are allowed to carry on the way they please, but the parents have no option than patronise the schools, because the public schools are non-existent.
The school fees charged by the private schools, starting from the pre-nursery schools to the few private universities, are at best embarrassing, and bear no relationship to the services rendered to students in these schools. The average school fees in a private Nursery/Primary school in Port Harcourt which boasts of any standard at all, as at the time of writing, is N30,000.00 a term! How can the average Nigerian worker, who earns less than N10,000.00 a month afford to pay for his children’s school fees at such schools? And what choice does he have, when the public schools are not functioning? At the end of the day, most children of eligible school age are sent by their parents to hawk wares in traffic jams, just to make ends meet. As time wears on, these children join the ranks of the uninformed and illiterate, and more often than not, veer into crime out of frustration.
Meanwhile, the exorbitant school fees paid by the few who can afford it is not tax deductible, as the State does not care whether the parents are paying for the education of their children or not. Since the taxes paid by the citizenry are meant for provision of amenities like education, which does not exist or is grossly inadequate, where then lies the justification of continued taxation of the people?
Social Security
In caring societies, the government provides a sense of belonging to all its citizens, irrespective of whether they are strong or weak. Those who are strong and able to work are consciously encouraged to engage in gainful ventures, which create wealth. Others who are not so lucky, either due to ill health or other causes, are recognised as such by the society and provided for in a caring manner.
In Nigeria however, the reverse is the case. The few people in government consume most of the national wealth through a bogus government bureaucracy, which adds next to no value to the lives of the people. Government recently admitted that 85% of the national budget is spent on recurrent expenditure, leaving only 15% for all other expenditure that touches the lives of the people. Meanwhile, less than 1% of the total population of the country works for government, and another very few are engaged in any form of meaningful employment. The irresponsible manner in which the national wealth is frittered away without any form of accountability to the people, makes public office very attractive in Nigeria. Government officials do not have to do anything for the people. If a Governor constructs a road, people hail him as having tried! They fail to realise that provision of such common amenities, is the reason for the existence of government in the first place.
The National Social Insurance Trust Fund is another drain pipe where workers in the organised sector are compelled to make contributions, without any hope of being able to reap any benefits from it whenever they lose their jobs, or become unable to earn an income, for any reason, as is the case in other societies where the idea was borrowed from.
In Nigeria, unless you are strong and able to fend for yourself, no one cares for you. Your daily meal is entirely your responsibility, and if you are unable to provide it for any reason, you may as well starve to death! In any event, the government does not even know that you exist! Due to complete lack of data on its citizens, Nigerians are of no statistical importance. Census figures are always fraudulently manipulated to serve some mischievous ends, thereby leading to a situation where no useful data is available for any form of planning. In the event of natural disasters, casualty figures are only estimated, as no one knows for sure who is alive or dead at any point in time. After the bomb blast disaster in Lagos, over 1,000 people were estimated to have died, because that figure was close to the number of the actual dead recovered from the swamps! This situation can be contrasted with the unfortunate disaster at the World Trade Centre on September 11 2001, where every casualty, to the last man, is today known by name!
In an uncaring society such as ours in Nigeria, one wonders what the purpose of taxation is. The money realised from taxes are not put to any use that people can see, and those who are unable to provide for themselves are completely neglected and left to die, or eke out a living by inconveniencing others. Destitutes are all over the place on the streets, begging for money to eat, with no hope of any provision from the social welfare departments, as is the case in other saner societies.
Medicare
The state of healthcare delivery in Nigeria is legendary, in its neglect of the people. Government officials only parrotise the general saying that health is wealth without knowing or caring what its underlying meaning should be.
Most hospitals in Nigeria are an eye sore, to say the least. The environments are smelly, with suffering and pain everywhere. One of the most harrowing experiences a person can face is to be ill and go to a public hospital in Nigeria, or have to attend to a relation who is ill in hospital. Nothing is available! Even water, which is quite basic, has to be bought by the sick person or his relations before operations are performed on them. This is certainly true of the Braithwaite Memorial Hospital in Port Harcourt, which is supposed to be a centre of medical excellence in Rivers State. When water is not available, how can one talk of drugs? The doctors are disgruntled, either from poor pay or inadequate conditions of service, or the frustration that flows from not having the most basic tools to work with. Most of them resort to referring patients to their private hospitals, where they can at least earn some money from them, and also provide some semblance of Medicare, albeit at exorbitant costs!
In view of this, most Nigerians meet their untimely deaths from ailments which can be easily treated, and from other ailments which they contact while waiting in the unhygienic environments of the public hospitals, waiting in vain for never available healthcare.
As is always the case where public services fail, many private hospitals have sprung up, to cash in on the non-availability of healthcare from the public sector. These private hospitals are however either too expensive, or due to lack of standards, end up being as bad as the public ones. It is not unheard of for people who are not even doctors, to set up “hospitals” in Nigeria, and even perform surgical operations!
For years, governments have touted the idea of health insurance, as a way of introducing some sanity to healthcare delivery. But like all other things Nigerian in nature, health insurance, which works so well in other countries, and is private sector driven, remains perpetually at the conceptual stage, with huge sums of money being wasted annually on setting up its bogus infrastructure, which will never work as currently conceived.
Housing
A shelter over one’s head is one of the basic necessities of life, and responsible governments the world over, strive to provide this amenity, or encourage its provision through private enterprise. Thus, functional mortgage institutions whose responsibility it is to build houses and sell the same to people at affordable rates, exist in different countries, and serve as the main ways through which people own houses in other places. Where houses are sold to people, the interest rates are made very affordable and spread over a long period of time, for ease of payment. It is therefore an aberration in most of the civilised world, to see homeless people, who are not being provided any form of care by the social welfare authorities.
In Nigeria however, the sight of people sleeping under the bridges, in uncompleted buildings and under the open sky, even in peacetime, is very common. Embarking on a building project is one of the most harrowing experiences in adult life. Apart from the high cost of the land and the intrigues surrounding land ownership which has led many unlucky people to fall victims of fraudsters and land speculators, the actual experience of supervising a building project, from inception to completion is both exhausting and harrowing. The cost is also quite another thing, and one has to live in debt for a long time afterwards, if you are not a government official who just takes the money from the public coffers to embark on such private project.
In a sane environment where government is interested in planning for its people, mortgage payments are tax deductible, and people who embark on such projects do not have to unnecessarily strain themselves and their families before being able to live in their own houses. In Nigeria, you can hardly, if ever get tax rebates for money borrowed to build houses, and there are no organisations ready to lend money for such long-term ventures. In the end, most Nigerians live in shanties called houses, with no visible efforts by government to put policies in place to encourage home ownership. The National Housing Fund remains a tool for political gimmicks, and in spite of the many years since its conceptualisation, it remains a thought process yet to deliver any houses to Nigerians, either now in the foreseeable future.
General enabling environment
Amidst all the numerous bottlenecks highlighted above, survival in Nigeria is difficult for the citizens, thereby resulting in many of them jetting out of the shores of this country, even if in search of menial jobs in other places, at least to be able to fend for themselves. This trend, which the government is very much aware of but has done nothing to stem, has led to the loss of very good brains who would otherwise be in Nigeria today contributing to its development. Government pays lip service to desiring development for the country, without putting any concrete plans in place to ensure that this happens in a transparent and auditable manner. Year in year out, huge sums are budgeted by the government, but there are always complaints of funds not being released for projects, even by the government agencies. Many vital government agencies, such as the National Drug Law Enforcement Agency, the Immigration Service, the Nigerian Prisons Service, to mention a few, are starved of funds, and are therefore unable to play their assigned roles in addressing specific areas of national need.
Meaningful tax reliefs
The tax structure as it currently operates in Nigeria today is outdated, and offers
no meaningful relief to taxpayers. The point has already been made that government cannot justify tax collection in Nigeria because no services are rendered in exchange for the taxes paid by the citizenry. But even if taxation is not entirely eliminated because government has somehow become used to this source of unjustified revenue, then meaningful tax relief which bear a relationship with actual expenditure outlays of taxpayers should be introduced. The following are suggested areas which must be looked at as a matter of urgency:
All expenditure necessarily incurred by an individual tax payer in the provision of amenities which should have been provided by government, such as roads, security, water, Medicare, education, houses, etc. as outlined above, should be fully deductible before computation of tax liability;
The rates for personal allowances should be drastically increased from the current rate of 15% of earned income, to 70%, to take care of the numerous responsibilities the average worker in Nigeria has to shoulder in taking care of brothers and sisters, relations, aged parents, etc., all of which are part of the burdens which in African tradition, are required to be borne by those who are perceived to be doing better than others and should therefore be their brothers’ keepers in an environment of an uncaring government.
The balance of the taxable income, after all the deductions suggested above, should then be subjected to taxation at a graduated rate which results in a maximum tax rate of 10% of earned income.
Government performance should be constantly measured against its set roles, in line with the concept of social contract, with the provision that the tax rates may be reviewed upwards or downwards, depending on how well government is adjudged to be performing in providing basic amenities for the people.
Accountability to the people should be the watchword of government, such that the present neglect and distance from the people by those in government should be discouraged. People should have free access to those they elected, to complain about inadequacies in their lives, and seek redress. Failure to comply with such minimum such minimum standards should be a good ground for recalling such elected officials, no matter how highly placed, in a process devoid of fraud, intimidation and rigging, as is usually witnessed in Nigeria’s electoral processes.
Conclusion
Nigeria is a potentially great nation, so we have heard, and have been told for years. Those potentials are however never going to be realised, the way we are carrying on at the moment. The journey of a thousand miles begins with the first step, if only in the right direction. We are currently headed in no direction at all, and since we cannot remain stagnant, we are actually retrogressing. Drastic changes therefore need to be made by honest and dedicated leaders, who do not merely pay lip service to issues, but are genuinely interested in seeing to the emancipation of the citizenry, from a largely hopeless people, to those who can wake up with confidence, knowing that their problems, even though many, are in capable hands and are therefore sure to be solved with time.
- The article was first published in 2001. Twenty-four years after, the points argued in the essay remain relevant to the ongoing national debate on tax reforms.
Madaki O. Ameh, Managing Partner at Bbh Consulting is a lawyer and former Management staff of Shell Petroleum. He can be reached via email: madakiameh@gmail.com
