It remains a chicken and egg dialogue whether we should increase transparency and accountability before expanding the tax net. But the two can go on simultaneously. At the recent Ibadan School of Government and Public Policy dialogue, one of the panelists on taxation raised the moral dilemma of paying tax to an irresponsible government that delivers little or no services to citizens. A barrage of taxes are levied on businesses which seem more like disincentives to business success without providing the competitive and enabling environment for business to thrive. And sometimes, the collection is done in a crude and authoritarian manner. Year after year, Nigeria continues to score low on the business competitiveness index.
At the citizens’ spectrum, we all dig boreholes for our water and many communities are still providing electricity transformers and stringing cables to access electricity. I know of a couple of estates in Abuja where residents are contributing not just to build inner estate roads but access roads to the estates. Public services, in terms of schools and hospitals have collapsed and public servants are owed arrears of salaries in so many states. And in all these, there is still a call for tax compliance and expanding the tax net. All these look like building up a case and reasons why Nigerians should resist taxation. However, we hold here that rather than build up a case against taxation and compliance, it provides the background and the reasons supporting the advocacy for compliance with tax laws and the authorities expanding the net. The locus standi to demand accountability from government, I dare say, may be the payment of taxes. The best person to demand the accounts of a pool of funds is a contributor to the funds.
Over the years in Nigeria, we have generated a human rights and development dialogue of claiming rights whilst de-emphasising the relevant duties. But rights and duties are two sides of the same coin. How many Nigerians remember Section 24 of the 1999 Constitution while clamouring to make Chapter 2 on Fundamental Objectives and Directive Principles of State Policy justiciable? Section 24 provides inter alia, that it shall be the duty of every citizen to – (d) make positive and useful contribution to the advancement, progress and well-being of the community where he resides; and (f) declare his income honestly to appropriate and lawful agencies and pay his tax promptly. Our rights must be balanced and tempered by our duties.
But it does not end in payment of taxes, citizens need to organise and get involved in groups for the demand of fiscal responsibility and accountability. It will not make sense to hand over resources to a group of people, operating in the name of elected representatives and allow them to manage public resources as they like. Organising and building movements are imperative if we need to deepen democracy and development. Thus, we will build structures that not only emphasise rights and duties but become vehicles for constant engagement between citizens and elected representatives. The popular saying is that we should stop agonising and start organising.
Has anyone imagined or calculated the cost of lack of engagement or poor governance in terms of lost resources and opportunity cost? Take the simple case of access to water. Imagine the cost of digging hundreds of boreholes and overhead tanks, the cost of servicing the boreholes and pumping out water over a year. It will definitely be 10 times more than the cost of digging one or two industrial boreholes and the infrastructure to reticulate water across the estate. In a typical Nigerian estate, this is the scenario and one may be tempted not to calculate the cost because individuals are bearing the cost. However, the resources of individual citizens are part of national resources which could have been more properly deployed to achieve greater welfare if the governance system works well. Proper citizens’ mobilisation and organisation could provide a bulwark for engaging governance so as to properly manage and use public and private resources to yield more value for money and enhance the public welfare.
However, citizens’ confidence in government provides the best foundation for voluntary payment of taxes. Available information indicates that the free education of old Western Region was funded by a levy. The experience of the funding of the Imo Airport initiated by the administration of the late Sam Mbakwe also shows how citizens rallied to fund the airport. Levies were collected and people paid voluntarily, not only in Imo State but in the Diaspora. All these could happen because citizens had faith and confidence in the authorities that managed the money. The authorities on the other hand did not betray the confidence of the people. They delivered on their mandate.
With diminished oil rents available to governments at all tiers and with a low tax to GDP ratio lower than the ECOWAS average, taxation should be considered as a way forward to improving government finances. For now, the suggestion is not an increase in rates or introduction of new ones but to get all relevant stakeholders into the tax net, strengthen collection by simplifying compliance procedures and plug leakages in the system. This will give tax stakeholders a sense of participation in not only electing government but funding governance. We also need to manage the transition from non-payment of taxes to an attempt to enforce compliance. Admittedly, it is a paradox that we are remembering taxation as a source of funding governance at a period of economic decline. But we need to start somewhere.
To facilitate citizens’ voluntary compliance to taxation, the authorities need to open up governance. We need monthly and quarterly accounts of how much came into public coffers and how it was expended. We need a National Assembly whose budget is open to public scrutiny. The lifestyles of our leaders should also change from grand opulence to suit the austere times because citizens will feel reluctant to fund the ostentatious lifestyles of the current leadership. Nothing stops us from going back to the low profile that will dispose of the big limousines and SUVs as official cars and the array of aircraft in the presidential fleet, while going for modest means of transport for public officials.
We need to collectively decide on our priorities and not just few elected and appointed public officials deciding for us what should be our priorities in the budget. This should happen across all the tiers of government, from the federal to the local government levels. A review of the 2016 federal budget estimates reveals how not to spend public resources, especially the tax revenue. Over 40 per cent of the increased capital expenditure is in the classification of administrative capital. Virtually every MDA is asking for new vehicles, computers and software programmes just as a means of cornering the enhanced capita budget. Goods, infrastructure and services that impact on public welfare did not get the required priority. And this is where citizens’ mobilisation and organisation should lead the way for reform. Beneficiaries of a decadent system cannot reform it except there is a push from outside.
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