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Published On: Thu, Oct 25th, 2018

Creative taxation and matters arising

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By Sola Adeyeye


Taxes are hardly welcome with a smile. Even in jurisdictions where public funds are judiciously husbanded, taxes are often treated with as much dislike as for leprosy! As such, I was not surprised that my call for creative taxation has attracted an admixture of commendation and condemnation. One has learnt to take both with equanimity.

Suffice to say, for a start, that politicians in general and serving legislators in particular are not the only ones who need to think outside of the box in the wake of the economic doldrums currently besieging our republic. The knights and dukes of the press, ostensibly canonized as putative purveyors of eclectic reasoning, must themselves elevate their criticisms beyond the box!

After reading the objections of Tunji Adegboyega to my suggestions, no one can denounce his concern that part of the additional revenues accrued from creative taxation would be embezzled by the iniquitous political class. Unfortunately, perhaps unwittingly, Adegboyega sank into the very within-the-box mental framework he was denouncing! Otherwise, his preoccupation should have been about promptly effecting such checks and balances that will prevent such taxes from being embezzled. Rather, he seemed to be arguing that because such creative taxes will be embezzled, they should not be collected. Is it possible that some of the taxes currently collected through variegated means and sources are also embezzled? If we stretch Adegboyega’s argument to its elastic limit, perhaps we should proscribe all taxation until such a time that we can guarantee the absolute cessation of embezzlement! But we must leave the ridiculous for the sublime.

Contrary to the innuendoes of Adegboyega, the vast majority of Nigerians will hardly be affected by a revised system that taxes so-called allowances. Most of these allowances are hardly known to the masses! Rather, they are constitutive but obscene perks of the rotten upper caste in the public and private sectors of our workforce. The rumbling protestation that greeted my suggestion from some of my own colleagues reflected the angst of a threatened caste. It is no secret that most prosperous countries across the world embrace progressive taxation that ensures that those who earn more pay more taxes; those who earn far more pay far more taxes.

In Nigeria, whether in the public or private sector, the extant practice is that huge portions of income are sheltered under the loophole of so-called allowances. What we need is a progressive scale of taxes based on the total earning of every citizen. Details of such progressive taxation can be left to the tax experts to evolve in the best interest of our republic.

All of us are free to point accusing fingers to past and current leaders for the economic mess in which our republic is submerged. Unfortunately, the blame game will not suffice to get us out of this choking mess. Yes, let us blame; let us prosecute, punish and curse. But let us do more than these. Let us get creative in finding solutions.

I am well aware that we already pay some valued added taxes on our phone calls. Currently, a page of 160 characters costs 3.81 naira. Adding one naira tax to a page of text message is, arithmetically, a relatively huge increase. But can we honestly say that Nigerians will suffer unduly for paying less than five naira per page of text? We used to pay about fifteen naira per such text message at a time that one naira had double its current value!

Likewise, I am well aware of the promises made prior to the disbandment of the toll roads. But are current economic realities the same as those prevailing when the toll roads were disbanded in the second term of the Obasanjo regime? In any case, would we not have been far better served if our toll roads had been modernized rather than disbanded? Across the world, policies like this are not cast in stone as if Government is gifted with inerrancy. On the contrary, tax laws are constantly revised to dynamically reflect society’s needs and resources.

Alas, our short-term resources have plummeted while our needs continue to rise along with our escalating population. Hackneyed calls for the diversification of our economy must never discountenance the cost for such diversification and the lag phase between investment and yield. During this phase, we must find creative ways to cut the cost of government while also expanding its revenues. Anything short of these is wishful thinking. For example, many glibly talk about the potential for much higher tourist revenues for Nigeria while discountenancing the reality that this will not be actualized until we first develop the ancillary infrastructure for successful tourism.

Like Adegboyega, Nigerians are generally pained and infuriated by the profligate prodigality and recent looting of our common patrimony. We salute recent efforts to recoup stolen funds. Even so, our pain and fury must not derail us into the common fallacy that these efforts constitute an eternal panacea for our woes. If we can recoup two trillion naira of stolen money this year, will this be a recurrent revenue for the next several years? Specifically, shall we be able to recoup the same amount every year for the next five years? What will be our recourse if the price for crude oil continues to plummet? Shall we arrest Dasuki and others and try them again?

Elsewhere, I have advocated for the cancellation of so-called oil subsidy. But that must await its own separate discussion.


Sola Adeyeye is a senator of the Federal Republic of Nigeria

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