Whose money?

So much has been written about the level of impunity of the last PDP government where billions of dollars were siphoned away by government officials. The APC came into power in 2015 on the back of a promise to fight corruption and recover all the monies stolen by the government of President Goodluck Jonathan. What […]

So much has been written about the level of impunity of the last PDP government where billions of dollars were siphoned away by government officials. The APC came into power in 2015 on the back of a promise to fight corruption and recover all the monies stolen by the government of President Goodluck Jonathan. What interests me is that one of the current dominant narrative amongst many Nigerians, is that fight to recover ‘our’ money. 

The question that sometimes filters through my mind when government says it will recover the funds stolen is that whose money is it really? How do we define this rather sticky issue? Many of the poor in Nigeria feel that they are more entitled to the funds than the middle and upper class. All Nigerians, irrespective of their contributions or non-contributions to the family pot, feel that just by being part of the geographical expression that is Nigeria, entitles them to lay claim to what they refer to as our common wealth. 

To understand this position, we can examine another dominant narrative that is making the rounds, where we are told that Nigeria’s tax is only 6% of its GDP making it one of the countries with the lowest Tax to GDP ratio. There is thus a need to ensure tax compliance. While this might be true, what it fails to recognise or acknowledge is that this is not simply because many Nigerians are not paying the ‘right’ tax but could be more likely that many Nigerians cannot do that. With over 70% of Nigerians supposedly living below the $1.25 threshold that defines poverty, they are simply too poor to pay taxes. Also, many other Nigerians work in the informal sector making it difficult for them to be captured in the tax net.

I bring this up because, if so many Nigerians are not paying any taxes, one can argue that they are really not contributing much to the Nigerian state or at least their contributions in financial terms are but a small percentage in the greater scheme of things. It is those in the formal public and private sectors that are bearing the load of paying what will generate the revenue required to carry out the numerous developmental projects that are needed to cater for every member of the constantly increasing population. 

Of course, for equity, taxation has a redistributive function that taxes the rich more and the poor less, allowing the less fortunate to feel part of the society through the provision of social services such as health and education. This will reduce social strife and allow for greater social harmony. But how much redistribution is fair? Can those that pay taxation argue that they are being treated unfairly in the scheme of things? In Nigeria, it is taxpayers’ money that pays for the Joint Venture Cash (JVC) calls and new investments in the oil industry required to enable the oil companies continue to produce that oil that generates ‘our’ money. Even investments in other sectors through loans and the burden of the loans being sourced for the social programmes are going to be borne by only the taxpayers. 

Every nation needs every section of the country to survive, however, equity works both ways. If we compare countries such as Norway and Sweden where taxes and tax compliance are high, we see that unemployment rates are low, 4.15% and 6.5% respectively, while Nigeria’s unemployment rate is 18.8%. When we look closer to home, in Ghana and Togo the unemployment rates were 5.6% in 2017 for Ghana and 6.79% for Togo in 2016. We can also look at the population growth rate which is 2.6% in Nigeria compared to 0.8% and 1.1% in Norway and Sweden respectively and in Ghana and Togo these are also 2.2% and 2.5% respectively, both slightly lower than in Nigeria. These show that with their higher employment rates, taxation should be higher (with effective tax administration) in these countries than in Nigeria. The lower birth rates also mean that the level of new investment in social services will be lower.

It is important that government understands that when it pushes that narrative of our common wealth, they need to educate the less fortunate that they need to play a greater role in how ‘our’ money is generated. That is the social contract that will provide greater sense of belonging between all sections of the country. ‘Our’ money belongs to every Nigerian citizen and the tax payers probably have a greater stake in demanding for accountability of how these funds are used than the many that do not pay any taxes and are actually pushing their responsibilities to the tax paying population. Continuing on this path will only pitch different sections of the society against each other, something that will affect social harmony in the country.

Dr. Liman, wrote this piece from Kaduna