The Governor’s Mistake [Video]

The Governor’s Mistake [Video]

A governor waives most small business taxes in his state, and attacks the core principle of taxation, Nigerians rejoice – he is fighting for the masses. Yes, why should we pay taxes when there is no government in our lives? Every respectable company in Nigeria runs a local government operation, providing its water via borehole, electricity via generator and security via private security guards. Government is invisible! We know those things – Nigeria is not working. Yet, what will make Nigeria work is not killing taxation but by demonstrating that taxes can work for the people, and then using that construct to stimulate them to pay more. Until Nigeria can get people to understand that taxation is part of being a citizen, we have no future.

Yes, many  have shared the clip of the Governor of Cross River state, Ben Ayade, who waived most taxes in his state. While his post Covid-19 tax waivers are commendable, his broad statement should not be celebrated blindly. He attacked the tax system, making a case that governors should not make. For Nigeria to rise, governors have to find ways to deepen their tax bases, and then use the resources judiciously. Like I noted in the Platform, people willingly pay taxes when taxes are working in their lives! But that does not mean we have to give them excuses not to pay. Why? The promises of all politicians are taxes of the citizens. When that tax is not available, nations fade.

I respect His Excellency but his argument is flawed. Tax should not be based on scale of business but profit, as contained in the Nigerian tax ordinances. People should pay taxes as that builds a system we all depend on – affordable public schools, at least. If you are in any government university or polytechnic and paying less than N300,000, thank tax payers for that possibility when private schools continue to hit new heights on fees and tuition. 

You tax a man that makes N30,000 as a teacher while the man who owns 20 goats selling two every market day does not pay tax. Mr. Governor, in his thesis, where farmers should not be taxed will be comfortable with that. The construct  is that only those that have formal employment should pay taxes in Nigeria even though some of them are still very poor! Yes, the farmers, carpenters, cab drivers, etc are not paying, but that does not mean that is normal. We have to work hard to change that even if they have to pay N50 in a year provided that was based on their profits. Government does not need to have directly helped in your farming before it can have the rights to tax the profits from your farming.

Governor is a politician but his state will not advance on this muddling tax policy. He can suspend tax payment during a pandemic. That is fair, but making collection of tax to be seen as an evil system is recklessness.

 What Mr Governor needs is a tax collection system which follows the law: find an efficient way to tax profit whether from a big or small company. Linda Ikeji blog was rumored to be making hundreds of millions of naira  at a time. She probably had less than three staff. Many said no tax was paid. But if you check her revenue, she could have made more money than most insurance companies in Nigeria – most report less than one billion naira in revenue, yearly. Yet, they are hit with tax while those small profitable entities pay nothing.

This is my formula – prepare the minds of people that paying tax is part of being a citizen. Do not attack the tax system. Sure, you can suspend or waive during a pandemic but taxation is not evil. For more than twenty years, Nigeria has been working hard to re-orient the citizens on the necessity of paying taxes. We cannot make heroes out of those who now think asking people to pay taxes is a bad policy.

Yes, a governor should not send a different message. I will hope our leaders make that point because Nigeria’s problems of tomorrow will be anchored on our ability to pay taxes. More so, a state governor has limited control of taxation in Nigeria. The statement from the governor could make the work of federal tax collectors harder, as the citizens will see all of them as agents of the state, which the governor had mandated not to collect taxes. Practically, a governor cannot dictate most things on taxation in Nigeria. The man who sells acres of land and pays no VAT, and the man who sells dozens of cows and pays no VAT should not be given tools for excuses.

I commend Mr. Governor for waiving taxes during this hard time. We need the small businesses to thrive, for tomorrow. But taxation is not bad and no governor should preach that message. Our challenge is this: tax collection remains sub-optimal and governors like Ben Ayade should improve that system in Nigeria.

I COMMEND the tax waiver.

 

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4 thoughts on “The Governor’s Mistake [Video]

  1. You see why Nigeria is always in a confused state? The governor in question is a professor, in case you have forgotten…

    When we elect the ones that didn’t go to school and they grossly underperform, we argue that we need those that schooled very well. But here we have one of those that apparently schooled very well, though it’s still unclear if his sense left him immediately he became a governor, because I had seen some of his other senseless utterances; he’s a joker by several magnitudes anyway.

    A governor is apparently discouraging payment of taxes, simply because at the end of each month he heads to Abuja to collect his own feeding bottle money; so of what use is tax pay payment? His counterpart in Rivers is equally busy turning himself into an emperor, in the name of fighting Covid-19 battle; but they all went to school.

    And you addressed him as His Excellency? I don’t understand.

    As to how to get operators in the informal sector to pay their own taxes, the same way Discos share electricity bills to both metered and unmetred consumers, you can develop a similar mechanism for tax system…

    Reply
    1. The tax that have been paid before now .has it been us to help the poor masses as loan so that they can pay more .
      This governor is totally right,
      The rich are always rubbing the poor in Nigeria .
      They will only copy the monetary part of citizens bills in foreign country they will not copy the policy of how they are
      helping their citizens

      Reply
  2. I beg to differ on Ndubuisi’s opinion here, having seen how the Nigerian tax system works in detail for a number of years. The principles of taxation in Nigeria has been wrong for ages. No politician has been able to make the statement this governor has made ever in Nigeria. Nigeria has a plethora of taxes which are not equitable, morally justifiable and actually become triple or quadruple incidences of taxation.
    Also in a country where the masses are unable to identify the benefits of taxation in their lives or that of anyone whatsover, it is essentially an abysmal hole that leads to the pockets of the Nigerian corrupted system. I think he can manage the state on a macro level and create work and development in his state by encouraging development of small scale enterprises. A lot of state governments harrass residents for too many different types of taxes and would do well to build a structure that would enable them identify taxable individuals and those that should be left out of the tax net so that concrete plans can be put in place to develop them to be taxable in the future.
    The background of taxes in the world was not to help individuals but to create a monopoly for those who administer nations. It has been abused particularly in Nigeria so far.
    A government which cannot provide basic infrastructure for its people does not even have any right to demand for taxes. I think we as professionals would do well to make it plain for government to show the populace its actual income and expenditure so that those who are bearing the burden of taxes can see what the taxes are doing and what it is not.
    When state governments can come out and provide citizens with detailed income and expenditure of taxes then the equity is very visible.

    Reply

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