Niyi Akinnaso: How much of your government do you own?

Published:12 Feb, 2013

There is a fundamental reason Nigeria is often compared to the United States. The Nigerian presidential system of government and the constitution are patterned after those of the US. As a vibrant,  continuous, and uninterrupted democracy for over 230 years, the US clearly provides a good model for the rest of the world. Incidentally, Nigeria also shares with the US the status of an oil producing state. However, the US has been very prudent with its oil wells and reserves, by only allowing limited exploration at a time and importing oil from all over the world, especially Nigeria and the Middle East. As part of its energy conservation strategy, the US continues to stock up on refined petroleum for a rainy day, while also aggressively pushing an alternative energy policy that seeks to end dependence on oil importation, and, possibly, fossil fuel altogether.

Although the US collects rent on its oil resources like Nigeria, the mainstay of the American economy is taxation. Thus, while Nigeria relies almost completely on its oil revenue, the US relies almost completely on taxes from its citizens, corporations, industries, and small businesses. In this sense, the Lagos State economy mirrors that of the US, if only on a very small scale.

Having worked within the American university system for nearly three decades, I experienced the American system of taxation first-hand. Every month, before my paycheque reaches my bank account, Federal, Medicare, and Social Security taxes would have been withheld. Then, whenever I file my tax by April 15 every year, I often pay additional federal, state, and local taxes. I pay a monthly property tax as well, from which money is appropriated to improve local schools, roads, and parks. Such improvements, of course, often require the residents’ approval or disapproval through a referendum. Finally, as a New Jersey resident, I pay at least seven per cent tax on everything I purchase, except food and clothing. At the end of the day, a quarter or more of my annual income goes to various taxes.

It is this reliance on taxpayers’ money that makes the American government directly responsive to its citizens. It also explains why local, state, and federal officials fall over themselves to satisfy their constituents. They do not tag constituency projects to bills in order to pocket the money. No, no; the money goes directly to appropriate constituencies for specified projects. That’s why they are anxious to inform citizens about how their taxes are spent. Signs, like “Your tax dollars at work” are often posted at road construction sites. As a rule, American  politicians often meticulously document their achievements in office, knowing full well that they will be evaluated by voters when they campaign for re-election.

Because they literally own their government through taxation, Americans have a reason to demand accountability from their politicians. This idea of citizens as owners of their government has been at the heart of American democracy from its foundation. It is not for nothing that their democracy is defined as “government of the people, for the people, and by the people”. This notion of democracy was captured in 1776 in the Declaration of Independence by the memorable phrase, “We the People”. President Barack Obama used the same phrase to frame his inaugural address on January 21, 2013, citing citizens’ demands as the bases for his policies.

If you are a Nigerian, the question to you is: “How much of the Nigerian government, or your state and local government for that matter, do you think you own?” The answer is not that simple. From those who come from the oil producing states of the Niger Delta, what you will hear is to the effect that Nigeria exists on their back. They hinge their response on the argument that the nation’s oil wealth comes from their region. This is the basis for their demand for increased derivation and for prolonged militancy in the region. In effect, what the region’s “landlords” (Governors and the like) are collecting on behalf of the people is rent from the Federal Government, which acts as their agent. Now, you can understand why a number of the landlords collect the money and fly with it. The same situation applies to Nigerian politicians in general, particularly those in the Presidency and others charged with the petrodollars. Their profligacy and lack of accountability are not unconnected with the source of the funds. Because they don’t come out of the people’s pockets, Nigerian politicians manifest a callous sense of irresponsibility by pocketing as much of the money as they could.

By contrast, Americans in oil producing states do not manifest the same sense of ownership that Niger Deltans do. Nor do American politicians run away with oil money. They can’t, because their laws and sense of responsibility do not allow it. In any case, all taxes are collected by the Internal Revenue Service, which then pays directly to the treasury.

There is another group of Nigerians who have a more valid claim to ownership of the government than Niger Delta landlords. These are the taxpayers. Unfortunately, they are few and far between. Nigerians don’t pay enough tax, if at all, unless it is deducted at source through the Pay As You Earn system. Those who fall into this category include civil servants; teachers; and workers in government hospitals and parastatals. The number of people involved in the PAYE system is unknown. But it is fair to estimate it at no more than 15 per cent of the population. Perhaps, an additional five per cent of businesses, big and small, pay some token taxes.

So, we are left with about 80 per cent of the population that pays little or no tax at all. Ok, let’s take away an additional 10 per cent of the population to take care of the high youth unemployment factor. We are back to 70 per cent of the population that is supposed to be living on less than two dollars a day. The question then is, how much tax can Nigeria collect from its citizens in order to remain solvent, say in the absence of petrodollars?

The answer may be surprising: A lot. Who knew that Lagos State would be able to collect billions and billions of naira in local taxes until former Governor Bola Tinubu came along with Alpha Beta? Say what you will about his excesses, he has turned the fortunes of Lagos State around for ever. Every state needs its own Tax Collection Agency, while the Federal Government needs to go after the top one per cent, like President Obama is now doing in the US. It won’t be easy. The rich and the powerful will resist. Market women, small-scale traders, and artisans will resist. Labour and trade unions will protest. But it is the right thing to do. A tax code must be enacted that requires every citizen to file their tax by a certain deadline each year, as in the US.

If Nigerians want to own their government, and have more than their votes to defend, they must brace themselves for taxation. That is what responsible citizens do in civilised democracies.

 

Niyi Akinnaso (niyi@comcast.net)

Read original article via Punch

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