By Abdulwarees Solanke
The life of every citizen is circumscribed by taxation, an imperative in public finance for facilitating development in the provision public goods and services. Hardly can one escape or evade taxation when compliance monitoring and enforcement by relevant authorities are efficient and effective.
Taxation, coming in different shades and shapes can be income tax, withholding tax, and value added tax. And as we have taxes, we also have duties, dues, levies and licences to pay as a civic obligation to the state.
Such strategic responsibility, as a matter of public policy, requires that only the vastly experienced, brilliant and dynamic minds are recruited to man institutions managing taxation in any nation, because at the core of public finance is the effective and efficient management of the tax system.
So as the year 2019 was closing, President and Commander in Chief of the Federal Republic of Nigeria, Muhammad Buhari appointed a new Chairman to lead the Federal Inland Revenue Service, the institution managing taxation in Nigeria.
In naming Muhammad Nami as a replacement to Tunde Fowler whose tenure as the chairman of the revenue collection agency expired, President Buhari also approved the composition of a new FIRS board.
Nami, a professional tax consultant who graduated from the Ahmadu Bello University, Zaria and comprehensively trained tax, accounting and management professional is now firmly in office manning FIRS is bringing a robust experience in auditing, tax management and advisory and management services.
Indeed, in many developing countries, taxation is very problematic and has even been the cause of the collapse of governments when the citizen angst against arbitrariness in its assessment gets to the boiling point.
Of cause, there are always claims that taxation is often punitive, or lacks transparency and consideration for the situation of the citizen just as there are allegations that it is a heavily corrupted or compromised obligation, with proceeds hardly getting into government coffers but ending in the deep pockets of unscrupulous government officials.
Remarkably however, in government budgeting, part of the revenue for its implementation will be derived from taxes, which the citizens should bear. But in a country like Nigeria, will the citizens voluntarily pay?
A 2001 International Monetary Fund’s (IMF) journal article authored by Tanzi, V. and Zee, H., sees the tax system as a very powerful device of redistributing income more equitably.
How true this assertion is for Nigeria and most Third World countries is debatable given the tax burden on the low income earners and the ease with which many rich and big corporate bodies and individuals either evade tax or are under-valued.
However, the two scholars quoted noted that developing countries would probably need a higher tax regime if they wish to be fully integrated into the global economy and attain the economic level reached by the industrial countries.
This suggests that a country like Nigeria must implement a higher tax regime to meet the citizens’ needs. Can the nation afford such? What is the implication on the image of a government that accepts such prescription usually bandied by consultants, experts and economists from the World Bank and its organs?
So, how do we factor in the known apathy of the people towards taxation and the pervasive suspicion that tax end up in the pockets of tax consultants, internal revenue officers, and the big men in the government.
Nonetheless, behind the crux of taxation remain the enduring need of poverty alleviation, equitable and hitch free revenue mobilization, efficiency of fiscal allocation and management, and sustainable development.
Consider this checklist: free and qualitative education, health services, public infrastructure, national defence, social welfare and government overhead. Taxation becomes a practical means of internally raising revenue to finance them.
Taxation is a normal process and the citizens pay with enthusiasm in systems where they appreciate the enormity of the burden of government and where they also understand their civic obligation and responsibility to assist the government deliver on its social contract.
After all, meeting the social contract between the government and the citizenry demands a commitment to equitably provide public services and goods, and the readiness of the citizenry to bear some of the cost.
This scenario, seeming utopian in the Third World context where corruption is the norm and good governance a challenge, is possible because there is respect for the rule of law in such climes and the accounting system is reliable, while compliance is voluntary on the part of the citizenry who have confidence on the fairness of the tax.
Public disgust, phobia and trepidation over taxation in the Third World are not unfounded. They are very justifiable because most Third World countries, particularly those in Sub-Saharan Africa including Nigeria, are still grappling with the challenge of underdevelopment with manifestations of poverty and economic crises, low capacity utilization or even collapse of the industrial sector, illiteracy, deficit of committed leadership, disenchanted citizenry and political instability.
In this discouraging environment, good governance is only a lip service as corruption, bureaucratic inefficiency, weak legal and institutional frameworks to implement policies and structural misalignment (who does what, what linkage and coordination and what monitoring and evaluation mechanisms) compromise public service delivery.
As there is a deficit of transparency and accountability in most processes and procedures of accessing government deliverables, the citizens are usually suspicious of the intentions of policy introduction, including taxes and levies.
The refrain is: What is our gain? How does it benefit us? Is it not for the interest and for the pockets of the few rich high up there? This is because they see the leaders’ attitude and lifestyles being at variance with popular situation and common concerns.
Generally, the Third World situation does not conduce to a tax system that reflects egalitarianism and voluntarism. Taxation is more often seen as punitive and exploitative. Hence, it features low compliance and high collection cost, doubtful acceptability, difficulty in enforcement and is also usually a subject of the vagaries of the local uncertain politics, values and economic dislocations.
In essence, we are not happy paying taxes in the Third World, and Nigeria is not an exception. The challenge now is what tax policy can be attractive in the Third World? Ironically, this question is not just for taxation, but for every policy issue.
Any tax policy in the developing countries, however, must take serious cognizance of the subsisting challenges, beliefs and values. The question to ask is: Does it reflect the economic structure of the society?
Therefore, in designing and implementing any policy, what allowances are made for the incorporation of local opinion leadership in mobilizing support for it? Are the citizens sufficiently informed and educated about it? Are they convinced about its gains and benefits? Are they educated about its processes, that is, the exemptions, deductions or intention? Do they understand its structure?
The Public and Social Media inevitably have patriotic role to play in educating the public about the tax system in the country because what they think mostly of taxation as a civic obligation is ‘robbing Peter to pay Paul’. If they are sufficiently informed or educated about the purpose, plans, process, procedures and pluses of taxation, their minds will be disabused of the pains or privations of taxation in our nation.
So, as Muhammad Nami now mans FIRS, managing and minding taxation for the nation, Nigeria, he cannot afford to fail Nigeria because the tax system is very strategic to public finance and national development in any country and in presiding over FIRS must assure the nation a friendly and efficient tax system.
Abdulwarees, a fellow of the Chartered Institute of Public Diplomacy and Management, is Deputy Director, Strategic Planning & Corporate Development, Voice of Nigeria and volunteers for the Muslim Public Affairs Centre MPAC Nigeria Director, Media & Strategic Communications
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