The Need for Holistic and Altruistic Approaches to IGR and Taxation in Nigeria

Posted by African Examiner Featured Contributors/Columnists, Latest Headlines Tuesday, December 8th, 2015

Akintokunbo A Adejumon – akinadejum@aol.com

BALTIMORE, MD (AFRICAN EXAMINER) – This is not an academic or professional article about what IGR or taxes are. We already know what they are and the role they play in governance in any country. This is more about our leaders’ attitude and approaches to implementing them effectively, such that they will be more publicly understood and acceptable.

On the back of recent economic woes that has befallen the states in Nigeria, and the Federal Government, several state governors seem to have woken up and are gradually coming to their senses and the cries of the need to increase, improve or, for some, establish Internally Generated Revenue (IGR) and taxation in their territories have suddenly dominated their statements to the public through press interviews, projects commissioning and workshop opportunities. In most cases, these erstwhile profligate and corrupt politicians are speaking through the sides of their mouths because they either do not know what they are talking about or they are playing up to the gallery to cover past misdeeds and to appear to the public that they are still there with the knowledge of what to do about their ailing and moribund economies.

In saner and more civilised countries, where decent politics, democracy and good governance have been embraced by all, both leaders and followers; IGR and taxations are no longer issues; they are normal governance procedures. The leaders who are elected do not need to chase after IGR and taxes; these are already in place to support them in delivering the goods to their people. And the people from who these are collected are assured that whatever is collected from their salaries, business profits and other incomes will be used altruistically and suitably for their benefit and not corruptly for those they elected or are appointed to rule them.

These two interconnecting facts do not exist in Nigeria. People, perhaps understandably, do not want to pay taxes and contribute to IGR because of the ingrained perception that such money extorted from them will disappear into the rulers’ pockets to fuel inordinate wealthy lifestyles, and even worse, to oppress them. In fact, we see the evidence every day in the way our elected and appointed officials behave in public, internally and outside in the wider world.

Herein lays the dilemma for both rulers and followers – lack of trust, lack of credibility, lack of sincerity, lack of purposeful leadership and lack of trusting followership, as well as an ignorant, indifferent and unsympathetic public. A dilemma or difficult circumstance of our own creation from which there seems no escape because of mutually conflicting or dependent conditions – dubbed “a

catch-22 situation”.

A little digression: Just a few months ago, a local government chief executive sought my advice, and a possible contract for me, on exploring and exploiting new sources of IGR in his local government area, as well as improving on what little they already have. I came back to him after one month with just four pages of comprehensive and implementable ideas, including new sources and execution methods that will pay the salaries of his staff; will reduce dependency on the federal or state allocations so that the federal handouts will be released for developmental and other local authority projects. He was ecstatic, but unfortunately for both of us, for me on a business consideration; he told me his governor did not warm to the ideas. I know what he meant. There seemed to be not enough money in the ideas to benefit his “oga”.

Then recently, the governor of the State of Osun proclaimed that he is recruiting “Tax Marshals” to boost the revenue base of the state. Remember the State of Osun was the worst offender that failed to pay the salaries of his workers for almost eight months, before the federal bail-out came, and even now is still owning many month’s unpaid salaries, and not very sure of its ability to continue paying the salaries. Who or what is a Tax Marshal? I will let him answer that, but I sure hope it is not like that of Lagos State, where they say over 25% (please don’t quote me, the figure is always varying, because nobody knows the true figure) of the taxes and revenue collected goes into the tax consultant’s pocket in fees.

A friend then wrote me: “The challenge for Osun is to create jobs and attract investments, first and foremost. Without jobs, organisations, factories, shops, or commerce there will be no taxes to collect. As a matter of fact if you recruit ‘Tax Marshals’ who go about intimidating entrepreneurs, prospective investors are driven away.

To encourage investors, your tax regime must be liberal initially as well as competitive. Knowing Osun and Nigeria, these civil servant ‘Tax Marshals’ will be underpaid, owed months of unpaid wages, will have no other alternative than to demand bribes from shopkeepers, companies, factories or other organisations.

When Awolowo and the AG developed Ikeja, Ilupeju and other industrial and commercial estates, the tax regime was initially low. Lagos state is now the biggest beneficiary of Awolowo’s foresight and investment. The industries and commercial concerns are tied in already. So Lagos State could impose stricter tax regimes.

Has [Governor] Aregebesola created investment, industrial or commercial bases [and enabling environment] in Osun yet? Is Osun attracting investors? Let Aregbesola lay the foundation like Awolowo did, then Osun will gain the tax benefits in the future”. (Olukayode Nathan)

Furthermore, development initiatives are not about just the federal allocations or IGR. It is about developing the human capital through applicable education, skills development, providing basic infrastructure; portable water, electricity, transportation, roads, telecommunications and in these says the Internet. Any government not addressing those developmental initiatives is a failure. Any government not providing good education to the youths is a disaster no matter how big the IGR.

Are the vast majority of children achieving in schools and colleges? For Lagos and Akwa Ibom or any other state, the answer is NO.

Are the state governments providing for the health and welfare of their people? The evidence show there is lack of basic infrastructure; lack of portable water, health facilities, lack of sewage facilities etc. in most parts and indeed the rural parts of both Akwa Ibom and Lagos states, or any other state in Nigeria for that matter. So both states like all other states fail the test.

We need to be objective rather than defend ineptitude. None of the governors or public officers in those states would send their children to their public schools including the universities, and as we often see, they and members of their families will use the state-built hospitals for medical care. A good and poignant example is that of former Akwa Ibom State Governor, Godswill Akpabio, now a senator of the Federal Republic of Nigeria, who had claimed and shouted to the rooftops during his tenure as governor that he has built a “world-class hospital” only to be flown abroad for treatment of minor injuries he sustained when he was involved in a car accident in Abuja a few months ago. How do we explain this incongruity and hypocrisy?

The problem is that our politicians never think of legacy building; they never think of building and erecting foundations for the future or for the next generation. They are very myopic, and do not see beyond their noses, all clouded by greed, self-interest and thievery. They want it NOW, during their tenure, mainly because of the profit in kickbacks and bribes and the exaggerated glory that will come to them during their tenure only. “What do I care about the next government or the next generation?” that is their thought.

That is one of the main reasons why the development of our industrial, infrastructure, investment and commercial bases are so poor. They make no attempt to leave some legacy behind; no continuity of purpose and governance. Even in the same political party, a new incoming governor or local government chairman wants to start afresh, just to make his own money and empower a few family and friends and then proceeds to dismantle and discard the little that his predecessor managed to do.

It is very sad, this phenomenon. With so many dearth of ingenuity and resourcefulness from our so called leaders, it is no wonder most states are in distress in Nigeria and go begging, cap in hand for the Federal Allocation in Abuja, out of which they even embezzle most.

Fiscal federalism or autonomy is a very long unachievable dream in our times, if the mind-set of both rulers and the ruled stay primordial and suffocatingly corrupt, because the revenue allocation formula in Nigeria inevitably encourages parasitic governance where states become relaxed and endlessly expectant of the monthly ritual of allocation from the federal government. According to Dare Arowolo, a lecturer in the Department of Political Science and Public Administration, Adekunle Ajasin University, Akungba, Ondo State, the implication of this is that while the allocation formula limits the capacity of states to provide public goods needed to promote and sustain governance, it also predates on the Internally Generated Revenue (IGR) of each state, thus making the states perpetually dependent on the Federal Government.

The surest way to at least partial fiscal federalism by both the states and local governments not only lies in an altruistic approach to generating internal revenue but also a sincere and holistic will and commitment to using the income so generated.

In a way, we should be happy that the mind-sets are changing, but why should it be only when reality has set in; only when the price of crude oil, which we have depended on for so many years that we have neglected other sources of revenue, has fallen to very economically-dangerous levels? We are in it together!!!