There are about 15 million cars in Nigeria, but we use more SUVs than many countries around the world, if not all. So, let’s say 50 per cent of these cars are small. That will be 7.5 million small cars multiplied by N10,000, making N75 billion. If the other 7.5 million big cars are taxed at, say, N30,000, that will make for N225 billion. This is a potential yearly collection, on this tax line alone. We could start very small and scale up later.
Weeks after the All Progressives Congress (APC) won the elections in 2015 and amid all the euphoria of the times, the party organised its first and only economic summit at the Hilton Hotel, Abuja. As a supporter of General Buhari then, I attended. I noticed that there were many professors of Nigerian descent invited from abroad. The atmosphere was optimistic. We thought we had finally gotten it right. But many of the professors, as well as the captains of industry, who were invited only came to lament about the scarcity of funds for economic development. A lot of the professors also came with dated ideas and I recall in one of the breakout sessions, former Minister Bolaji Abdullahi, while having a hard time convincing these pundits that basic education was a better investment than university education, with the scarcity of funds earlier alluded to. Someone like me was rather out of place there, because the conveners already had their famous and favourite intellectuals to call on to. I recall trying to get the attention of Governor Fayemi on a personal basis and being brusquely brushed off by him too. In that season, I made friends with Okoi Obono Obla and Senator Olorunnimbe Mamora.
But it was in the last plenary I attended that I got the inkling that we may had missed it, again. It was question and answer time, and as much as I tried, I was not called. But a white lady almost in front of me was recognised to speak. She got up and said this, exactly: “I’ve heard many people say that you do not have finance for your projects. I’ve been to many countries in my time. Nigeria is the only country where you don’t get charged for over-speeding. How then do you intend to get finance for your budgets?” As a professional, she sat down after this short and direct question. She looked like a diplomat of sorts. But the organisers totally ignored this question, much to my dismay, and moved on to another question. The average Nigerian has no time for small fries like overspeeding tickets. Chances are that the lady was equally disappointed. But for me that day, that was it. After about 10 minutes, I got up and left. I had lived in London and I know how things work. I also understand the power of aggregating from a large number of people, small fines, fees, duties, rates, rents, levies, and taxes. I know that you may not succeed as a government if you ignore what you think are the little things. Of course, the Buhari administration is closing as one of the worst in our history. Not only have we seen two recessions in seven years, there is a chance we will see another one within the next few months, making it a record third recession under the same administration. Put that down to bad luck, but we also lost whatever was left of our societal discipline and too many of our people have become belligerent and destructive. And we are stuck with one of the lowest government revenue-to-GDP ratios in the entire world.
One unspoken reason behind our low revenue compliance and capability problem is that our elites are not yet ready to reach a consensus, to use their wealth to reboot this economy. I recall that some months back before the election frenzy, the vice president spoke about elite consensus. But he never followed this up. At his 2019 colloquium, Asiwaju Tinubu also emphasised the need to be more aggressive in getting government revenue up. He even offered himself as a sacrificial lamb by saying that if he was not paying enough taxes, he should be approached. I have noticed, however, that our finance ministers would rather not rock the boat, and our tax collectors are such that don’t understand just how dedicated to their jobs they should be. Some of them always take sides with taxpayers, helping to rationalise why people shouldn’t pay taxes. When an Inland Revenue Service man begins to say things like, ‘shey you know they bought their own generator and did their roads’, you know you have a problem. A tax collector must have a single-minded approach to his job, and only rationalise at the highest level. A trainee tax collector should do his job strictly, not assume the position of adjudicator for we taxpayers. For a culture of tax and other revenue compliance must be achieved in Nigeria if we are to make progress. And I am less particular about taxes than I am about other areas of government revenue such as:
Now we are in deep trouble, as we owe very close to $100 billion. For context, as at 2006 when we were in a debt trap and begged for forgiveness from the Paris and London Clubs, we were owing just $35 billion. The Buhari administration alone has contracted almost $50 billion in new loans plus the devaluation of currency effect. The Jonathan government, with Mrs Okonjo-Iweala as coordinating minister, left our loans at $53 billion.
Back to the lady’s question. Why do we not collect fines for overspeeding in Nigeria? It is just because we refuse to be organised. We also are uncontrollable. And any society that is uncontrollable, where every and anyone does things the way they like, will never make real progress. Our uncontrollability is the reason why people now see Nigeria as a pariah nation – a place to be avoided. Not only have foreigners stopped coming here, they are also sealing us from their countries. They are only interested in our best brains whom they hope to be able to reform. They have given up on us organising ourselves, and even we have since given up on ourselves. With EndSARS and other recent upheavals, our people became even more uncontrollable. A lot of Nigerians would rather make a big scene, and cause trouble, if they are asked to pay a fine for overspeeding. They will put it on Instagram Live and attempt to ridicule the law enforcers. Law enforcers too would rather just collect a small bribe and let the culprit go – money that should go to the state for, well, executing the budget. And then our professors will come to summits such as the APC’s and lament how we don’t have money to execute their brilliant ideas. Our government will also give up on getting organic revenues up, and choose to rather borrow instead. Now we are in deep trouble, as we owe very close to $100 billion. For context, as at 2006 when we were in a debt trap and begged for forgiveness from the Paris and London Clubs, we were owing just $35 billion. The Buhari administration alone has contracted almost $50 billion in new loans plus the devaluation of currency effect. The Jonathan government, with Mrs Okonjo-Iweala as coordinating minister, left our loans at $53 billion.
Perhaps a more serious and intractable issue facing us in this regard, is that we have too many ‘big men’, who run for free. There isn’t anyone born of a woman in Nigeria who can stop the Nigerian big man and ask him to pay for overspeeding or for running traffic lights. Yet, these guys are the biggest culprits. They just don’t give a toss about things like this. They are also the ones riding motorcades of many luxury cars, paid for by the taxpayer. Yes, the poor, disappearing, unfortunate, taxpayer.
As Another Administration Approaches
If we are not careful, the next administration, if it is populated by the usual mindset, will also complain about having no money to finance its otherwise lofty ideas. Already, I’ve heard many people – a lot of them young folks – wondering where the funds will come from to run some of the ambitious projects of, say, a President Tinubu. I haven’t heard very ambitious ideas from the rest, who are basically trying to shrink public goods and pursue market determined prices for everything. And so, I was just thinking around this issue the other day and decided to explore just one item; vehicle taxes, or road tax, or car tax; call it whatever you wish. I discovered that Pakistan had recently doubled car tax on any car beyond 1600cc horse power, and tried to look at the revenue implication of a similar tax in Nigeria (even if collected at the state and local government levels). Let’s start small. Say N10,000 tax per year on small cars. There are about 15 million cars in Nigeria, but we use more SUVs than many countries around the world, if not all. So, let’s say 50 per cent of these cars are small. That will be 7.5 million small cars multiplied by N10,000, making N75 billion. If the other 7.5 million big cars are taxed at, say, N30,000, that will make for N225 billion. This is a potential yearly collection, on this tax line alone. We could start very small and scale up later. And if government can show integrity, fidelity, and example, this country can be transformed and its GDP can grow in double digits. We are coming from a negative position anyway. I believe that we can transform this country without the ongoing reckless borrowing that is mortgaging our unborn children.
The world is changing rapidly. Nigeria has only been left behind because of the attitude of we the people – the leaders and the led. We sort of believe that development will drop on our laps, or that God will neglect other peoples of the world and help us. Sometimes, we also believe that we can borrow our way out of underdevelopment or that the white man will gift us technology. It is that simple. We act like people with simple minds, make all the wrong assumptions, and complain later. Development is hard. Development is difficult. Development is long-term and requires pain, planning, and perseverance.
It is the seriousness around tax collection that makes South Africa budget seven times our own budget, in dollar terms, for her people, while we can only budget peanuts. The SARS (South Africa Revenue Service), collects at least R1.54 trillion every year. If we multiply this by 26 into the Nigerian naira, that comes to N40 trillion. Our entire federal budget is a mere N17 trillion, despite all the push from folks like me who have insisted that we budget higher for our people.
I recall the day I paid AED1,600 in Dubai for overspeeding. Some eight years ago, Dubai, which had transformed its economy away from crude oil and into tourism, also got smart and installed speed cameras everywhere. One day on my way from Al Ain, I was just ‘blowing my speed’ normally, doing a modest 120 kilometres per hour (kmph), not knowing that they had dropped the speed limit to 80 kmph in some areas. What I paid that day alone is equivalent to N250,000 today. And that was not the only time that I was caught by the speed camera in Dubai, even in Umm Al Quwain. Nigerians are in Dubai, paying this every day. What this kind of tax does is however not just about raising money for government, but ensuring order in society. Abuja, our Federal Capital is today the most unruly, most undisciplined and, of course, the most corrupt city-state in Nigeria. Nobody has respect for traffic lights, not even the good old local taxis (they just don’t care anymore). On a few occasions, the traffic police makes brisk business for their own pockets. Of course, if we cannot make Abuja sane, there is no hope for anywhere else. Shame on the Buhari government, but things must change.
It is the seriousness around tax collection that makes South Africa budget seven times our own budget, in dollar terms, for her people, while we can only budget peanuts. The SARS (South Africa Revenue Service), collects at least R1.54 trillion every year. If we multiply this by 26 into the Nigerian naira, that comes to N40 trillion. Our entire federal budget is a mere N17 trillion, despite all the push from folks like me who have insisted that we budget higher for our people. At the current level, our per capita budget is a mere $200 per person, while SA does as high as $3,000 per person. In Europe and the USA, this number is around $25,000 on the average. Why would any other country then have respect for us? We are not taking ourselves serious and we have consistently allowed monies that are due to government to flow instead into the pockets of individuals and gangs. This must change. Even tax havens like the Arab countries have embraced change. Where parts of Nigeria (particularly the North and East) are very resistant to taxation, even the Arab countries have introduced the value added tax (VAT) at 5 per cent (2017 in Dubai and 2018 in Saudi Arabia). Tax in the new age is godly, except you want to get into serious economic crisis.
The challenge for our government is how to show fidelity to the people. How do we show that government is not merely collecting from people to spend freely on their fancies? I believe this can be done. Under Governor Fashola in Lagos, this was done. Signposts littered Lagos showing what taxes were used for, while encouraging residents to pay more. People found themselves complying more. This must be done nationally. And why not? We are now in serious trouble and crisis, using 95 per cent of our meagre revenue to service the interest on our $100 billion debt. Our Federal Inland Revenue Service now collects close to N7 trillion, as against N40 trillion collected by the SARS of South Africa. We cannot continue like this. Certainly not. Nigerians should rally round to save their country, and invoke the wrath of Hades on that public servant who wishes to usurp their sweat.
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