The Economics of Tax, Taxes and Death

One of the many issues that has agitated my mind in recent times, is the issue of tax, tax collection, tax administration and tax enforcement in Nigeria. This issue has become even more agitating with the many counterproductive strategies and plots deployed by government agencies and their agents in the administration of the various tax regimes. The general argument by taxpayers is that government has consistently and serially failed and abdicated its role in fulfilling its socioeconomic obligations which accounts for low tax compliance.

During one of my many trips to the United States, I sat next to an American who appeared from his drawly accent to be from Texas or from one of the Southern Belt states. During our very long 14-hour flight, we had ample time to chat about various issues ranging from race to weather, and from food to wars. After what appeared to be a flight to eternity, our discussion arrived at why he would leave America, a country that was developed and planned to cater to all the needs of most of its citizens; a country that provides its citizens with protection, social welfare cushions and other amenities, to move to Nigeria to seek employment. In that peculiar Southern drawl he said… “Mann, taxes and taxes and taxes… Uncle Sam will tax your asses off… goddamn it…” From that moment, I began to reflect on the power of government over its citizens, and the natural responsibilities between government and the governed.

My American co-traveler who, by the time we were halfway into the flight, was on his 10th, or so can of Budweiser beer and was by now loosened and more loquacious. Without prompting, he volunteered his reason for choosing to ply his trade in Nigeria. He said to me, this time, in less measured tone, as the Budweiser had started working, that; “… Mann the only things assured in life for any American is Tax, Taxes and Death… the fucking government will take everything you sweat for… and what do they give back?…” he thundered “…freaking shit, and they call it services and protection… fuck them all… I hate paying them freaking taxes… that is why I am here, where I make my sweat, tears and blood pay,… and I can keep what I want to keep for me and my family and whatever I want to give to the freaking government and the evil politicians I do… ain’t nobody gonna exploit me no more…”. He continued, this time more agitated; “… you Nigerians are fucking stupid and ignorant … why do you pay taxes to a government that does not care for your welfare, a government that does not provide simple comfort and amenities like power, good motorable roads and protection from criminals and even mosquitoes… a government made up of thieves and criminals who turn around and steal the monies they force out from the rich and the poor as taxes…” Now, looking me directly in my eyes with visible anger and condescending stare, he continued… “your people are idiots and docile fools… how can you allow this to happen? … with all the endowment bestowed on your country, human and natural, you allow yourselves to be exploited like slaves…” Although intentional, I apologise for replicating the expletive and unprintable tirades of my American co-traveler. It was done for the sole reason of showing his utter disdain for the exploitation of humanity by those in government.

At that point, I was covered in shame and was lost for words in response. All I could muster, was that our politicians were no different from the American politicians and that the American people were equally as docile as we Nigerians. This encounter that took place over 20 years ago, may have been proven right today with the current trend in America, where certain political leaders will not disclose their tax status and yet were voted in to lead that nation. Today, I wish I could run into that American, so that I can tell him how idiotic and docile his people have also become.

Upon arrival at my destination in America, I was invited to a Super Bowl party by a bunch of my old schoolmates mostly doctors from the University of Nigeria, who, long after our graduation in the 1970s, had all taken flight to the US in search of greener pastures. The host was an old schoolmate, a general practitioner of medicine, whose million-dollar mansion in the exclusive Buckhead area of the city of Atlanta, was a clear testimony of his monumental achievement and success in America. The last time I checked, his classmates and contemporaries who stayed back in Nigeria, were still battling to pay their rents in Surulere and are still struggling to manage with their children’s school fees in our dilapidated, rundown and poorly run schools.

The moment I entered my friend’s home I was greeted with warm welcome and naturally, as I had just arrived from Nigeria, was bombarded with questions about home. The firework of questions was intense, probing and nostalgic. I was not prepared and ready to provide answers to their inquisition, as I had just escaped from the hardship of living in Nigeria and was looking for a place to lay my weary head and enjoy the comfort of being in a country and a society that cater for its citizens and whosoever may have the opportunity to obtain a permit or visa to visit.

My friends will have none of that. They peppered me with more probing questions about home, relentlessly accusing me and other home-based Nigerians, who live there, of destroying and squandering the fortunes of our country. Another friend and schoolmate who is a very successful cardiologist, in fact rated one of the best in the state of Georgia, joined in the fray of accusers and with a frenzy accused Nigerians at home of being tax dodgers, thundering that the underdevelopment in Nigeria was largely occasioned by the generality of Nigerians not being responsible tax payers. The salvo of attack was coming from all corners and was articulated with brilliance by these “deserters” of our country.

I was boxed in, and, like Mohammed Ali, I started plotting my way out of the dangerous corners by jabbing, weaving and floating all around the ring surrounded by angry Nigerian intellectual immigrants whose souls were still left at home, and whose concerns were laced with nostalgia and genuineness.

I rose up, cleared my throat and at once got everyone’s attention. I began to ask them questions that appeared mundane but required answers. I asked our host where he mounted his generators and huge diesel tanks, his high fence and steel gates, his maigadis (guards), his water borehole. To the cardiologist who drove in, in a large luxurious SUV, I asked when last he changed his shock absorbers and fuel and oil pumps, and other parts of automobile that are constantly destroyed by bad roads and imported fake and low quality petroleum products in Nigeria. They all stared at me in bewilderment. I proceeded to remind them that for as little or no taxes they claim we pay in Nigeria, we get nothing in return. That if someone were to have a medical emergency right there in Atlanta, an ambulance and medical help would be there in less than five minutes, and that if our host’s house were to go up in flames, the fire service would be there in no time. I narrated to them the experiences of a neighbor who watched his house burn down to the ground and when he attempted to call the fire services, their phone lines were dead, and when they finally were dragged down by someone who drove to their station, they came with fire trucks that had no water. With dead silence in the TV room of our host, I narrated another experience of another neighbor whose house was raided in the dead of the night by armed robbers. During that harrowing incident, I told them how I was woken up by loud booms of gun shots and the repeated wailing of our neighbour’s wife and children pleading for their lives. That I peered through my window and roughly counted over ten or so hefty men carting away properties belonging to our neighbour while inflicting bodily harm on them. We and other neighbors called the Police for help. Needless to say that the Police came one hour after the night marauders who spent over an hour at this location had long left.

My host and friends were stunned. But I was not done yet. I proceeded to narrate a personal experience that occurred to me while taking a trip by road with my then young family to visit my parents in Awka, Eastern Nigeria. Driving through the death trap called the expressway filled up with potholes and dangerous gullies populated by dare devil drivers racing at speeds reminiscent of the Indy 500 motorway races with no speed limits, no police speed and traffic administrators and control, we were stopped within the vicinity of Benin City by thugs claiming to be agents of Edo State Government, who mounted road blocks with spiked thorns of iron. Before we could blink, these smelly thugs with bloodshot eyes, indicative of illegal substance inducement, had jumped into our vehicle demanding to see our radio tax document.

I explained to them that my car had no radio and that even if it did, we had no interest in listening to Radio Benin or radio whatever, simply because these radio stations offered nothing of interest to us, but mere rubbish that disturbs the tympanic membrane and pollutes the minds of discerning listeners. Needless to say, we were talking to dead horses. They “detained” us on the road for hours and forced us to part with non-receipted payment for “radio tax”. Many travelers suffered and are still suffering from similar incidents on our highways. Today the Police, Customs and even Immigration agents are all lined up on our deprecated deathtrap highways collecting “taxes” from Nigerian travellers.

Only recently, three neighbours of mine and myself came together to discuss the state of the road on our street which is located in a high brow Ikoyi residence area. Our street, a stretch of less than 200 meters, in about 20 years that I have lived on it, has not received a cup of asphalt or any type or form of pavement or maintenance. Our street, housing some of the most beautiful houses in Nigeria, on the average, may be conversely considered to be the most expensive real estate in the entire world. Yet the road is all broken and dilapidated with smelly overflooded gutters housing the most vicious mosquitoes and rodents. Whenever it rained, we and our cars swam through the streets in manic ways that will make the Olympic Swimming Champion Michael Phelps green with envy.

Yet again, every other minute, the Lagos State Government agencies in charge of tax collection for various multiple taxes: tenement, refuse, water, mast, environmental and even the air that we breath, parade our street demanding for tax payments. We have waited in vain for our road to get fixed and for other essential needs to be fulfilled by this same government.

Feeling that our living conditions have been seriously degraded and our real estate grossly devalued, the four of us, after being unable to persuade the government to take up their responsibilities and also unable to engage our other neighbours to join us in repairing the road, contributed millions of naira and contracted a private road repair company to apply palliative measures to make our street road motorable. It did not stop the tax man from making his more than frequent visits to collect where he did not sow.

Taxes are as old as the universe. The Bible is replete with various forms of taxation instances, most of them demonizing tax collectors as wicked and evil people who were not expected to be pure and were not expected to inherit the Kingdom of God. However, taxation has come to become, in modern times, an essential catalyst and an inevitable instrument of generating revenue for governments and, in turn, for providing essential services to the citizens of the state. While government and its method of taxing and its taxation policies, orientation, implementation, can be problematic, a wise and conscientous leader, who understands the algebra of economics and feels the pulse and instincts of the people he leads, would use his wisdom to institute tax policies and methods that utilize his/her power to tax and spend in a way that can be harnessed to make the economy grow, especially in the private sector and to ameliorate the suffering of the taxed.

In Economics, the redistributionists’ postulation presupposes as a moral imperative that a prosperous and affluent society must ensure that everyone has considerable basic necessities. Nevertheless, the empirical tests of the actualization of such ideals yield negative outcomes.

The motives of our tax policy makers, and by extension, the intentions of government, can never be easily discerned. My general concern is that, to the extent that the tax policy makers primary concern is for the well-being of the citizens, it is insufficient to presume that the efforts into formulating tax policies and promoting their acceptance and implementation have been consequentially beneficial to those they pretend to serve and service. For me, the ultimate bottom line is whether these tax laws and all other attendant innumerable policies actually produce the desired results. It is very difficult to avoid the inevitable conclusion that the process stopped at the point where the goal of thinking and academically articulating these ideas has been achieved.

Citizens all over the world resent paying taxes and are always suspicious that their governments and their various tax agencies place heavy tax burdens on them. The degrees of these feelings vary from country to country depending on the weight of the taxation and the social and economic services provided to its tax payers. Political economy indicators of development go beyond particular government actions or policies, including tax policies, and fundamentally, the presence or absence of a well articulated and effective tax framework within which economic and social activities can take place and flourish, has been a major enduring factor and influence on a people’s prosperity or poverty. Nigeria, no doubt, is not an exception to these cases.

The scope and limitations of government’s power in Nigeria, in theory, is largely monopolistic, and in practice, controlled by a few decision-makers, whose actions, for instance, in the case of formulating tax policies, most of the time, are ineffectual and not accomplishing the larger purpose upon which they were made. The taxpayers’ input in the formulation of the policies is often not considered. The only avenue for the taxpayers to influence the decisions of these policy makers (politicians and their appointed technocrats) is through the ballot box. But when was the last time we heard any politician campaign on substantive central issues? When was the last time any politician campaigned on any issues, period. Without a largely constructive and direct input from the taxpayer, there can be no significant and meaningful tax policy and mutual cooperation between taxpayer and government.

The most we get from our politicians is the swinging of brooms and umbrellas as symbols of their parties and the gyrations, grand standings and singsongs at political rallies as if campaigns are musical concerts. What about the taxpayers (the voting public)? When was the last time they demanded and received from their representatives in government their stands on critical matters relating to the formulation and implementation of tax policies?
There has been bitter resentment of the unequal economic and social outcomes by government in the distribution of amenities to the various sections of the country, and the consequent tax burdens that follow these projects. Cases in hand, are the proposed imposition of tolls on our highways, and more condemnable, the proposed tolling of the New Niger Bridge in Onitsha.

Critics point to the Niger Bridge project and the proposed tolling as most disdainful and a grave and tyrannical injustice to the users of the bridge. They argue that to toll and tax mostly the South-Eastern and South-Southern users of a pivotal bridge leading to the major economic zones of the country, while building other major railroads and roads in the west; like the Lagos-Ibadan Highway and others in the North, without tolls or taxes, is brazen injustice and discriminatory taxation that threaten the social fabric and fundamental strength of our political unit, thus widening the disconnect between Government and the people.

My general observation and a disheartening one, is the indispensability of our policy makers for several policies and its ultimate value from other social and economic functions. Also equally disturbing is the limitations of government’s ability to perform sweeping economic schemes under strong comprehensive central and universal planning, and not the aggressive pursuit of activities that cater to the wills of particular individuals who wield power and use it to suppress and oppress the citizens of the state through excessive taxation without reciprocal benefits.

Our politicians constantly remind us that our country’s tax-to-GDP is comparatively too low to other countries, and that if we do not pay tax, we have no moral obligation or right to challenge or demand from government to provide public goods and other basic amenities. I argue and urge government to do the reverse; to enhance the tax community by fulfilling its obligations in the provision of adequate socioeconomic values and infrastructure such as security, electricity, portable drinking water, housing, road and rail transportation, etc.

Government should also reduce the excessive heavy tax burden, overtaxing and other corruption elements inherent in the administration of the policies. This will build trust and encourage the citizens, who will in turn embrace tax compliance.

The economics of tax, taxes and death in Nigeria produce a painful sense of unfairness in a society that is expected to promote and support the welfare of its people, and by so doing avoid some of the trampling social realities that intrude upon the wellbeing of hardworking Nigerians. A transparent and judicious application of our tax revenue is sine qua non for the compliance of the citizens with our tax obligations.

• Dr. Okey Anueyiagu A Political Economist wrote from Ikoyi Lagos.