Most Nigerians already are tax payers, maybe not to the earthly purse

Nigerians have always being tax payers, this may not be that obvious but really they do – government agents from local to federal level need a lot to learn to make sure taxes go to the right purse.

When I was little in the 80s, in the then Oranmiyan local government, almost every adults pay their taxes, even the non-government staff.

People like my father makes his payment without any reminder, it was a flat rate for farmers. For the traders, it is mostly collected in the markets.

The other way to make sure fewer people slip through the net at the time  was to make it mandatory that all school children produce parent’s tax receipt in the beginning of academic year.

This system was far from perfect at the time, in fact it was open to lots of abuse and double taxation as people sometimes get taxed twice if unable to produce receipts at check points, however hard a lot of people paid up.

The biggest factor that contributed to people’s resistance is  that there were no public improvement whatsoever to show for the government revenues so over time, taxation of public stopped altogether.

Fast forward a few decades later, despite the population increase, it seems the percentage of people paying any form of tax in the same area has reduced significantly. Today, only tax paying adults are registered businesses and civil servants.

The myth of taxing poor masses

The poor masses wanted to pay taxes,  lots of challenges for sure, however, if this hasn’t stopped Lagos state from collecting taxes within the state, surely Osun can do the same.

For example a friend in Ogun state got taxed flat rate of 10k naira/annum for dried food stuff shop. People with similar source of income in Osun got off with paying no tax.

As it stands today many small enterprises in all of our towns are not paying any taxes to the government because no one is asking them or the misconception that everyone is poor so exempt from tax.

However, this same group of poor masses somehow are very happy to comply with the religious rule of 10% earnings tithe and sometimes, they do accept more or less according to individual economic blessings.

I wonder, if Nigerian churches could be so clever to instil in people the need to secure their ‘heavenly home’ through taxation, surely it should not be hard to convince the same group of people to pay towards improving their earthly surroundings.

From what I know growing up in the area, people’s resistance to paying taxes has nothing to do with being poor,  if there is more transparency in the collection and spending of people’s  contributions – they will happily obliged.

If any government is able to educate the people of Osun state on the importance of taxation, it will be Ogbeni Aregbesola as people love and respect his work.

Home grown solutions to Nigeria socio economic problems

Thinking about socio-economic issues,  I recently realise there are many Penkelemesi (peculiar mess) in our culture that must be addressed to give room for bigger economic improvement.

This is even if we have ‘perfect’ government with minimal corruption related to management of public funds.

There are lots of assumptions made on behalf of many poor Nigerians yearning to make ends meet. The assumption that people can always make the best decision especially when it comes to prioritising is not exactly true.

The more I think about it, I realise people do indeed need education not just about how to best invest their capital but most importantly is how to separate business accounts from personal ones.

Philanthropists, activists and lots of Western sponsored NGOs may genuinely want to help so wealth can be spread a bit better across our regions but in Nigeria for some reason we are blinded to the reality of how wealth created must be retained in business for higher turnover to occur.

Take for example this exchange I had with a friend recently.

About a year ago, Kola stood as a guarantor for a bank loan so a friend could increase his business capacity. The bank had trusted his judgement given record of long business with the bank and the bank knew he has assets they can rely on, so loan was approved for Kola’s friend to expand his business.

Commercial bank interest rate in Nigeria is in excess of 20% – clear sign for common man with no connections never to knock on their doors as it is out of the reach for small to medium size owners with no tangible assets. However, medium-sized business do get this high risked loan as there is more to gain with volume, so this was the case for Kola’s friend.

The way Kola talked about his friend’s commitment to grow his business and the fact he has worked really hard to get it off the floor is something many investors would be interested to support.

Earlier on this year, the friend was supposed to start the repayment back in instalment, the bank made a reminder call of their agreement. In February Kola’s friend disappeared leaving the bank no other option but to chase Kola to find his friend or his assets could be confiscated.

Kola was seriously worried. What he saw about his friend the week after his bank loan was approved was total change of lifestyle. Before the loan approval, he only had a truck for running his business, however weeks into the loan, he bought two cars, one for himself and the other for his wife – this was done to compliment the sudden growth of his business to the people around him.

Story such as Kola’s friend is very common in Nigeria, whereby people treat money loaned to them as ‘earned’ only to satisfy the yearning to fit in.

Maybe, there is other way to help people before given financial help – education on lifestyle.