Taxing informal economy in a way that they are not worse off

For the last year or so, there has been an increasing emphasis on the need to tax informal economy in Nigeria, the excitement is across the nation.

As if it is new awakening that people in this category make money too. Well, the clue to the interest is the ever decreasing oil prices.

Last year I read with interest, notes from Nigerian economists (too many to mention) – I just have to shake my head. Not that they didn’t make sense but because I realised that for some reason a chunk of Nigerians have been walking around thinking the civil servants/office workers are the only one that should have robust disposable income.

This is ironic because even today, most Nigerians both male and female work in informal sector – from rural area to big cities.

Like our governor of Osun State, Ogbeni Aregbesola – his mother is called Iya Olobi (kolanut seller) for a reason.


Now, my state is making a lot of changes, creating more local councils and all. I don’t understand reasoning for many of these actions, but I hope those closer would have better understanding.

Which brings me to the point of the new tax cash cow that my people are just discovering – informal sector.

I am all for taxing; making everyone contribute their fair share to building our state/nation. However, there has to be a defined formula to follow so that people here are not worse off.

Whether it is Akara Osu or Dodo Ikire or indeed Mama Olobi that we want to tax to raise revenue – it has to be fair if we ever want to get it off the ground at all.

I read somewhere where Ogbeni Aregbesola stated that he was trying to emulate what has worked in other countries (or something like that), that is great. One of the purposes of taxation is to create social welfare where there is a pool of fund whereby everyone contributes to and then redistributed so that the least of us are not worse off.

Significant part of tax fund goes back to maintaining communities in the west – Public schools, libraries, museums, recreation centres etc – these help to ‘cushion’ tax burden for people because they can see and be beneficiaries of their contributions.

This means that everyone in principle pays according to their earnings. With no exceptions.

I think it is a misconception that people don’t want to pay tax in Osun State for example, people just don’t want to ré èsun s’ínú ibú (taking from the pond to fill ocean).

Most people in informal sector in Nigeria have no pension waiting for them so they put all their earnings on educating their children (those who chose to). If they don’t work, no kobo comes in – as simple as that. If they fall ill or any of their family does, they may end up loosing every kobo paying medical bills.

Too many people close to me lost all their money this way, and in some cases life.

So if we are going to successfully charge informal sector, people need to see this money being put back into our public schools including our villages – too much money waste of useful cash/time for needless travel for the villagers.

Many of our people will never make it beyond secondary schools – let’s make it worth while for everyone not just children of folks in offices and towns.

If villagers’ money is good enough to contribute to building revenue for the state, they deserved improved schools (like the new ones) too.

Osun a maa dara si