[size=20pt]OMOIGUI: These tax methods are oppressive

By Salisu Suleiman
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July 16, 2009 12:08PMT
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At a business centre in Abuja recently, officials of the Federal Inland Revenue Service (FIRS) stormed in, almost commando style to demand for tax documents. The reaction of the owner, as well as other people at the business centre said it all. I know for sure that if there were firearms anywhere close, they would have been used. And the FIRS would have been at the receiving end.

The harried owner of the business centre, struggling with the burden of running the place permanently on generators; struggling with exorbitant rents; struggling to pay salaries; struggling to keep the place open for one day at a time, and indeed, struggling just to survive in Nigeria's dreadful business environment would have snapped and done something terrible. And every witness in that business centre would have testified in any court that it was a case of temporary insanity. (Though the business environment in Nigeria is permanently insane!).

The economic foundation of most modern states is based on taxation, which is a compulsory levy imposed by government on the income, capital or consumption of its citizens for the purpose of raising revenue to provide basic and essential amenities and services to the entire citizens of that country.

Its imposition is backed up by Law and it also has punitive measures for all defaulters. Taxation is part of a country's fiscal policy and used the world over as an important macro-economic tool to achieve objectives like controlling inflation, fighting poverty, unemployment, maintaining economic stability and ensuring economic growth.

But that is for sane economies. In a country like Nigeria where every economic theory is turned on its head, where the virtues of good governance do not exist and where public resources are looted with impunity, to begin to harass struggling entrepreneurs like the owner of the business centre (and many small struggling businesses) in the name of taxation may be counter-productive to economic growth, and further worsen unemployment.

Where are the basic and essential amenities and services like roads, power, schools, hospitals, water etc that tax revenues are supposed to provide? In proper democracies where citizens pay taxes, government is concerned with the generation, aggregation and optimization of resources to improve the lot of citizens, facilitate access to social infrastructure and the judicious use of public funds to invest in projects and programs that would improve the lives citizens.

But that is not the case in Nigeria. In the 2009 appropriation, trillions of naira would be spent but at the end of the year, it would be difficult to see where those monies have gone. School pupils still study under trees.

Women and children still have to trudge for miles in search of water. Youth cannot gain admission to schools or find jobs. Public transport is pre-colonial. Neglected farmers cannot get their produce to the markets.

Today, there are areas in Nigeria that cannot be reached by any form of motor vehicle; emergency cases are transported to clinics on donkeys or motorcycles; boreholes do not have water; many people die from preventable diseases like malaria, typhoid, cholera, dysentery, and meningitis; there are mountains of refuse and clogged drainages all over the country. So what happens to paid taxes?

It is true that the fall in revenue accruing to the public sector occasioned by falling oil prices mean that government must make constructive fiscal policies. But how can those policies be achieved when small businesses become the target of oppressive taxes? How can a beauty salon owner pay taxes when 50 percent of her resources are spent to run the business on generators? Government should ask if there fundamental are principles of prudence guiding the determination of taxation necessary to promote economic growth and reducing poverty.

Government intervention in the economy should be predicated on the need to ensure steady or stable economic growth. It should aim to harness available resources in a comprehensive and coordinated manner to hasten the pace of development and lessen the misallocation of present and future stock of resources; and the existence of public goods and externalities must provide an economic rationale for the range of activities undertaken by the government.

Government policies should influence macro-economic conditions. These policies affect tax rates, interest rates and government spending in an effort to control the economy. Federal taxation and spending should be designed to level out the business circle and achieve full employment, price stability and sustained growth in the economy.

Thus fiscal policy should aim to stimulate demand and output in the current period of business decline by increasing government purchases and cutting taxes to release more disposable income into the spending stream and to correct overexpansion by reversing the process.

Fiscal policy is manifested in a government's policies on taxation and expenditures to not only provide goods and services for constituents, but with direct impact on the economy such as in promoting economic growth and reducing poverty.

All over the world, the goals of fiscal policy are the same and can be summarized to include (1) Employment creation ; (2) Price stability in the economy; (3) Curbing inflation; (4) External equilibrium; (5) Economic growth and development and; (6) Income distribution.


I hear that the FIRS is guaranteed a certain percentage of collected taxes, and its zeal in that respect is understandable. But when taxes become oppressive, the already battered economy would worsen.

Government should pursue and ensure fiscal discipline and responsibility otherwise it would be unable to defeat the challenge of poverty, unemployment and to stimulate economic growth. Nigerians are willing to pay taxes, but only when corruption is crucified and transparency and accountability resurrected, to permit that expression.

Madam Omoigui may mean well with her mighty intellect and iron determination, but remember, even the ultimate Iron Lady, Margaret Thatcher was ultimately crushed by oppressive taxation.


Suleiman is a doctoral student at the Ahmadu Bello University, Zaria

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