By Sheriffdeen Tella
If there is an unpopular government policy with the public, it is tax policy. So, the noise about the recent tax reform by the government is not unexpected, and the hullabaloo generated by the tax document swap should be taken as a normal event. Taxes normally give the public some level of apprehension, even when it serves as a source of joy to the government. The more taxes the government is able to collect, the happier because, as revenue, it reduces the gap between government revenue and expenditure or budget deficit. It minimises the need for borrowing and the attendant costs.
In a few days, we should enter the year of tax reform implementation. Many people wished the government would suspend the implementation of the tax until issues regarding the gazette and assented versions of the tax document are resolved. To the public, the prayer might be that it should not be resolved in time and possibly forever. Of course, that would have been wishful thinking.
The government naturally does not need a prayer but action, because taxes are the primary source of revenue to implement annual budgets. The government has stated that the implementation starts on January 1, 2026, which is just three days from today. Which version of the document will be implemented? We are not informed. The government does not think it owes the citizens the responsibility to be open, even in the spirit of democracy. But in the spirit of transparency and accountability, we deserve to know the version the government is implementing come January 1, 2026.
Tax indeed remains a contentious policy, even in advanced economies where the use of collected taxes is apparent. It is more contentious in this environment where the amount collected is not only in dispute, but the use of the total fund cannot also be substantiated at the end of a period. Sometimes, the money collected could be relatively smaller than estimated and/or is under-reported. Corruption is usually at the root of tax collection and tax reporting. There is corruption at the tax collection points and another level of corruption at the level of management.
I often argue that the problem with Nigeria is not a lack of revenue but corruption and mismanagement of the revenues. There are mind boggling revelation of individuals stealing funds that compete favourably with their state budgets. These people are rewarded with national honours, gladly displayed after their names; rewarded with ministerial positions and even ‘voted’ into the national assembly by Nigerians! If by mistake, such people are jailed, they are quickly pardoned and given apology. They shamelessly move around the country as VIPs.
As the government is pursuing tax collection with vigour, and every government does, it is important that it should also highlight the returns to taxpayers. In other climes, citizens know that part of the taxes collected goes into the provision of public services efficiently. Provision of basic needs like water, electricity, transportation, and public healthcare is taken for granted in terms of efficiency and effectiveness in service, though these are paid for by users. From the same taxes collected, the government provides social safety nets in the form of tokens or allowances for jobless citizens and their families. Here, each family provides these basic needs at personal costs, and if you are jobless, you are on your own. There must be a reward for paying taxes in this country. A major reward should be efficient public service. The reward for now is a rip-off.
There are cases of undervaluation of tax items by government tax evaluators, which ab initio necessitated the use of consultants. There are also reports of corporate businesses, particularly Nigerian-owned businesses, presenting different balance sheets for tax assessments. When low returns from taxes and levies are reported, these are the sources of leakages that bring out such abysmal results.
The use of technology for tax assessment and tax collection should reduce incidences of tax evasion and tax avoidance. A government that is revenue-conscious, like the Tinubu administration, will deploy all sorts of available technology to address the situation. The decision to use NIN is one of the technical ways of getting everyone on the tax board.
Efficiency in tax collection has always been a problem in Nigeria. That is why some state governments, and possibly the Federal Government, often engage consultants to collect taxes. This equally adds to the cost of tax administration. It is a case of double payment for tax administration. There are paid employees in the ministry or agency in charge of tax collection, but their major functions are carried out by tax consultants, which results in double payment for the same job. The use of consultants is like “job for the boys” and a resource mismanagement to the economy. Workers should be empowered and monitored to do the jobs they are employed and paid for.
It is not true that everyone runs away from paying taxes and levies. I can recall that during the Lateef Jakande administration in Lagos State, many Lagos residents were walking into the state tax offices to pay taxes because they could see a government running free and accessible education, same with health services and providing low-cost housing. I can also recall the same scenario during the time of Babatunde Fashola in the same Lagos State. An uncle of mine living in Ogun State received excellent treatment while hospitalised in General Hospital, Ikeja, which also houses the Lagos State University Teaching Hospital. On discharge, he looked for a tax office to pay a flat-rate tax in appreciation of what he saw or witnessed in the state. If people see that their taxes are being judiciously used or applied, they can pay their taxes voluntarily.
It is important to remind the government that tax is a withdrawal of funds from the economy and must be returned as government expenditure or injector to be beneficial in expanding the economy. The government’s economic focus in 2026 should be on ways to reduce unemployment. Policies must be initiated and implemented towards expansion in the private and public sectors, particularly for the industrial sub-sector.
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