‘Illegal” Taxes: Our Road to Redemption?


OpEd By Tosin Adeoti


On the night of December 16, 1773, in Boston, present-day United States, groups of masked men, from a crowd of more than five thousand, boarded three British ships and dumped cargoes of tea into the waters. The value of the wasted products is nearly $1 million in today’s money. This event would later be known as the Boston Tea Party.

Prior to this time, the British had enacted a series of taxes intended to favour the British Crown’s rule over its colonies in America. These revenue generation tactics provided funds for the monarchy to defend its territories and continue to keep it under its stronghold, but Americans were tired of taxation without representation. So while the taxes which caused the destruction of tea that day technically made tea cheaper, the people revolted because over time they were not carried along in the governance of their regions yet the British kept wanting to collect more and more taxes.

In the end, British’s reaction to the destruction of the cargoes of tea would eventually lead to the Revolutionary War from which thirteen colonies in North America would declare independence in July 1776 as the United States of America. (1)

This story came to mind when a friend asked me what could jump-start the lethargic Nigerian from his slumber in the light of our political realities.

Nigeria – In a World of Her Own

To be honest, Nigerians have taken their ‘suffering and smiling’ stance to legendary levels.

In April this year, a non-violent resistant movement in Algeria forced Abdelaziz Bouteflika to resign as President. (2) This was largely owing to the high unemployment of youths in the country. Youth unemployment in Algeria is a little below 30%. (3) For Nigeria, it’s 55%. (4) 9 million youths are unemployed in Algeria, while it’s at least 50 million in Nigeria.

In May 2019, a Sowore-styled personality Boniface Mwangi, the leader of the Red Vests Movement in Kenya, was arrested but promptly released same day over suspicion of inciting people against the government over ongoing cases of corruption. (5) Pressures of youth employment rate of 18.5% in the country led to mass protests led by the opposition. Due to these pressures, Kenya’s Kenyatta was forced to create a national dialogue process designed to generate ideas for institutional reforms. (6) In Nigeria, Omoyele Sowore has been in detention for more 120 days for disrupting peace in the nation despite being twice granted bail. (7). This morning, after a judge had ordered the activist released again, the State Security Service went to the court brandishing firearms. The judge and court staffers fled the courtroom in the chaos that ensued. DSS then forcefully rearrested Sowore. (9)

In Chile, protests have been ongoing since mid-October 2019 over income inequality and injustice in the country. (10) The protests have been considered the worst civil unrest since Augusto Pinochet’s era in 1981. The government has started to make concessions, chief among which is a new constitution. In Nigeria, income inequality is said to be one of the most serious in the World. Oxfam and Development Finance International puts Nigeria last in a list of 152 countries ranked by their “commitment to reducing inequality”. (11) In terms of justice, the President has been shown to have a poor judicial record; ignoring Nigerian judges on at least 40 occasions. (12) His Attorney General has said the rule of law is what the authorities determine it to be.

However, in the midst of this, my mind says we may be approaching a point where there is light at the end of the tunnel.

Cause Of Optimism

Two news items caught my attention this week…

The first news is that of an appointee of the federal government seeking for the National Assembly to seize funds in dormant accounts in all Nigerian banks. (13) Seeing that dormancy may be activated in 12 months upon inactivity in an account, it is potentially a good source of revenue especially when you consider that there are at least 47 million dormant accounts in Nigeria today (14). As you may know, a lot of factors could be responsible for dormant bank accounts including death of account holder, BVN issues and ownership of multiple bank accounts by customers.

The second news is that the federal government has sent a bill to the National Assembly which directs that individuals would be required to produce their Tax identification Numbers (TINs) before they can operate new or existing bank accounts in Nigeria. (15) Once signed into law, the law will take effect from 2nd January 2020, according to the Finance Minister.

Why Are They Interesting?

The reason I consider these pieces of news interesting is that conditions are making the government look inwards in terms of revenue generation.

This government is broke. It has a 2020 budget proposal of N10.59 trillion, but the total revenue it plans to get from oil exports is N2.64 trillion. (16) Of course, the oil projection is overly optimistic. So you understand there is no way it will be able to fund this ‘historic’ budget.

For the past couple of years, it’s been raking up debt on an unprecedented level. From a debt profile of N12.6 trillion in 2015, this administration now has it at N25 trillion in 2019 second quarter, an increase of 104%. (17) And it keeps seeking for more funds to borrow. It’s looking up to the World Bank for $2.5 billion. (18) It has written to NASS to approve $30 billion foreign loan. (19) Eurobonds and loans from institutions such as the African Development Bank are already penciled down for 2020. (20)

But more than the borrowings and fears on how they are spent, the major worry is on the debt payment. For instance, if the $30bn loan is approved, Nigeria will use 80% of the revenue it generates to service the debt. It’s obviously not sustainable, so much so that Moody’s Rating has alerted international investors to the situation in the country by changing its outlook on Nigeria’s B2 rating from stable to negative. (21) Moody highlighted Nigeria’s poor public finance management.

Obviously, we cannot keep on borrowing endlessly. The readily available revenue channel a lot of governments turn to when they are at their wits’ end is taxes.

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