Lack of a social contract

The figures we hear these days are mindboggling; if it is not billions in subsidy scam, it is billions in other public funds misappropriated. I also get disoriented by political jargons and jingoism. What, in the name of God, is dividend of democracy? I would have thought that chiefly is the right to choose a leader or representative, so that if I am not satisfied with whatever leader or representative, I have, without a gun to my head, the right to choose somebody else. It, therefore, cannot be the welfare of the people as it is being peddled by politicians because the people’s welfare now is pale compared to what it was when we had the gun to our head. What a shame!

The Nigerian system is rottenly corrupt. We seem to relish in an unworkable system for the fear to tip the cart. In all of this, there is a disconnect between the rulers and the ruled. The social disconnect is as a result of lack of contract between the people and their government. From the time government was invented, personal income tax (a boring topic for some) has always been a social contract between the people and their governments. Politicians and civil servants, however, favour corporate tax, if at all. But, as Greg Wiebe, KPMG’s head of Global Tax, put it the other day, companies do not vote, only people do. A system that compels the citizen to pay personal income tax will embolden the demand for accountability. This is the principal reason why Nigerian leaders pay only lip service to personal income tax; they know a vigorous pursuit of the payment of personal income tax, by the citizens, will be tantamount to shooting themselves in the foot. Our leaders, however, are extremely lucky – the people themselves abhor paying personal income tax. This is a Catch-22, with the advantage, nevertheless, tilting towards those in public service.

Whilst it is becoming fashionable for us to pour invectives on our leaders for caring less about the plight of the poor, the majority of Nigerians are also guilty of indifference to public concerns or property. It was the Iron Lady, Margret Thatcher, who famously argued, “When people pay nothing, they care nothing.” This was her case for personal income tax, in the ’70s, to stem the tides of the ordinary British people’s indifference to public concerns. Unless people are made to pay personal income tax, no matter how small, to fund the public treasury, they cannot put their mouth where their money isn’t. It is a stake in the running of the affairs of the community, and it even produces patriotism as a bargain. The lack of a robust tax system makes the fundamentals of our economy weak; it has left the ordinary folks bereft of commitment, and undeservedly, our leaders have honed their manifest self-regard. President Obama got it right, “Leaders need not be strong; it is the institutions that have to be.”

The year 2013 may yet be a deciding moment. Our traditional market – the USA – is buying less of our oil, and our oil receipt is in a decline. The Jonathan administration is preparin us, psychologically, for a life without America buying our leading export commodity – oil. The minister of finance, Okonjo-Iweala, was quickly dispatched to alley our fears. The opposition, ACN, has just sounded an alarm that the Nigerian economy could take a substantial hit this year. I just hope the chicken hasn’t come home to roost so soon. I have written several times and on several occasions about this scenario. Nigerians cannot afford to live a life of fantasies any longer! You cannot make an omelet without breaking eggs. Throughout the world, there is no gain without pain. The masses have turned to God for the leaders (Caesar) to have a good conscience concerning the plight of the poor. That has not happened yet. Meanwhile, the men of God have cashed in.

The oil revenue that funds the bulk of our public treasury has, for some time, been a no man’s land; those who have power and connections have made a meal out of it, without recourse to accountability. Only about 15 percent of taxable adults pay personal income tax in Nigeria. This is a weak arrangement, and it weakens the position of the people to force the issue of accountability of public officials. The people, therefore, are helpless and at the mercy of public servants. If the above stats are correct, then those in government know that the people themselves know that they do not, in reality, contribute (tax) to the public treasuries. The people in government have never forced the issue of nonpayment of personal income tax for as long as there is oil revenue. This status quo, in any case, strengthens their advantage over the masses.

A robust tax system is the groundwork of modern economies. There is also no substitute for personal income tax as a social contract. Tax as a system is hugely symbolic; it is deeper than a mere collection of the tax itself. It is the foundation upon which the social structure of a state is built. Getting the country out of this predicament will require a concerted shift in thinking, by all of us, on tax issues. If the executive does not have the political will to prepare a bill for the National Assembly to compel every taxable adult to pay personal income tax, then people could appeal to the Assemblymen to do it. A legislative bill that limits the funding of the security apparatus, the judiciary, and the civil service overheads to tax revenue is a good start. In so doing, it will mitigate tax collection and fight against tax evasion. The downside is we could be, in doing so, creating another monster – the tax collectors. Tight guidelines for tax collectors to thwart collusion in tax evasion will also be needed.

As the country braces up for lean times ahead, I sincerely hope we do not relive 1982 and 1983 yet again. The leader of the opposition then was labelled a prophet of doom when he sounded the alarm. That time it was the president’s economic adviser – a professor of Economics. Not too long afterwards, we suddenly found ourselves in a tremendous economic mess – the country is still reeling from that effect. Those who still remember how Shagari fiddled on the economy will not sweep the opposition’s caution on the state of Nigeria’s economic health this time around under the carpet. IMF and the World Bank had advised that Nigeria needed a tax reform to guarantee government earnings in order to meet governments’ social obligations. That advice has been cooling on the shelves for over 30 years. I believe we still need a bill, and it will make nonsense of President Jonathan’s PIB that is being taunted because it will be all encompassing.

 

SAMUEL A. CAULCRICK