• Wednesday, May 22, 2024
businessday logo

BusinessDay

Lagos development and the imperative for taxation

Who says the poor do not pay tax in Nigeria? (2)

Taxation is a critical component in the smooth running of any government and society. Taxation enables the government to source for required funds to provide social amenities such as good roads, the transportation system (rail, water etc), improved health care systems and security among others. Tax serves many purposes for the government such as wealth redistribution.  When the rich are made to pay more, this makes more funds available for government, while the poor are only restricted to a minimal amount that is commensurate to their income.

Its origin dates far back in the history of human societies. In ancient Egypt, the Pharaoh’s tax collectors were known as scribes.  In ancient Greece, during war times, the Athenians imposed a tax referred to as a diaspora.   No one was exempted from the tax which was used to pay for special wartime expenditures.  In the contemporary world, the tax has become a huge source of revenue earning for governments.  Taxation makes a government accountable to the citizens as the process of budgeting, economic planning and public spending is closely related to taxation.  Government is compelled by law to make all these processes a matter of public knowledge, and such information is readily available on request.  Thus, taxation enhances the transparency and accountability of government and government spending and revenue generated. 

READ ALSO: CITN urges tax authorities to constantly engage taxpayers

Being a cosmopolitan city with teeming challenges associated with its huge population, Lagos State is required to spend a lot of resources in providing adequate security for lives and property, so that normal business activities and social life can be conducted smoothly in an atmosphere of peace, orderliness and respect for the rule of law.  These can only be made possible through funds generated from taxes paid by the citizens.

The huge population of Lagos also means that more waste will be generated daily.  Waste disposal in a megacity like Lagos State can be quite complicated as it has other dire consequences on health, environment, safety and general wellbeing of the city.  Poor waste disposal practices have been known to negatively affect the biodiversity and wellbeing of other living organisms in rivers, lakes and other water bodies in our immediate and remote surrounding.  The huge amount of money that the Lagos state spends annually in keeping these wastes off the streets, and ensuring that they are properly and safely disposed of, comes from taxes paid by the citizens.

It is, however, understandable that willingness towards compliance to taxation has always been a problem throughout history.  Even in the time of Jesus Christ, people were known to have complained to the Messiah about the burden of having to pay taxes to the Roman government.  They were probably expecting him to validate their desire to circumvent the law by withholding their taxes.  However, Christ’s response is recorded in Matthew 22:21 where he made that famous comment: “Render to Caesar the things that are Caesar’s; and to God the things that are God’s.”

READ ALSO: CITN, in PH, strategises on the post-COVID tax environment

A major reason why people are a bit lethargic towards payment of taxes is that they are often sceptical about the judicious use of their hard-earned money. But then, it could be safely affirmed that Lagos, in the current democratic dispensation (1999-date), there have been tangible manifestations of the government’s shrewd deployment of the state’s resources. This could be seen across almost every sector in the state, especially in the area of public health, transportation, the environment and infrastructure upgrade. 

Presently, the Ambode administration is making concerted efforts to take Lagos state to a new level of prosperity. The recent strides of the administration readily attest to this. For instance, to enhance the quality of health care delivery in the state, the government has provided numerous mobile care units’ ambulances as well as transport ambulances to various General Hospitals in the state. To improve security in the state, the government has also procured brand new power bikes, armoured tanks, and a helicopter to support the State Police Command in ensuring a safer Lagos. This is in addition to the acquisition of several new squad cars for the Special Operation Service which is expected to coordinate community policing in the State. To provide succour for it retirees, the state government has paid billions of naira to offset pension arrears owed pensioners since 2010.

However, as good as the efforts made so far to have all taxable adults in the tax net; it is regrettable that only about 3million Lagos residents out of a taxable adult population of about 12million pay their taxes. Thus, whilst everyone is taking the benefits of democratic dividends in the State, the burden of funding is squarely placed on quite a few. This is inequitable, unsustainable and unfair.

READ ALSO: Amid COVID-19, multiple taxations, FX, others compound airlines’ woes

It is therefore not out of order that Lagos State government has, reiterated its commitment and resolve to wield the big stick against tax defaulters.  The government has made it clear that a life without tax is a lie, as no nation or state can effectively thrive if its citizens pay lip service to issues of paying their statutory taxes. The point here is that there is no magic wand that can bring development without money. It is noteworthy that the most successful democracies in the world where governments are accountable to the people are those societies with a strong tradition of paying taxes.

Despite the current steady strides of the Ambode administration, it is quite apparent that much still needs to be done. Being a melting point of people from diverse parts of the world, Lagos has peculiar infrastructure needs. There is, perhaps, no other state in the country that contends with as much pressure on its infrastructure as Lagos does. This is why taxable Lagos residents must partner with the state government through prompt and willing payment of taxes to attain the Lagos of our collective dream.

Adeola Ishola-Lemomu