My article last week was on Ben Ayade, the crying governor of Cross Rivers state. Asides dwelling on the charade Ayade calls governance and how he uses tears to mask his utter incompetence, deception and bad governance, I noted the implication of creating an anti-tax agency to enforce tax exemptions for the social contract between the government and the people. I argued that essentially taxation “is not so much a burden as it is a right to participate fully in the social life of the state.”
Predictably, I received many reactions mostly agreeing with my submissions on Ayade but disagreeing with my take on the social contract. The reason is simple: I cannot be advocating for citizens to pay tax when the government has been irresponsible, mismanaging the resources at their disposal. The overwhelming sentiment was that the people were victims of bad governance and the first place to start is to ensure government accountability before insisting the people pay tax.
The argument goes that the largely poor victims of bad governance cannot be made to support a largely corrupt political class who mismanage the proceeds from oil anyway. This follows the usual trend in most developing countries of placing rights before duty and making payment of tax contingent on the government fulfilling its own part of the social contract.
This, to my mind, is a major misconception of the social contract and a major reason for the absence of government accountability. I therefore explain below the concept of the social contract and how it plays out in other climes. The idea of the social contract, which first appeared in the writings of Plato but developed by Thomas Hobbes, and later, John Locke, J.J Rousseau, Immanuel Kant, and John Rawls amongst others, seeks to answer the questions of the origin of the society and the legitimacy of the authority of the state over the individual. In its current form, it assumes a sort of reciprocity between the rights provided by the state and the duties expected of citizens for a harmonious functioning of society.
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Failure on the part of either party to perform its duties leads to a breaking of the contract and in the case of government failures, it often leads to agitations, protests, strikes, and even revolutions. Although this concept is well established in political discourse, its use in Africa has been quite problematic because of the prevalence of weak/failing states that are incapable of performing the functions of a ‘real’ state on their own without external support. Unlike in Europe and America where states emerged through a long and complex process of wars, invasions, conquests, cultural interactions, rampant migration; and where the need to
raise taxes in order to finance wars led to the development of strong representative institutions, the typical African state developed differently. It is, according to Peter Ekeh, an imported institution consisting mainly of “migrated social structures and constructs which were almost literally parcelled from metropolitan centres of the imperial west…and engrafted onto the new colonial situation”. This externality and artificiality of the African state, according to many political analysts, have made it difficult for African states to develop a European-type civic culture.
To be sure, the social contract in the European-American sense always involves both duties/responsibilities of citizens to the state and corresponding rights and or privileges of citizens which the state must guarantee. As I stated above however, the starting point of this relationship is with duties. Duties precede rights and citizens must first empower the state before they can expect to draw from its abundance.
However, in Nigeria, the opposite appears to be the case. The conception of the social contract is mainly in terms of rights and privileges or what the government can and should do for the people and not the other way round. It has always been so since the colonial days, even though the colonial authorities also demanded payment of taxes more vigorously. In fact, it is the unpopularity of the harsh colonial tax environment that provided many nationalists leaders with the platform to mobilise and gather large followings. Of course, they cashed in on the discontent to rally the people against colonial rule often promising freedom from obnoxious taxation.
In fact, it is the unpopularity of the harsh colonial tax environment that provided many nationalists leaders with the platform to mobilise and gather largen followings. Of course, they cashed in on the discontent to rally the people against colonial rule often promising freedom from obnoxious taxation
Upon taking control of government, these nationalists leaders began to feel the heat themselves. Unable to maintain the colonial tax regimes, they focused on converting the revenues of the marketing boards to state revenues and or setting policing trade to raise revenues.
It is for this reason that Federick Cooper describes African states as “gate-keeper” states – states unable to develop a modern taxation system and relying exclusively on policing the points of interface, as it were, between the domestic and world economies to raise revenues. The colonial powers built trading points on the coasts and railways into the interior to bring out export products. Since they were unable to raise taxes from the people, they relied on tariffs on imports and taxes on export products for revenues. Independent African states were sadly unable to change that structure and so continued with the ‘gate-keeper’ tradition.
Therefore, independence in Nigeria brought with it a gradual decline of direct taxation as a component of government revenue. Enter oil and taxation system set up by the colonial government, even as inadequate as they were, were gradually dismantled or ignored. Many Nigerians wonder why their country cannot manage proceeds from its oil resources like say, Norway, whose prudent management of its oil resources has made it one of the richest countries in the world. To be sure, Norway produces just about 1.6 million barrels of crude oil per day (less than Nigeria’s 1.8 million barrels/day). Yet, its $450 billion economy is dwarfed by its $1.09 trillion Sovereign Wealth Fund, which is the largest in the world. The most astonishing fact about Norway however is that with a population of about 5 million, it still has one of the highest tax regimes in the world – 36 percent personal income tax and 25 percent VAT.
Despite its wealth and low population, Norway still choose to operate a tough tax regime to prevent the country from becoming a rentier state, make its citizens equal partners in the social contract and better positioned to demand and ensure government accountability, and prevent its citizens from developing an entitlement culture. Therein lies the success of Norway.
In Nigeria however, the notion of citizenship is basically right-based – one that sees itself more as receiving from, and not giving to the public domain. Jane Guyer describes this kind of social contract as “representation without taxation”, an ingenious reversal of the popular American slogan before the revolution. But this kind of social contract does come at a cost – an almost total absence of accountability in governance. Since the people contribute very little to government revenues, they do not have the moral right or even the incentive to know how the government manages the resources. Usually, such countries depend on external “rents” or strictly speaking “unearned revenues” for their sustenance. The common disposition is to view the rents, in Richard Joseph’s words as “manna from heaven poured down on the country to be grabbed by the lucky and well connected” because the money is nobody’s and is just there for the taking. With time, the embezzlement of such funds becomes the “strategic essence of governance” or in diverse and multi-ethnic entities, the state becomes an arena where the struggles for shares of the national cake dominate all other considerations and actions.
