‘Nigerians must demand judicious utilisation of taxes’
Former President of the Trade Union Congress (TUC), Peter Esele, in this interview with COLLINS OLAYINKA says Nigerians should demand equivalent services for the taxes they pay
Is taxation becoming too excessive in Nigeria?
Normally, workers pay taxes around the world. Here, they pay what is referred to as “Pay As You Earn (PAYE). As people earn higher, their tax increases. Basically, being taxed is not the issue, but how the money that is realised from tax is used. I think that is what should worry us as a country.
For example, in the Nordic countries, workers pay as high as 50 per cent of their salaries as taxes and yet they don’t complain. They don’t complain because the money is used to provide quality healthcare and education for the citizenry. Their transport system is heavily subsidised. Should we pay tax? Yes we should pay tax but our attention should be on what government is doing with the taxes that we are paying.
We should also look at how to generate employment through our tax regime. We cannot tax the rich to the level that they are not able to create employment via investment. We don’t have to kill the rich. We have to be careful about taxes that businesses pay. Government might be an employer of labour, but employment that government creates is few compared to the number that the private sector can create. The private sector, which is supposed to be a catalyst for growth must not be saddled with multiple taxation. Multiple taxation will make it difficult for the private sector to invest in order to create jobs.
Again, there must be a unified taxation system between the federal, state and local government. Presently, companies go through a lot of stress with many of them facing constant threat of shutdown because of multiple tax.
What is the likelihood impact of increment in Value Added tax from five per cent to 7.5 per cent, introduction of communication tax and re-introduction of tollgates on workers?
My advise to government is to look at all of these and realise that underpaid people is an avenue for corruption. The law of life is that people must survive. So, in wanting to survive, they can go to any length to make that happen. So, all of these taxes that are raised, how does government plough it back into the economy to make life easy for an average Nigerian? If government increases taxes and all the increments translate to higher recurrent which is caused by the fact that there are too many people in government does not make sense at all. In government, there are Special Assistants to Ministers that will also have their own Special Assistants and the list goes on and on. So, when all of these are put together, they will all translate to wastages in the system. At the end of the day, there won’t be enough to provide education and health for the people. For me, these are the fundamental challenges. While I am not against taxation, I am worried about what happens to the taxes that are being paid.
I am sure an average worker will agree to part with 50 per cent of his salary if quality education, world-class healthcare delivery would be guaranteed and his transportation to and from work would be subsidised. Why would they not pay? When people grumble and shout about taxes, they are doing that because they cannot see the result of what they are paying. The challenge facing this government is that our debt profile is very high. Look at the proposed 2020 budget, the recurrent and debt servicing will gulp close to 70 per cent of the entire budget. How can development take place in the midst of this? Debt servicing is about N2.6 trillion while capital project is about N2.1 trillion. Meanwhile, development is supposed to take place using the capital projects. The constitution of the country has also helped to increase our recurrent and that is why the President must take a close look at the constitution and see areas where amendments are needed in order for the country to get its priorities right.
Our recurrent is just too high and that is where the taxes we pay go into. No one borrows money for consumption and expect growth.
How do you think social sectors such as education and health can be properly funded?
We have education tax, ecological fund and other funds. Where are they? Our biggest problem is not absence of laws and policies; on paper we have one the finest policies in the world. But at the end of the day, it is how we deploy the money and policies that determines how successful we are in our developmental strides.
If government sets up good educational institutions and healthcare facilities that are world-class, people from all over the world will patronise them and those investments will earn us foreign exchange we need for development and will also discourage government from over-taxing the people and businesses that are currently proving counterproductive. This is not strange to us at all. We did it shortly after independence when people from commonwealth countries came here to access education and health facilities. What went wrong? What we need is to strengthen what we have already and automate them. Reducing human interference in the ways we do things will reduce corruption and human errors. But we don’t like that because we love corruption. We deliberately don’t want technology because we like the system the way it is. So, for me it is not about taxation, but about what we do with the taxes that are collected.
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