Government Taxation Policy: Adams Oshiomhole’s Government in Perspective

By Victor Oshioke

Tax can be loosely defined as” a compulsory and definite amount levy on adult citizenry of a particular country the collection of which is backed by the statutory provision of a state. A tax is a pecuniary burden laid upon individual or property to support government expenditure. Therefore, a tax is not levied in return for any specific service or services rendered by the government.” (Lekan et al, (2006). Tax according to the National Tax policy for Nigeria is “a monetary charge on a person’s or entity’s income, property or transaction and is usually collected by a defined authority at the federal; and state level.”

Tax

Taxation is one of the first necessities that led to the emergence of government and the organization of society as we know it today. Yet the task of collecting taxes has never been easy. This is clearly demonstrated in the Holy Bible when the Pharisees questioned the holiness of Jesus Christ for having the audacity to sit down at table and eat with tax collectors. Mark 2:16 By implication, Tax collectors were the most vilified, abhorred and loathed public officials from time immemorial. No wonder then that even today, any attempt to introduce, modify or reform any aspects of taxation, no matter how well intentioned and even from the most benevolent, people oriented government, is always resisted at first until the benefits begin to dawn on the populace and the real intentions begin to manifest in terms of verifiable evidence of what taxes collected were used to provide.

Nara Monkam and Mick Moore, in their book “How Property Tax Would Benefit Africa”, argued that:

“The developmental benefits of governments taxing citizens, even for modest sums, are often disregarded. African governments have long depended on revenue from natural resources or foreign aid to fund budgets. While the potential contribution that better domestic resource mobilization could make to national finances has received greater attention since the 2008 global financial crisis, international donors often fail to recall the central role that bargaining over taxation has played in building effective, accountable and responsive states across the developed world. Although never popular, taxation is an essential component of consensual and representative government…Property taxation is widely regarded as highly progressive and equitable because the sum due is determined by wealth rather than being a percentage levy on transactions”

In Nigeria, it is ironic that whereas there is unanimity of opinion that government at all levels should strive to generate revenue internally and depend less on oil based federal allocations, opinion is sharply divided each time a government, especially at state and local government levels, resort to the most reliable avenue to generate revenue internally which is through taxation. Even more confounding is the fact that commentators who utilize every available opportunity on morning talk shows, to call on government to be more aggressive in generating internal revenue are the same commentators, who utilize the same space, to denounce government, whenever attempt is made to enhance IGR through taxation.

Since Adams Oshiomhole became governor, Edo state has not introduced any form of taxation that is not consistent with the peculiar circumstances of the state. This is in spite of dwindling resources which has compelled some state governments to introduce unconventional forms of levies, duties and fines in a desperate attempt to boost IGR.

The Land Use Charge 2012, which is just now being implemented in the state, is well in tandem with the

TAXES AND LEVIES (APPROVED LIST FOR COLLECTION) ACT, CAP.T2, LAWS OF THE FEDERATION OF NIGERIA, 2004, amended as:

”SCHEDULE TO THE TAXES AND LEVIES (APPROVED LIST FOR COLLECTION) ACT (AMMENDMENT) ORDER, 2015” Official Gazette No. 77 Vol. 102 of 9th June 2015, duly signed by Dr. Mrs. Ngozi Okonjo-Iweala, OFR, as Coordinating Minister of the Economy and Minister of Finance.

Part 11 of the Schedule to the principal Act was amended by Substituting the existing item 7 with a new item 7 as follows

“7. Business premises registration in respect of urban and rural areas which include registration fees and per annum renewals as fixed by each state “and

b) Inserting immediately after the existing item 11, new item 12 to 25 as follows

“12. Land use charge, where applicable;

13. Hotel, Restaurant or Event Center Consumption Tax, where applicable;

14. Entertainment Tax, where applicable;

15. Enviromental (Ecological) fee or levy, where applicable;

16. Mining, Milling and Quarrying fee, where applicable;

17. Animal Trade Tax, where applicable;

18. Produce Sales Tax, where applicable;

19. Slaughter and Abattoir Fees, where State Finance is involved;

20. Infrastructure Maintenance Charge or Levy, where applicable;

21. Fire Service Charge,

22. Property Tax, where applicable;

23. Economic Development Levy where applicable;

24. Social Services Contribution Levy where applicable; and

25. Signages and Mobile Advertisement jointly collected by States and Local Governments”

I have taken the pains to list out these charges and levies approved by the Federal government, to underscore the point that Edo State Government did not arbitrarily introduce Land Use Charge. As a matter of fact, there are numerous taxes, charges and levies, which are veritable sources of IGR and implemented in other states of the federation, but which the Edo State government has overlooked because of the likely effects they will have on the common man.

The Edo State Land Use Charge 2012, is a progressive tax initiative in line with modern reforms geared toward making the wealthy in society contribute a fair share to help provide amenities for the communities where in most cases they generate their wealth. The Law adequately makes provisions to exempt the vulnerable in society. It excludes palaces, places of worship, properties of senior citizens, premises used for charitable causes, family compounds within appreciable space, and reserves a latitude for the governor to consider a property for exemption

Available statistics show that civil servants pay their fair share of taxes commensurate with their income through the PAYE system. The wealthy, self employed business persons on the other hand have perfected ways and means to evade paying their fair share of taxes though official declaration of losses, even when they spend billions in acquiring exotic cars and properties in choice areas of the state. With the land use charge, at least they will be compelled to pay a fair share of taxes for their physical properties which can be assessed and appropriately taxed.

There can be no fairness in a system where a property in GRA Benin City, with a yearly rent of N500, 000 per 3 bedroom flat pays the same tenement rate as a property in Ekenwhuan road which goes for N120,000 per 3 bedroom flat?

It also makes no economic sense for someone to own multiple properties in choice areas of an urban community and end up paying nothing to the government nor contribute to the development of the host community. As stakeholders in the Edo project, there should be a paradigm shift in the parameters of discussion on how best to move this State forward, It is my opinion that the discussion at this point should be centered on how to ensure consistent assessment and valuation, accountability and judicious use of the increased IGR which will emanate from the Land Use Charge.

Our society will be better served when we see ourselves as partners in the development project. It is time we see our state as a comparative society where we all pay our taxes which is in turn used for the benefit of all. Federal allocation will then become a bonus which can be invested in capital projects for the benefit of our children.

The goal of every responsible government should be to generate enough revenue internally to meet its recurrent expenditures. Anything short of that vision will amount to perpetuating economic stagnation. Our own duty is to live up to expectations as responsible citizens by paying our taxes irrespective of our objections to the logic of such taxes, because in the final analysis, the Edo State land Use Charge is backed by law and anyone who does not pay the charge becomes a law breaker.

In line with international best practices, there is right of appeal for charges imposed, and incentive in the form of 10% discount for those who pay up without delay. What else can one ask for in terms of a humane, considerate and modern tax regime?

We are in an election season and naturally, the polity is tense. Opposition politicians are apt to try discrediting government policies no matter how good intentioned they are. But a responsible government will make policies that will ultimately better the lives of citizens, no matter how unpopular those policies might be in the short run. The Edo State Land Use Charge is a good initiative whose benefits transcends political calculations and positions the state for a great leap into a secured economic future. Amongst other, anticipated benefits of the Property tax include:

1) Increased IGR to be invested in the development of Edo State

2) With increased IGR, the state will become more credit worthy and can borrow money for capital projects

3) Wealthy people will be more interested in charity activities since by giving some of their properties for charitable causes, like Motherless Children’s Homes, accommodation for homeless people, widows quarters etc. such premises will qualify to apply for exemption from the land use charge.

4) There will be a reduced interest in land speculation. Benin City for instance is one of the fastest growing metropolises in Nigeria. This has opened the floodgate for wealthy land speculators to buy lands in fast developing areas like Ugbor, Amagba etc, and leave the land fallow for a few years. This drives up the price of land in such areas and within a span of 5 to 10 years the value of the land appreciates from between 300 to 500%

5) There will be fewer abandoned premises which make areas like GRA an eyesore

6) There will be more land available for purchase in choice areas for people who genuinely want to build houses as opposed to those who already have good residential houses but simply want to acquire more land.

Victor Oshioke

Government Taxation Policy: Adams Oshiomhole’s Government in Perspective