17 Apr 2009 |
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Do Nigerian leaders pay tax? By Reuben Abati ON Wednesday, April 15, the White House released the details of the tax filings by President and Mrs. Barack Obama and Vice President and Mrs. Joe Biden. Tax payments are taken seriously in developed and organised societies. To evade tax either overtly or covertly, is to court a jail term and public condemnation. But the Obamas and the Bidens filing their tax returns for 2008 and making same public, is not merely the fulfillment of a routine civic obligation, these are lessons here in leadership, especially for Nigerian leaders, living in a country where tax evasion is almost a cultural norm, and the leaders prefer to collect rent, rather than pay tax and contribute to the development and growth of society. Do Nigerian leaders pay tax? When last did any Nigerian leader publish his personal income tax returns? One of the major areas of reform in the past 10 years has been tax administration in Nigeria, but the reform seems to be more of a pro-rich proposition in its design and implementation, creating a regime of unfairness and unequal opportunities. In the course of his Presidential campaign in 2008, US President Obama had promised the American middle class that he would introduce a more equitable tax regime which would favour ordinary Americans and their families, and reward work. The Bush administration was accused of promoting tax breaks, a complicated tax filing process, an accommodation of tax havens and a tax code which benefited the wealthy. Obama proposed to the Americans, a five-part tax plan which will empower the poor, the elderly and working American families. Consistent with the focused character of his administration since the assumption of office in January, President Obama has again with the publication of his tax returns conveyed a strong message that leadership is a moral responsibility. Every income-earning American is required to pay tax. Americans may not be impressed, or see anything unusual in the President paying tax, or Obama's tax policy, but to a Third World audience, it should be a big deal. Obama's tax returns in the public domain is a statement about transparency. If the President and his wife pay tax and they pay so much, why should any American evade tax? It is called leadership by moral example. It is also worth noting that although the IRS in the United States has provided an extension for filing tax returns from the April 15 deadline through October 15, 2009, the Obamas and the Bidens have chosen to file their tax returns early. Nigerians can easily spot the difference in their own country. Almost as a rule in Nigeria, rich men in high places do not like to pay taxes - direct or indirect. Indeed, they'd rather not. They are helped by the underdeveloped and inefficient tax collection system in the country, a failure that has not yet been addressed by an on-going tax reform programme. But even more by the country's corrupt processes. The rich in Nigeria enjoy privileges that they do not deserve, the unfairness of which provokes the poor and is partly at the root of social violence and alienation. First, tax payment in various parts of the country is easily manipulated. Tax officials double as consultants to whoever wants to evade tax; they help them to compromise the books and they collect a handsome fee for their services. Second, companies are reluctant to remit taxes, and nobody is wielding the big stick. Third, it is common knowledge that Nigerian leaders routinely live above the law. How much tax did former President Olusegun Obasanjo and his Vice President pay between 1999 and 2007? How much tax has President Umaru Yar'Adua paid in the last two years? And how about the Governors? There was once a State Governor who boasted that he was richer than the state he was leading? Nobody asked him how much tax he paid to the same state. There are Nigerians - individuals and companies on the World's Richest List: is it possible to determine the percentage of their personal income or company income they have given back to the state? President Barack Obama and his wife, Michelle announced a joint income of $2.7 million in 2008. The source of that income is stated: earnings from the sale of Dreams From My Father and The Audacity of Hope totaling about $2.5 million in royalties. The Obamas have now paid $855,323 in Federal income tax, and $77,883 in Illinois State income taxes; and they have donated about 6.5 per cent of their gross income ($172,058) to 37 charities. Vice President Joe Biden and his wife, Jill made about $269,256 in 2008 and have paid $46,952 in Federal income taxes and donated $1,885 to charity. And yet, many Americans are still asking questions. There has been some sniggering about the Obamas making so much money from book deals, and the Bidens pretending to be so poor. And whether or not the Obama tax returns covers Michelle's mother who is supposedly staying with the Obamas in the White House at state expense. In Nigeria, it takes more than a battle to get public officials to declare their assets. And who would dare ask them about personal income tax? It is taken for granted that public office is a vehicle for primitive accumulation. It is nearly a general principle that the wealthy in Nigeria can avoid tax. Tax avoidance is said to be a good evidence of creativity, except that it undercuts the country. During the US Presidential election campaigns, President Obama had publicly declared his tax returns for six years (2000-2006). He was accused at the time of giving too little to charity. In his current tax returns, he has made amends. Message: he listens. When last did a Nigerian President or Governor donate anything to charity? Here, our leaders don't even pay electricity bills. They don't pay tolls on the roads. And if they can avoid the payment of VAT, they would. Even Aso Rock Presidential Villa in Abuja is said to be heavily indebted to PHCN. Rather than give to charity, Nigerians in public office prefer to use their positions to take from the people. They organise weddings for their daughters; they organise fund-raisers for the construction of Presidential Libraries and through this, they collect gifts from the pubic, gifts that are never declared either to the Code of Conduct Bureau, or the Tax Man. Do the arithmetic of the Obamas and the Bidens tax returns. How much do they have left after the deductions? And not a penny of their income is abroad. Nigerian leaders find ways of taking their loot abroad. Every poor man who occupies a Nigerian public office leaves a few years later being stupendously rich. It is possible to argue that local attitudes towards tax payments are cultural. During the colonial era, Nigerians in both urban and rural areas fled into the bush whenever the taxman cameth, and in parts of the country, there were protests against the imposition of poll tax, water tax, personal income tax and so on. Thus, originally, taxation was seen as a tool of oppression and dispossession. Whereas the resistance in the colonial era may have been part of the struggle against British rule, in more contemporary times, average Nigerians resist tax payments out of the plain realisation that taxes are invariably stolen by state officials. The disconnection between tax for development and growth and national objectives drives the people off the idea. But even then, only the poor and the Nigerian worker still manage to pay taxes. The Pay as You Earn system ensures that over-worked and under-paid workers pay their taxes. When the State wants to collect taxes, it resorts to blackmail. Tax receipts have to be shown in order to register a child in school, process official documents or to receive treatment in public hospitals. This has proven to be an ineffective means of tax collection. The tax regime in Nigeria is riddled with fraud and inefficiency. Ms. Ifueko Omoigui-Okauru, and the Joint Tax Board have in the last few years talked about tax reform and a more equitable system, but the National Assembly has been slow in considering the New Tax Policy Bills. Any proposal however which sustains the tradition of multiple taxation and further harassment of the poor, while the rich manipulate the system and gain tax breaks cannot address existing loopholes. President Obama's nominee for the post of Treasury Secretary is currently being questioned by the US Senate Finance Committee over his tax returns. Timothy F. Geithner is being queried over tax underpayments and he has had to pay back about $43,200, including interest. In Nigeria, our lawmakers don't even bother to check whether nominees for public positions pay their taxes. They prefer to ask nominees "to take a bow and go". When the Joint Tax Board tried to make an issue out of the required payment of taxes during the screening of candidates for the 2007 elections, that intervention was immediately politicised. The JTB insisted that most of the politicians presented fake tax certificates, it even took the INEC to court, but nobody was sanctioned. Tim Geithner has been nominated to head the Treasury, the department that deals with the enforcement of the US tax code; questions about his tax returns are definitely embarrassing. In Nigeria, nobody addresses any such embarrassing questions. Nigeria's underdeveloped taxation system is a reflection of a general erosion of values. But it is also a by-product of the country's over-dependence on oil revenue. Every month, Commissioners of Finance from the various states converge in Abuja, with small knives in their pockets, to cut the national cake from the oil wells of the Delta. Nobody pays close attention to tax revenue, those who pay tax feel cheated and seek ways of avoiding it, and because no one is required to part with any significant portion of their earnings, not enough questions are asked about the management of public resources. This has to change.
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