TPWFN 2: Count, Tax & Share

In ancient times, when medieval kingdoms fell to Rome- the emperor usually ordered a census of the overtaken territory. The Holy Books recalled census exercises in the turn of the first millennia ordered by Herod, and the Roman Emperors in Jerusalem and far off lands. Census was how the Roman Empire developed far off lands and integrated them into Rome proper. As trivial as it might sound, Census was embedded in the US constitution for the very same purpose. Simply put, it is impossible to plan for what you don’t know! Even in oppressive regimes of apartheid South Africa and Mao’s China, enumeration was a necessary prerequisite for planning and economic prosperity even in the absence of freedom.

In our clime however, it has been impossible since independence to obtain an accurate count of Nigerians.  What takes place in Nigeria is political census; perverted by mundane considerations and wrongly incentivized to produce grave errors. If the basic function of counting ourselves is impossible, no wonder we’re still hunting fifty years later how to vote, run an electric grid and build good roads! To begin to effectively right the ship of Nigeria’s state a thorough enumeration underlined by a need to plan for proper economic development must be undertaken.

While the proposed national identity/electoral/payment card scheme is the step in the right direction, only a complete enumeration of Nigerians into a single database will suffice for long term economic planning and consequently, development. It should be expected that there will be political dimension to enumeration, but this should be exploited to improve accuracy. There must be a balance between reward for being enumerated (government benefits) and responsibility (taxation).  These balances of factors could also in the long run fundamentally reshape the relationship between the government and its people, and restore accountability (as taxpaying citizens, also vote and demand good governance).

Starting with the responsibility i.e. taxes, there is no doubt that the breakdown between government revenue and the tax system is an underlining driver of corruption in not just Nigeria but the rest of resource-rich Africa, leading to endemic poverty. In most African countries, royalties and concession fees or revenues from natural resources far outstrip taxes collected.

There is as such the tendencies of the African politicians to arrogate these resources to the state, using the power of the gun to seize community lands to extract these precious resources, utilize the proceeds of such deals to finance a protection battalion that in turn afflict agony on the land- keeping it repressed, while the political class feed fat! After all, it is nobody’s money – and it comes really easy: it is cocaine money!

As the case may be, resources in the ground are worth nothing until foreign investors bring to bear their technology. With investors coming in different shapes and sizes- some with bags of money and mouth loaded with pearls, others with devious tendencies and machinations. Ask Congo, ask Liberia: they’ll kill if need be. The deal making as such becomes the most important localized aspect of the monetization of these natural resources, and hence the very source of corruption!

Speaking about benefits- absent a ground-up individual land ownership with full mineral rights, as obtainable in parts of North America- the second best option for resource rich countries is to share revenues directly to citizens. This sharing (some call it, resource control) has to be citizen based and not communal, or based on some random geographic entity which is often a product of historical corruption and/or colonization. A just formula to compensate all Nigerians for the oil retrieved in her name, and held in trust by the government for the people will circumvent the rampant corruption inherent in oil deals. Instead of the excessive focus on elections, perhaps we will just be again happier being citizens.

To this end, a first step to free Africa’s and certainly Nigeria’s government of corruption is to re-allocate revenue from crude oil, bitumen, coal and other natural resource concession directly to the people. The idea that government knows best when it comes to capital allocation has proven to be mockery given the manner in which $400 billion in oil revenues have been looted in Nigeria since independence, out of the $800 billion received.

The only direct oil spending should be a fixed amount devoted to only capital projects, with the balance going directly as checks on an annual basis to all registered Nigerians! Indeed, the component of crude oil and other mineral revenue receipts  devoted to high value projects should flow directly to the states, leaving the federal government entirely tax receipts dependent.

Whereas the former system incentivized corruption, encourage election violence and rigging, reinforced the mentality of do-or-die, the new system will restore justice, deemphasize political service in favor of citizenship and boost enumeration accuracy for planned development as only the registered will benefit. Assuming Nigeria’s nearly $11 billion (1.87 trillion naira) in oil sales revenue to the federal government were sent directly to the people (with state allocations left intact) an average Nigerian will receive a cheque of eleven thousand naira per annum. While this might look like peanuts, it will go a long way to alleviate the sufferings of three-fifth of Nigeria’s citizens living on less than one dollar a day.

How then will the Federal Government fund itself, some might ask? That is a really easy one; the government’s current tax receipts amounts to $5.165 billion in 2012 alone. This is in a climate of poor collection and poor enumeration. With better enumeration driven by the promise of free cheques to citizens, and better economic surveillance this pot alone can be quadrupled easily in the first year -driving up revenue available to a much leaner government that is free of rent seekers looking to sip from the oil dripping pan. There is a case to be made for a smaller government, but even a more effective one; boosting the tax base as a precursor to development was perfected in Lagos, let us just replicate it!

Certainly, to take this system of “enumerate and tax” further, it may be coupled with a very strict system of taxation and restoration of the colonial era head tax. If every Nigerian taking the “resource dole” is required to remit a flat tax of two thousand naira only, we’ll be looking at an extra one billion dollar in head tax revenue with necessary exemptions to the poor, aged, retired and self-employed requiring annual system of tax returns (for all citizens) governed by an aggressive punitive system for those that fail to file even if they own no taxes. Filing may be as easy as showing up in a government office at the beginning of the next tax year for the very illiterate.

No doubt, the foundations of a much stronger economy and socio-political system can be laid by counting, sharing the proceeds of Nigeria’s freely given mineral wealth directly with her citizens, and requiring 100% coverage of Nigeria’s tax regime. We know what to do to right Nigeria, why not?

 

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Artice title: TPWFN 2: Count, Tax & Share
!- Title alias: tpwfn-2-count-tax-share NVS Article ID: 23770 Article create date: 15-05-2013 21:11:47 Article modified date: 15-05-2013 21:16:07-->


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