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Tuesday, July 31, 2012

The perils of taxation without credibility by Tochukwu Ezukanma

A MAJOR problem
of Nigeria is the
oil money. Oil
money is
extraordinary in
that it does not
come from any
national effort,
toil or sweat.
It comes not
from any
agricultural,
manufacturing,
scientific or
technological
endeavour. It
results not from
our
resourcefulness,
innovation or
ingenuity. It is a
windfall; it,
literally, drops
from above.
The monthly
financial
allocations from
the Federal
government to
state and the
local
governments are
similarly
windfalls.
They hover like
clouds in the sky,
and then, drop
like rain every
month, emptying
into the
outstretched and
expectant hands
of state
governors and
local government
chairmen. The
problem with
such hand-outs is
that it is hard to
handle them with
thrift and
accountability. As
the hackneyed
but instructive
saying goes,
“easy come,
easy go”
Nobody labored
for the money.
Consequently,
nobody feels
particularly
responsible for it
because it is,
particularly,
nobody’s money.
So, the governors
and the
politicians can be
remiss and
extravagant in
their expenditure
of their
allocations. And
because the
people do not
have a strong
sense of
ownership of
these hand-outs,
their demand for
accountability
and transparency
in their spending
is half-hearted.
A very powerful
antidote to the
office holders’
lack of
accountability
and the people’s
almost
indifference to
the handling of
public funds is
internally
generated funds,
of which taxation
is a major source.
As a simple
example: if the
inhabitants of a
town collectively
determine their
budget for the
administration of
their small town
for the year, and
decide to tax
themselves
equally or based
on a formula that
determines the
tax for every
individual.
It will be very
difficult for
whoever that is
entrusted with
the
disbursement
and expenditure
of this fund to be
careless with it.
The contributors
of this money
will feel that the
money belongs
to them and can
confidently
demand a
detailed account
of its spending.
Also, they will
feel empowered
and justified to
punish whoever
has appropriated
or misused the
money.
Therefore, the
attempt by the
Babatunde
Fashola
government to
get the residents
of Lagos State to
pay their taxes is
splendid. But is
the government
surprised that
many residents
of Lagos State
are reluctant to
pay their taxes?
They are
unwilling to pay
their taxes
because of their
profound distrust
of the Lagos
State
government.
The inhabitants
of the state, like
most Nigerians,
cannot trust
their governors,
legislators, local
government
chairmen, etc.
This is because
all tiers of
governments in
Nigeria have, for
so long, lied to
the people and
stolen from
them.
We can all rant,
rave and pen
diatribes against
the Federal
government for
its corruption,
extravagance
and theft of
public funds. But
corruption,
extravagance
and theft of
public funds are
not the preserve
of the federal
government.
State and local
governments are
all equally
culpable of the
same offenses.
Despite the
socialist and
populist
posturing of the
Lagos state
ruling elites, they
are just as
corrupt, arrogant,
scornful of the
masses and
prone to stealing
from the public
coffers like the
governing
officials in other
states and at
the federal
government. So,
like the federal
government and
other
governments in
Nigeria, the Lagos
state
government
lacks credibility.
Consequently,
the people do not
trust the Fashola
government;
they do not
believe that their
tax money will be
put to the most
constructive use.
His
administration
can prove its
credibility if it
curbs its corrupt
practices, end
the stealing of
the people’s
money and
become
accountable and
transparent in its
expenditure of
public funds.
Then, it will earn
the confidence of
the people. And
the residents of
Lagos State will
pay their taxes,
not under threat
of punishment or
promises of
reward, but
wholeheartedly.
The 18th Century
German
sociologist, Max
Weber, defined
power as “the
ability to get
others acting in
accordance to
your will”. And
the eminent
American
diplomat, John
Galbraith,
distinguished
between three
types of power:
condign,
compensatory
and conditioned.
He wrote that
every exercise of
power, to a
varying degree,
must involve one
or more of these
forms of power.
Unlike condign
power
(predicated on
punishment or
fear of
punishment) and
compensatory
power (based on
the promise or
denial of reward),
conditioned
power is the
most effective
form of power.
The exercise of
this type of
power is based
on people being
conditioned –
understanding
and/or agreeing –
to the need to
obey. Therefore,
they obey the
rule not because
of fear of
punishment or
promise of
reward but
because they are
convinced of the
necessity to do
so. Therefore,
they obey the
law, even, when
there is no one
positioned to
watch over them
or to enforce the
law.
Instructively, this
most effective
form of power
(getting others
to act in
accordance to
your will) is
based on trust. If
the government
of Lagos State
can earn the
trust of the
people, the
people will obey
its laws,
including, the tax
laws without
coercion or
cajolement, that
is, willingly.
On the other
hand, without
this trust, the
government
must resort to
tough-handed
measures like
hectoring and
punishing
Lagosians to pay
their taxes. Still,
it will fail in its
tax drive.

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