Friday, November 28, 2008

Revenue Generation From Taxes And Fees - America And Nigeria Compared

Revenue Generation From Taxes And Fees - America And Nigeria Compared
By: Paul I. Adujie
New York, USA

June 5, 2003

When I was very young, a remarkable event occurred while I was riding as a passenger on my father�s bicycle, his beloved �White-Superb�! That bicycle that my father was very proud to own! There were only two people in my hometown with this bicycle brand that at the time symbolized good fortune, good taste and wealth!

My father was accosted on that fateful day by the Local Authority (LA) Police Officer who demanded proof of license or permit from my father, this was usually issued annually upon payment by the bicycle owner of ten shillings or one pound, it was the beginning of the year and only a few days had elapsed and so my father had forgotten to go to the LA or the Council as it was alternately called, to renew his bicycle license or permit for the new year, that was just a few days old, yearly permit for his �White-Superb�!

He was noticeably embarrassed and frazzled by the incident or unsavory experience of being on the wrong side of the law, this was evidenced by how much efforts he put in trying to convince me that he had forgotten about the permit renewal as opposed a deliberate neglect or refusal to obey the law, he reminded me and emphasized my knowledge of him as a stickler for obeying all rules and laws, he explained to me that the policeman was right is wanting to detain our bicycle if payment for the permit renewal was not effected there and then, immediately! My father of course paid.

I recount this incident and experience as evidence of how efficient and effective the different levels of government in Nigeria were in revenue generation and collection when I was young, and how this collection on behalf of governments in Nigeria used to be; The different levels of government in Nigerian taxed and imposed fees on so many things! Hence the Aba women activism and uprising in 1929 against the then colonial government that taxed the locals while simultaneously depriving the locals of representative government from the pool of tax paying citizens.

But the discovery of petroleum and our becoming awash in petrol-dollars, the consequent neglect of agriculture, the military intervention in governance coupled with the bastardization of rules and laws, combined to change government�s systematic enforcement of rules that also served to generate revenues for public amenities and projects, the intervention in politics and governance by the military in Nigeria, literarily ruined entrenched government systems of doing business, ruined the hierarchical and well ordered and synchronized functioning civil service, that was very vibrant in Nigeria, prior to the military; Revenue generation and collections and rules were abandoned afterwards, the Public Works Department of PWD that was very efficient disappeared from what used to be their perpetual road repair and maintenance work, that helped to stem the tide of potholes and erosion damage to Nigerian roads as they have become now.

The Local Authorities or LA or Councils in early Nigeria were very powerful, they operated the local markets in the villages, the LA imposed Public Health on traders of foodstuff, LA determined the Local Hygiene and Sanitation standards.

Market women were always in fear and trepidation in their concerns for compliance with these rules and standards of enforcements as enunciated by the LA official, the women in the market scrupulously followed the public health regulations regarding displaying cooked food, hawking snacks or other edibles! The locals were compelled to following the exact tenets of public health laws regarding the presentation and or preservation of food items, especially cooked foods in certain types of pre-defined ways of packaging, and a violation resulted in the destructions of displayed food or wares of the violator or offender, it was very effective deterrence!

Every Nigerian knew what to do, because everyone knew what the law, rule or regulations were, there were the �town crier� who would broadcast new rules ever so often, especially on market days! The rules were thereafter meticulously explained and scrupulously and even sometimes ruthlessly enforced!

There were the so-called, �Forest Guards� as well, No tree was cut down or harvested, until the Forest Guard�s authority is given! The Forest Guard must give consent and permission for any tree to be harvested for timber or for any other reasons. The Forest Guard will announce a fee and determine in addition that there is no imbalance result from cutting or felling of the particular tree, and then, the tree is stamped by him, this ensured that there was no indiscriminate harvesting of trees, and that government fees are generated and that the eco system remained balanced.

The Forest Guards were from the ministry of agriculture, and nothing affecting trees could be undertaken or done, until and unless Forest Guards approves. The rules were based on the rationale that only matured trees could be felled or harvested and in orderly manner, without indiscriminately endangering younger trees and the entire eco system, but I did not understand this then.

Trees harvested or cut down, must be stamped by a Forest Guard and of course, this generated needed revenue for government, from the stamping fees charged, it also provided statistics of trees cut and certain other derivative projections and their effects in the macro economy activities.

All levels of government in Nigeria generated revenues from all kinds of other activities similar to the tree harvesting just described above, there were income tax collected every year, this per capita tax was collected from farmers and every adult, whether employed or not and it was a flat tax, it was called �head tax� in my village, livestock owned by farmers were also assessed for taxes by the LA, so, from bicycle permit or license, to timber harvest stamping fees and head taxes, the government was able to generate the cost of providing services to the citizens of my village and by extension, all of Nigeria.

But the advent of the oil boom and the military�s participation in politics changed all these, there was a complete alteration of attitude towards obedience of rules and regulations or laws.

However, it is now time to re-establish these machineries of government rules, regulations and law enforcement that has the added advantage and benefits of generating much needed revenues for the provisions of sorely need amenities and projects in every community, this re-establishment of these machineries would also re-awaken and engender participations by Nigerians in every village and hometowns nationwide especially as we re-embrace democracy more determinedly!

Nigerians should therefore share the cost of running a good, effective and efficient good governments, there is no free lunch, we have to contribute ideas and resources to running good government that we are all quick to demand! The rich and the poor, companies foreign and domestic must pay taxes and fees to enable effective government operations!

In America, it is the case that all citizens and recent immigrants arrivals pay the cost of running a good effective and efficient government, there exists, in America, a multiplicities of taxes imposed on all by various levels of governments, from the County taxes to City-Municipal taxes to State taxes to Federal taxes.

There are all manners of fees and taxes appended and imposed on all human transactions imaginable! On my cellular telephone alone, for example, I am slapped with the Federal Communication Commission (FCC) line charge/tax courtesy of the American Federal Government, then there are state taxes, and another type of taxes charged by my County or Local Government of residence! So government fees are a big chunk of what everyone pay for cellular telephone service in America. In America almost every major highway and bridges traversed attract tolls and fees, almost everything purchased attracts sales taxes and every April 15th annually is devoted to filing of income taxes. A failure to files is a felony and every citizen must pay or file tax returns, even the unemployed.

Then, there is the special surcharge imposed on City dwellers cell phone users like me, to subsidize telephone service for American rural dwellers ~~ to make it affordable for them, that is like charging Kano City or Lagos City dwellers that own cellular phones, special taxes or charging them more, just so, that rural dwellers in Nigeria in the distant villages in the interior, will enjoy affordable telephone service because the cost of taking telephone service to far away rural American areas are enormous and if telephone service providers were to charge the market price as determined by the actual cost of providing service, cost of production would make phone service prices exorbitant and prohibitively expensive in the rural areas, that are sparsely populated and where jobs are fewer and incomes lower.

This is good model that I believe Nigeria can practice and benefit from its practice; There is an urgent need to broaden the tax and revenue generation base of all levels of government in Nigeria through the collection of income taxes, imposition of regulatory fees while also gathering valuable statistics all at once.

There is permit required in New York state for home owners who are desirous of expanding their car garage in their private homes! I pay for my car registration, pay for the car to be inspected for emission compliance, pay for insurance etc etc, pay all these fees and then also pay for tolls or roads and bridges when I venture to drive the car!

When I bought my personal computer I paid sales tax, when subsequently I buy additional software and peripherals, I pay more taxes! It is endless taxes and more taxes galore, and so, Americans always would say, there are only two things that certain in their lives, paying taxes and dying (are the twin certainties of life in America!) And these taxes and fees help to run the society and frequently, you would hear an American say, look, I am a taxpayer and a voter! I demand you do this or that, when they address public issues or public officials; This perhaps help to engender active interest and participation by Americans in public affairs, because their tax dollars are at stake, at work or being wasted.

In talking to some Nigerians, they have stated that the reasons Nigerian citizens may not pay taxes and myriad of fees are the fears that such taxes and fees may be misused or end up in Swiss banks etc, but the truth is that a good majority of the American tax paying public were opposed to the American led war in Iraq, I was opposed to war too, but I could not control or influence how the war was conducted and I could not prevent my tax dollars being spent on such folly! Nigerian governments at all levels mush impose taxes and fees and collect them aggressively. That's what happens here in America, no one begs you to pay taxes, you are compelled to pay, on pain of prison! And no citizen here demands to be self-appointed auditor of government expenditure to determine the appropriateness of government expenditure before such citizen agree to pay taxes or other fees imposed by the different levels of government in America.

Taxes and fees and tolls in America are determined by governments in America, and the average citizen or immigrant have no choice in the matter, it is the law, if you do not obey, there are consequences of jail and fines to pay! Why should it be different in Nigeria? So long as the taxes are what have been democratically determined by our different levels of governments from the Local, State and Federal levels.

Federal Government in the US make taxpayers to pay more than four billion dollars a year to maintain government properties yearly, properties that are no longer in use, including an abandoned US Post Office in Chicago, this was reported in American Broadcasting Corporation Television World News on June 5, 2003 as I prepared this!

It is my very strong belief that the imposition of taxes and different fees for services or for permits, and the aggressive generation collections of such revenues from taxes and fees, will stimulate the interest of the average Nigerian and taxpayer in public properties, facilities and properties.

All Nigerians deserve the benefits that can and should be expected of our democratic system, now often referred to as the democratic dividends, but it should simultaneously realized that the provision of amenities by the different levels of government in Nigeria would necessarily require a commitment on the part of the citizens to make contributions to the funding of public projects, the citizens should accept an expect to pay taxes as and when due, and make commitment to paying prescribed fees for services provided by the different strata of government in Nigeria.

It is also my strong belief, that imposing fees and fines and surcharges on violators of certain rules, regulations and laws in Nigeria, would help to reduce the amount of unnecessary arrests undertaken by the police service in Nigeria. In America for example, most traffic infractions result in the issuance of summons or tickets or citations that requires the violator to pay monies to the municipalities or state for stated violations; In Nigeria, since the national identity card project is not complete and tracking offenders of violators present extreme challenges, a fine could be imposed the equivalent of the cost of twice the amount it currently cost to obtain a driver�s license in Nigeria, a motorist drivers� license is then confiscated on the commission of a serious traffic offense, until the violator pays the fines before the drivers� license is returned.

The above is a lot more better that confiscating cars and arresting motorists for traffic infractions that does not involve injury, death or serious crime; And in doing this, the different levels of government in Nigeria will accomplish two main things among others!

First, it will help to decongest detentions in police stations and prisons nationwide, when and if such detentions were based on traffic infractions that does not involve serious crime, injury or death.

Secondly, it would help the level of governments to raise money those the fines imposed on such violators; Thirdly, most Nigerians would be more conscious of the need to obey traffic regulations, as most Nigerians are not in the habit of wanting to loose money to the governments and Fourthly, this will reduce corruption opportunity, because if a particular violation or traffic infraction require the payment of say a two hundred Naira fine, so it will be, and the summons or citation or ticket will be issued, no discount and no ejoor, ejoor sir!

And if need be, some incentive could be introduced in conditions of service of the traffic agents to ward off irregularities or corruption and fraud in the process, making certain that fines can only be paid at municipal buildings or local government offices. Those not wanting to lose money and time, will be quick to obey traffic rules.

Nigeria will be enforcing laws, rules and regulations effectively, efficiently and almost effortlessly, while generating and collecting revenue for government, for the use and benefits of all Nigerians, effective collections of taxes, fees and fines are very good ways the different levels of government in America raise funds for public spending and Nigeria can and should do the same, this may actually stimulate the interests in the ordinary citizens in matters concerning government expenditures and interests in protecting and preserving public property, because our collective stake in them, through taxes and fees, if nothing else motivates us.

All Nigerians must help our local governments, our state and the federal governments to be good governments, this we can do with effective participation and contributions of ideas and resources and having financial stake through taxes and fees are good start!

Nigeria�s good time and unending joy will come, Insha Allah.

God has always blessed Nigeria and will continue to do so, even more abundantly!

Paul I. Adujie is a Nigerian Lawyer and an Information Technology Professional

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