Compelling Rich Tax Defaulters to Pay

Days ago, the Head of the European Union Delegation to Nigeria and Economic Community of West African States, Ambassador Michel Arrion raised a pertinent issue regarding Nigeria’s economy, which he said is skewed in favour of the rich at the expense of the poor. According to him, Nigeria is in a serious situation regard- ing its public finance and budget since it has no control over the international price of oil, which is the main revenue earner for the country. He therefore advocated a better tax and fiscal system that will make rich defaulters pay com- mensurate taxes.

Arrion lamented as unfair a situation where the poor are made to bear disproportionate tax burden in relation to some rich Nigerians who evade tax. While we commend the diplomat for such candid observation and advice, many people had for long known that some rich Nigerians hardly pay tax. Even when they do, the amount is so measly that it does not reflect the true state of their incomes.

Reason is that, the large chunk of the country’s economy is still sustained through political pa- tronage rather than commercial or industrial productivity that can be easily measured.

Here is a country where some of the rich lack visible sources of

Advertisement

income. Rather, they are known to live at the expense of govern- ment handouts due to closeness to the corridors of power. Such hidden sources of income make it diffi- cult for the authorities to tax them accordingly, while much of the wealth is stashed away in foreign banks.

For long, the country has de- pended on the sale of crude oil to spend its way out of any shortfall emanating from low tax receipts.

Even when tax payment is man- datory, much of the burden had always fallen on the few rich, including the poor and diminishing middle class. Now that the econo- my is facing hard times following decreasing income from oil sales, it is important for the incoming Muhammadu Buhari administra- tion to cut expenditure by plug- ging all leakages while improving on its revenue sources.

This it can do by taxing some of the luxury and expensive items they consume. Some of the richest in the society are virtually on tax holiday paying pittance when convenient. It is a pity that tax administration is still on those

Advertisement

in formal employment under the PAYE Scheme, leaving out some of the rich.

We insist that everyone be brought into the tax net and to make everyone pay commensurately as their fair burden of financing the state, as is done in other more organised societies.