Taxation has always thrown up intrigues about the suitability of the rate adopted and the ability of the payers, notwithstanding the type of system the country or society practised.
From time immemorial, taxation has been woven around the experiences and history of nations, connecting them with the prevailing system of government.
Its enduring feature is certainty. The reason and method of payment are known and agreed upon by the authority and members of a given community or state. It was a time-tested tradition; it was law.
However, taxation in primitive societies was characterised by arbitrariness. It must be paid, whether it was convenient or not. Also, the law of taxation in those days never took into consideration the modern principle of fairness. To the monarch, chief or emperor, the ability of the individuals to pay was a non-issue. Payment was non-negotiable.
Under such a traditional political system, evasion was common because the payment of tax was perceived as an avoidable burden and a cruel rip-off. Taxation, in some instances, also sparked rebellion and resistance because it was associated with fraud due to the deficiencies in its remittances.
Tax, under any system, was collected by force or intimidation. There was no strict formula for determining the levy by monarchs, whose collectors or tax masters were ruthless, unsparing and deaf to complaints.
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The traditional rulers relied on the tributes, tolls and levies as their sources of income and sustenance of community’s treasury. There was multiplicity of separate levies, irregular imposition and arbitrary assessment, which could not be questioned by the ordinary folks. Complaints were viewed as treachery and a mark of disloyalty punishable by imprisonment.
Taxation was a prime duty and a unifying factor. It was also a measure of the health of the primordial economy. There was a basis for funding community projects – building of township fence, palace and prison, community hall, and levying of war. Maintenance of soldiers, which was critical to regime protection, was sustained by tax.
In the empires of yore, when agriculture was the mainstay of the rural economy, the kings insisted on the payment of “Isakole” (tribute) from the people of his community and environments. It could be agricultural yields or domestic animals. The period of payment was during the harvest. The inability to pay, either due to dwindling fortune or crop failure, was mot condoned. It was equivalent to refusal, violation of the royal order and an affront to the community. It was a grievous offence that attracted a stiff penalty.
Tax offenders were publicly shamed and punished, like going to the king’s farm to till the ground for a season. The property of defaulters might be seized and they had to be ransomed later through hard labour.
In some towns, offenders were publicly flogged. Those who could not pay were labelled as unproductive. Even marriage, which was a validation of adulthood, was often tied to the payment of tax. Only few parents would allow their daughters to be married to lazy and idle men who could not pay tax, which meant that they were not responsible and could not be trusted to properly raise families.
Since tax was the king’s main source of revenue, defaulting vassal communities risked wars, which in those days were disastrous. In the course of the onslaught, the unfortunate communities paid more. Their able-bodied men, wives and children were taken as slaves and they became labourers in captivity, until they worked for their freedom in a hard way. Not all the victims were lucky. Some of them never returned home. They were either married or sold off to other distant towns and villages as slaves.
As colonial interlopers invaded Africa, the British, for example, came with the idea of paying tax, using coins and currencies, which replaced cowries, articles of trade and farm produce.
The motive never contrasted with the objective of pre-colonial taxation system. The need to generate revenue for the running of the government at all levels and provide and maintain public infrastructure became more compelling as the colonial masters expanded the bureaucratic functions of the colonies.
British taxation in the colonies was burdensome and exploitative. Defaulters were fined, publicly shamed and imprisoned. The condition of payment was stressful. That was the situation in Ibadan where Chief Adebisi Idikan, a rich farmer and trader, approached the Resident to stop troubling all male adults, promising to be paying their annual taxes.
The Divisional Officer and Resident marvelled at the singular decision to shoulder the huge responsibility. The rare act of philanthropy brought relief and restored normalcy to the sour relationship between Ibadan people and the colonial authority.
In Abeokuta, taxation was the source of a quarrel between Egba women, led by Mrs. Funmilayo Ransom-Kuti, and the Alake, Oba Ladapo Ademola II. As the aggrieved women protested daily, tension engulfed Ake, the seat of Egba Confederation. The crisis was so widespread that the monarch had to embark on voluntary exile for two years.
After independence, many Nigerians were still reluctant to imbibe the culture of taxation. People continued to evade tax, believing that it was a burden deliberately imposed by the government. Entreaties that the money was used to provide social infrastructure fell on deaf ears. Many people went into hiding in their farms, in ceilings, under their beds, stores and kitchens whenever the tax collectors came calling. Again, the negative feeling towards tax was fuelled by the corruption associated with its collection and remittance.
In the mid-1950s, the old Western Regional government increased taxes to get more money for funding free education. The opposition went to town with a curious propaganda that worked. During the federal elections that followed, the opposition used the issue against the ruling party. The voters were swayed, and the ruling party lost many seats in the central parliament.
As from 1970s, the government devised a method of “stop and search” to enforce compliance in some old provinces and states. At the sight of revenue officials, defaulters scampered into the bush. Some sneakily ran off the vehicles conveying them; others agitatedly disembarked from their bicycles and motorcycles.
However, as the civil service expanded, government devised the Pay As You Earn (PAYE) system. Through this method, taxes were deducted from the salaries of civil servants and remitted to the government. But, in the private sector, many companies continued to default as they do in the contributory pension scheme.
Up to now, most Nigerians do not pay taxes, for many reasons. These range from the inability of the government to properly track taxable individuals and corporate bodies as well as the evasion of tax payment by many wealthy citizens. This borders on corruption: using unscrupulous government officials in the tax offices to issue doctored tax certificates, among other dubious practices.
Some have argued that Nigeria accommodates many private jet owners and other “billionaires” who evade tax because of their closeness to some “powerful” government officials that aid the unpatriotic indulgence.
Tax assessment is a herculean task. In the metropolis where many companies operate without signboards. Many are unregistered. Thus, they are not legal entities with valid addresses.
What is very striking now is that despite the transparency of the modern tax governance, the politics of distribution has led to suspicion between two groups of stakeholders – those pushing for distribution based on derivation and those pressing for sharing on equal basis.
There is a general agreement that public revenue should be raised for known and agreed purposes. However, the emphasis is not on how the tax is generated; the bone of contention is how the lump sum is distributed among the states. Some states contribute so much and get so little; some contribute sparsely and get the big portion. There is institutional reward for lack of productivity.
No doubt, the capacity for generating the Value Added Tax (VAT) is skewed or lopsided. This may be due to the fact that states are not equally endowed or lack equal capacity to contribute to the pool.
The complexity of the situation is underscored by the fact that the seemingly disadvantaged populous sub-national units press, not for equity, but for equality in the sharing of proceeds. The populous advantageous units are blackmailed. Both bloc zones of the North and South are represented, but not equally, in the parliament where the law is to be made. There is peculiar bullying through the deployment of numerical strength.
In a supposedly federal country where some regions relish federal character, catchment area and quota system, there is the need to promote a debate on the sharing of tax proceeds.
As the entire process is enveloped in controversy, the question is: what is the way forward? The answers and options are: further consultations, constructive dialogue, negotiation, concessions, sacrifice, compromise, consensus building, flexibility, acceptance of reality and sustenance of the national interest.
A just tax system is not the one that soothes one section and burdens another but one that ensures that all parties get what they deserve based on what they work for.
