Tax: Responding to Oxfam’s inequality warning

Nigeria has continued to engage the attention of the world as a paradox of lack in the midst of plenty. As a country blessed with abundant human and natural resources, Nigeria has puzzlingly remained stuck in a perilous dalliance with poverty, coming across as a society where very few are outrageously well-heeled, while the clear majority continue to wallow in abject poverty. It is a scenario that has to change for the country to take the right steps forward.

In a new report by Oxfam, an international development organisation, Nigeria was described as the powerhouse of inequality in West Africa. She is seen as a place where inequality has reached a crisis level, with the government showing very little or no commitment to alleviating it. This is quite disconcerting because Nigeria has no business with poverty if the country’s enormous resources are managed responsibly. Yet, it is not as if the report, co-authored with Development Financial International, a financial consultancy, has come as a total surprise to watchers of events in the oil-rich country. Where most oil producing countries have been able to deploy their immense yields from oil sales to enhance the quality of life of their citizens and develop their infrastructure to the level of first world countries, Nigeria, a major oil producer, has remained trapped in dysfunctional governance with primitive and decrepit social infrastructure. Oxfam’s report reinforces an emerging pattern that has been sustained over a period of time. In a similar report released last year, Nigeria was ranked worst for two years running on policies meant to reduce inequality. Out of 157 countries surveyed on their commitment to policies on labour rights, taxation and social spending – indicators for addressing inequality – Nigeria placed 157th. She shamefully trailed countries such as Uzbekistan, Haiti, Chad and Sierra Leone. With the exception of Sierra Leone, in this year’s report, Nigeria was once again trumped by these same countries. What really riles the authors of this report is that inequality continued to bloom at a time when the economy of the country was doing well. This was captured in a portion of the report that said, “Poverty in Nigeria is particularly outrageous because it has been growing in the context of an expanding economy, where the benefits have been reaped by a minority of the people, and have bypassed the majority of the people.” Nothing could be further from the truth, especially given some of the statistics the United Kingdom-based organisation relied on to arrive at its conclusions. Last year, it suddenly dawned on many that the world would not be able to meet the 2030 deadline of the United Nations Sustainable Development Goal for poverty elimination because of the rate of poverty in Nigeria. The country was officially crowned the poverty capital of the world, where more than 90 million people live on $1.9 per day and six people drop below the poverty line every minute. A critical look at the trajectory of poverty growth in Nigeria shows that, between 2000 and 2010, when the price of oil, the mainstay of the economy, rose to unprecedented levels, and annual economic growth averaged seven per cent, the number of people living below the poverty line grew from about 69 million to 112 million. This is “equivalent to 69 per cent of the population,” the Oxfam report stated. Oxfam said about $24 billion would be required to lift these unfortunate Nigerians out of poverty, ironically, an amount less than the combined wealth of the five richest Nigerians. Amidst this excruciating poverty, Paul Wolfowitz, a former World Bank president, stated that $300 billion of oil wealth was looted in the four decades to 2016. It is, therefore, easy to link poverty in Nigeria with large-scale corruption. Aside from corruption, the Nigerian conundrum can easily be traced to poor management of resources and astronomical cost of governance, among other reasons. People see politics, not as a call to service, but as the easiest means of accumulating wealth. A Nigerian senator, for instance, earns N13.5 million (about $37,000) monthly, as running cost, as against his counterpart in the United States, the richest country in the world, who grosses $174,000 annually. Governors also pocket billions of naira as security vote for which they render no account. On top of that, governors and the President hire thousands as aides, commissioners and ministers. Their foreign trips, funded by taxpayers, easily pass for a jamboree. On June 19, 2012, for instance, a former president, Goodluck Jonathan, travelled to Brazil for the United Nations Earth Summit with an entourage of 116 people. These are some of the bizarre ways that public funds are expended. The Nigerian authorities, therefore, need to take steps to address the issue of inequality if they are desirous of building a just, equitable, peaceful and prosperous nation that can be the pride of the continent. There is no surer ticket out of poverty than a solid education. To make a meaningful difference, education has to be affordable and equally distributed. Last year, American philanthropist, Bill Gates, faulted the lack of adequate social spending in the country. Nigeria has to start investing adequately in education to return the over 13.5 million out-of school children to school. Health facilities also need to be overhauled to prevent high infant and maternal mortality rate in the country. The issue of minimum wage should also be implemented as quickly as possible to ensure that what people take home at the end of the month can actually sustain them till the next payday. The rich must be taxed at a reasonable rate. At the current estimate of six per cent, Nigeria has one of the lowest tax compliance rates in the world. The tax system has to be reformed to ensure that those who should pay tax do so. Besides, the business environment has to be conducive to aid job creation and ensure that more people are captured in the tax net, not a situation described by Oxfam where “the burden of taxation mostly falls on poorer companies and individuals.” Giving the poor a better access to capital will go a long way. The various governments should invest more in women to empower the family. Nigeria has to look at how the Scandinavian countries have been able to create a society where inequality gaps have been substantially bridged.


Source: punch