The Federal Government of Nigeria has forwarded an Executive Bill to Nigeria’s legislature, the National Assembly, for its deliberation and possible passage. However, the National Executive Committee (NEC), comprising all the 36 state governors and the vice president as chairman, has advised the President of Nigeria to withdraw the bill from the legislature so as to allow for deep consultations and stakeholder engagement.
However, the president has declined to withdraw the bill but instead requested stakeholders to make their concerns to the National Assembly during its expected public hearing of the bill.
Meanwhile, some stakeholders, such as the Nigerian Labour Congress (NLC), the Academic Staff Union of Universities (ASUU) and state governors have voiced their disapproval of some important provisions of the bill.
In light of these open disagreements among important stakeholders, we hereby propose incorporating relevant social scientists into the engagement and consultation process.
Incorporating political scientists, historians, sociologists, and allied disciplines in the committee of experts tasked with advising on Nigeria’s proposed VAT reform is crucial to ensuring that the policy is robust, equitable, and relevant to Nigeria.
This interdisciplinary approach is particularly important given the complex socio-economic realities of Nigeria and, indeed, many developing countries. Moreover, these social scientists can provide a more comprehensive understanding of the policy’s potential impacts
Understanding socio-political context, equity and distributional impacts: Institutional and social context
Political scientists and sociologists can analyse the institutional, regional and social context in which the VAT reform will be implemented. For instance, they can examine the capacity of Nigeria’s tax administration, the level of trust in government and the potential for tax evasion or resistance. Historians can provide insights into the evolution of Nigeria’s tax system and the impact of previous reforms.
Equity and distributional impacts
Sociologists and economists can investigate the potential distributional impacts of the VAT reform on different socioeconomic groups, particularly the poor and vulnerable. They can analyse how the reform might affect the prices of essential goods and services and the potential for regressive taxation in the various states of Nigeria.
Political economy and stakeholder analysis
Political scientists can examine the political economy of the VAT reform, including the interests and influence of various stakeholders, such as labour unions, businesses and civil society organisations. This analysis can help identify potential obstacles to implementation and strategies for building support for the reform.
Implementation and capacity building
Historians and sociologists can study the experiences of other countries that have implemented similar VAT reforms, highlighting lessons learned and possible best practices. This can inform Nigeria’s implementation strategy and capacity-building efforts.
Political scientists’ contributions
Political scientists offer critical insights into how VAT reforms intersect with governance, public trust and political stability in Nigeria. Taxation has always been closely tied to state legitimacy.
In developing countries like Nigeria, where government accountability is often questioned, citizens may perceive VAT reforms as exploitative, particularly during economic hardship, as Nigerians are currently enduring.
We know that political scientists can analyse:
- Policy legitimacy
How the proposed VAT increase aligns with citizens’ expectations of government spending and service delivery. In Nigeria, citizens have historically expressed dissatisfaction with poor infrastructure and social services despite various tax revenue collections by federal, state and local government officials.
- State-citizen dynamics
The impact of reforms on trust in governance, particularly amidst concerns about corruption and fiscal mismanagement. Several writers have highlighted high public resistance to taxation when transparency is lacking. For example, in 1929, thousands of Aba women violently protested against oppressive colonial rule when they feared that the planned headcount would result in more taxation.
Sociologists can provide insights into public sentiment, focusing on the lived realities of Nigeria’s diverse population. Given the high levels of poverty (the National Bureau of Statistics [NBS], estimated that, in 2022, 63% or, 133 million persons living in Nigeria are multidimensionally poor. This indicates a high level of material deprivation.
Sociologists can analyse the impact of VAT reforms on:
- Household consumption patterns
VAT increases often disproportionately affect low-income households, whose spending is largely on VAT-inclusive essentials like food and transportation.
- Social stability
In Nigeria, rising costs of living have historically led to social unrest, such as the fuel subsidy removal protests in 2012. Sociologists can anticipate and mitigate similar outcomes by suggesting social safety nets.
Historical insights for policy refinement
Historians can bring a critical perspective on how taxation policies have evolved in Nigeria and their socio-economic consequences.
- Lessons from Nigeria’s past:
Failure of historical taxation policies
During colonial times, the introduction of taxation without corresponding benefits led to widespread revolts, such as the Aba Women’s Riots of 1929 (Afigbo, 1966). These historical precedents highlight the risks of implementing policies that are perceived as unjust or ill-timed.
- VAT introduction in 1994
When Nigeria first introduced VAT, its implementation faced significant challenges due to poor communication and weak administrative capacity. Learning from these past missteps can improve the current reform process.
- Comparative analysis
Historians can also draw on experiences from other developing countries. For example, Kenya’s VAT reform in 2013 and that of 2023, which increased the VAT rate on essential goods, led to widespread protests, property destruction and deaths and necessitated policy adjustments, withdrawal of the proposed tax.
By examining these cases, historians can provide valuable lessons to ensure Nigeria avoids similar pitfalls.
Cultural and Behavioral Dimensions:
Informal Economy and Tax Compliance
Nigeria’s informal sector accounts for approximately 60% of GDP and employs the majority of its workforce. Sociologists and anthropologists can analyze:
- Cultural attitudes toward taxation
Studies have shown that taxpayers in developing countries often see taxation as burdensome, especially when governments fail to deliver public goods.
- Behavioral responses
Taxpayers may respond to VAT increases by shifting to informal markets or evading taxes altogether. Understanding these behavioural patterns is crucial for designing effective enforcement mechanisms.
- Regional and ethnic dynamics
Nigeria’s diverse ethnic composition and regional disparities require nuanced policymaking. Sociologists can evaluate how VAT reforms affect different groups, ensuring inclusivity. For instance, VAT revenue distribution across Nigeria’s states has historically been contentious, with wealthier states like Lagos, Rivers, Akwa Ibom, Bayelsa, Ogun benefiting disproportionately.
Equity and fairness considerations:
- Social justice and poverty reduction
Tax reforms in developing countries often exacerbate inequality if not carefully designed political scientists and sociologists can advocate for measures to ensure VAT reforms do not disproportionately burden low-income households. They can do this, for example, through:
Exemptions for basic goods
Countries like Ghana and South Africa exempt essential items such as staple foods from VAT to reduce the tax burden on the poor.
Redistributive mechanisms
Revenue generated from VAT increases can be used to fund targeted social programs, such as cash transfers or healthcare or agricultural subsidies.
Gendered impacts
Sociological research can highlight the gendered effects of VAT reforms. Women, who are often primary caregivers and managers of household expenses, may bear the brunt of rising costs. Addressing these disparities is critical for ensuring equity.
Facilitating public engagement, consultation and communication:
Building public trust
Political scientists can guide strategies to build trust and foster dialogue between the government and citizens. For instance:
- Participatory governance
Engaging civil society organisations (CSOs) and community leaders in the reform process can enhance public acceptance.
- Transparent communication
Explaining how VAT revenues will be used to improve public services can reduce skepticism. Rwanda’s success in increasing VAT compliance is partly attributed to effective public awareness campaigns.
- Preventing resistance
Sociologists and historians can anticipate sources of resistance and propose strategies to address them. For example, using historical examples of tax revolts, they can design reforms that prioritise fairness and inclusivity.
Conclusion
An interdisciplinary approach to evaluating VAT reform is, therefore, not just a theoretical ideal but a practical necessity in Nigeria’s complex socio-economic landscape. While tax experts, economists, and accountants are indispensable, the inclusion of political scientists, historians, sociologists, and allied disciplines ensures that the reform process is context-sensitive, equitable, and sustainable.
Samaila Mohammed, an accountant, legal practitioner, politician and entrepreneur wrote from Jos, Plateau State
Join Daily Trust WhatsApp Community For Quick Access To News and Happenings Around You.
