I was invited as a speaker at the recently-held workshop for states and local government functionaries, jointly organized by the Revenue Mobilisation, Allocation and Fiscal Commission and Messrs Switch Consulting Limited in Abuja. The theme was Alternative Sources of Revenue for Sustainable Development in States and Local Governments/Area Councils in Nigeria. For me it was a revealing and very interesting event and I wish to share some learning points here.
My take on the topic was to see how things are being done elsewhere and also look at the usual complaints by states and LGs, that Nigeria’s constitution is suffocating them, and so their capacity for generating their own funds is close to zero. I also considered the interactions between states and local governments, and we closed off by looking at the different solid minerals available to every state in Nigeria, while not forgetting to point out the fact that those solid minerals were worth a lot more once they were processed outside the country. This we did by researching what most of the minerals were used for; ranging from telecoms, to expensive jewellery, to industrial chemicals, to crude-oil drilling, fertilisers, electronics, animal feed, pharmaceuticals and so on. I urged the states to consider forward integration like other countries have been doing. This means that it is not enough to excavate and sell at the primary market, but to see how industries could be created here to add value to those products.
We discussed the recent IMF tax review for Nigeria which basically centred around the need for the country to get organized – as if we needed to be told. According to the report, Nigeria is haemorrhaging money from looseness in the environmental sector, through too many tax waivers granted to whomever is powerful enough in the political circles to obtain them, and through sub-par excise duties on ‘sumptuary’ goods like cigarettes and alcohol. States and local governments have jurisdiction over some of the items emphasized by the IMF, so it was interesting to know why they weren’t doing the needful.
The usual flare-up between the states and local governments occurred, when a state functionary justified what is apparently a deliberate emasculation of local governments by the states in Nigeria. Some of the state governors have been positing that only the Federal and State Governments are known to a Federal system of government. They believe that local governments are to be headed by people appointed by fiat, by the governor. They quote sections of the constitution which talk about the ‘Federal and Subnational Governments’. My opinion was that ‘subnational governments’ could mean ‘states and local’, since it was in plural, and also that the same constitution recognized Local Governments in many parts, leading to a portion of the allocation being specifically allotted to them. My stronger argument was the empirical evidence that in older, more-advanced democracies and federalisms, the local governments do not exist at the mercy of state governors. In the USA, which is the global reference point in Federalism, county (local government) elections still hold and we have Mayors and Chairmen of such counties. I was with the Chairman of the Greenspoint County (now called North Houston County) in September 2014 and his dreams, which he explained to our group in a presentation, was bigger than those of most African leaders. The infrastructure he controlled in that county – which is one of the poorest even in Houston – is larger than want we often fret about in Nigeria.
I asked the advocates of state domination why in the USA they still conducted council elections, and even elections for Sheriffs, which are no more than Police DPOs in Nigeria. Did the Americans come here to take approval from us for deviating from ‘true federalism’ before turning the office of a sheriff into a political one? So who says we cannot have our variance of federalism? And why have we allowed the governors to cannibalise our system of government for no just reason? Are we trying to teach USA federalism? If the United Kingdom, from whom we obtained independence in 1960 could maintain local governments (boroughs) – in spite of their socioeconomic advancement compared to us here – why would any governor say Nigeria does not need local governments? I recall voting for my local government chairman in Camden Borough, UK in 2005/6 and how orderly it was. We didn’t even have to sit at home. It was a normal, working Tuesday. I think we should be careful granting more spending powers to state governors who have usurped the local governments and become emperors unto themselves. We cannot solve one illegality by promoting another illegality. We are in a quandary. How do we proceed from here?
That is however not the kernel of my gist today.
In looking at the various ways our states and LGs could raise money, we considered:
1. Property taxes/ tenement rates
2. Environmental maintenance charges – including deterrence to pollution
3. Capital Gains Tax – of which states are entitled to the portion payable by individuals.
In Nigeria we complain about how there is no money to fund anything, but serious countries are being run on some of these taxes and rates which we actively resist. Cigarettes and beer are cheapest in Nigeria, compared to the rest of Africa, yet we are the largest consumers. Excise duties can easily be increased yet we refrain. So our aim was to know why the resistance.
I performed an experiment.
There were anything like 500 people in my audience. Most of them looked like they owned properties. Many were big men in the civil service. I asked how many would be willing to pay capital gains tax if they made profit from a land sale. We put it to a voice vote. The Nays had it overwhelmingly, yet these were people who had at one point or the other sold an asset and made money. I also put the idea of paying property taxes to them with the same result. I then asked, if those who were there, wishing to know how states and LGs could raise money were so unwilling to comply with the taxes which are enshrined in the constitution of the country, who then will comply? Someone in the audience asked why he should pay any tenement rate when he hasn’t seen the impact of government anywhere around where he built his house. He asked if it was a sin that he found a land and built on it. I told him it was a ‘chicken and egg’ scenario. If you don’t pay, government will say they cannot provide those services. But it is also true that when people pay, government spends on needless things, leading to taxpayer distrust. This distrust is further fuelled when for example, our Senate, paid monthly by the Nigerian people, says through its spokesman, Sabi Abdullahi, that Nigerians were rude to ask what senators earn. Hubris. So much hubris. More next week
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