The New Tax Regime And The Poor In Lagos


BEVERLY HILLS, March 19, (THEWILL) –  Internally Generated Revenue (IGR), as a means of funding huge government expenditures, has taken the centre stage among states. This is understandable in the face of declining federal allocations, occasioned by the drop in global oil price.

Lagos State, unarguably Nigeria's commercial nerve centre, is among states that have run their economies more from IGR than the monthly federal allocations. But the proposed new tax regime by Governor Akinwunmi Ambode, whereby market women, artisans, housemaids/gardeners etc. would pay one percent of their earnings, has again brought taxation in the state to the front burner.

Chairman of the state Internal Revenue Service (LIRS), Mr. Olufolarin Ogunsanwo, had disclosed that the new tax was in line with the governor's resolve to grow the state with contributions from every resident. He said the new regime became necessary for government, to provide and maintain basic infrastructure for the people.

THEWILL is not averse to taxation as a means of generating revenue to meet the huge demands of a cosmopolitan state like Lagos. In fact, it is the culture all over the world that people pay taxes to augment government earnings. It is only through tax that government can generate enough money to provide basic infrastructures.

However, over the years, residents of the state have not fared better, despite the taxes they pay under different guises. Lagosians are already groaning under multiple taxations and levies. In developed economies, people pay higher tax rates, in return for efficient social services. Sadly, it is the opposite in Lagos. It is worrisome that, notwithstanding the gargantuan revenues from taxation, pipe borne water is still a mirage to over 80 per cent of the population. Most roads are in bad condition, flooding is a recurring decimal; electricity and decent housing are almost nonexistent, unemployment is on the rise; while education and health facilities are either unavailable, or too expensive for the poor to afford. Reports show that some past tax revenues were siphoned, instead of used to provide infrastructures.

THEWILL views government extension of taxes to these extremely poor classes as insensitive. Instead, people with very low income should be granted tax waivers, grants and even rebates to help them afford a descent life, like it is done in several developed climes. It is unjust to tax poor people at the expense of the wealthy.

We are constrained to state that income distribution in Lagos is lopsided. Out of its over 20 million residents, only less than 10 percent, which constitute the rich, control 90 percent of the wealth in the state.

Under the circumstance, THEWILL suggests that rather than continuing to milk the already over-burdened poor, government should direct its new tax regime at the rich. LIRS should design a template that would see that the rich pay tax on their properties, including their very expensive vehicles and yachts.

We restate that when the poor class is over-stretched, they constitute a security risk to the rich. It is for this reason that social security grants are given to the vulnerable groups in advanced economies. We therefore urge the state to halt this proposal and redirect its new tax regime at the rich.