TAXATION AND INEQUALITY - Welcome to Soul 2 Soul Mates Blog


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Sir: Taxation is a platform for sustainable revenue generation for the government. The proceeds from taxation are used by the government to provide essential goods and services for its citizenry.

The reality of the tax system in Nigeria is that poorer individuals and companies pay a higher rate of taxes than richer individuals and companies. This tax system is retrogressive. Rich individuals who are usually well connected to the government are given questionable tax holidays and tax waivers. These rich individuals and companies exploit loopholes in existing tax laws and shift large amounts of revenue to places of low tax jurisdictions. Meanwhile, the 36 state governments in a bid to meet their revenue generation targets usually embark on aggressive taxation of the informal sector. Local Government Councils and some agencies of the state government relentlessly impose heavy and unbearable taxes on Small and Medium Scale Enterprises. Some of these taxes include offloading and loading charges, building permit, health approval permit, community development levy, pick-up and bus stickers, commercial vehicle stickers and tenement rates. These multiple taxations faced by the poorer people who dominate the informal sector are usually accompanied by human rights abuses.

In Nigeria, there is no established positive relationship between the volume of revenue collected as taxes and public services delivered to the average Nigerian. The percentage of Nigerian government budget appropriated to sectors that address inequality – education, health, social welfare – are among the lowest in Sub Saharan Africa. Despite the trillions of naira that has been budgeted for the development of Nigeria over the years, the state of schools, hospitals, water supply, electricity has been hugely inadequate to meet the demand of the Nigerian masses.

Millions of Nigerians lack access to potable water and sanitation. The number of Nigerians that lack access to basic maternal, newborn and child health facilities is scary. Nigeria is also a global leader of the number of out-of-school children. Nigeria’s commitments to improve its human development indices and address inequality can only be successful if there is an improved public finance management. Poverty eradication and equitable growth must be made a priority. Legislative measures must be taken to improve progressive taxation, while executive measures taken to build the capacity of tax authorities on transfer pricing.


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