DURING his recent media chat, President Goodluck Ebele Jonathan declared that Nigeria was not poor but that its wealth is in the hands of a few. The question is: Why is it so? A country may be having a steady economic growth without equitable redistribution of its wealth to her citizens, particularly the less fortunate class?
Over the years, every successive government in Nigeria has been planning for the country’s economic growth but with no thought on how the wealth would be distributed. The only government which, presumably, thought of wealth distribution was that of military President Ibrahim Babagida with the introduction of its Structural Adjustment Programme, SAP, which was midwife by Chief Olu Falae, then secretary to the government of the federation. SAP was suspected to be a script from International Financial Institutions (World Bank/International Monetary Fund). However, the programme failed due to lack of consideration for our country’s peculiar economic environment at the time.
Now, that the finance minister and co-ordinating minister for the economy, Mrs. Ngozi Okonjo-Iweala, is producing a road map for economic growth, it appears to me that the issue of redistribution of wealth is not taking the front burner in her economic planning as it should be. There has not been much pronouncement from her in this direction. Redistribution of wealth should be a national policy from the federal government to encourage and empower all the federating units to implement. President Barack Obama of the United States of America, USA, did it under his health care programme now called “Obama Care”, which is benefitting mostly the low income Americans.
This write-up is intended, therefore, to discourse only two of the tools for redistribution of the country’s wealth — namely taxation and subsidies. Taxation covers income tax, profit tax, capital gains tax, value added tax, VAT, land use charge, entertainment, etc. We all know that the only class of people who pay taxes regularly are salary and wage earners through the Pay-As-You-Earn, PAYE, system. Corporate bodies that declared profit tax may delay returns to the government for some years or avoid payments. There are estate and land developers, footballers, actors, actresses, musicians, small and medium enterprises, contractors and self employed professionals’ etc most of whom either pay little or no tax. It appears most states and federal tax authorities do not have the capacity to track many businesses for tax purposes. The only state that is making good strides on internally-generated revenue is Lagos. Most of our other states look forward to Abuja for their largesse. The basic principles behind most taxation is that the higher your income or wealthier you are, the more you pay taxes which the government, in turn, is to expend in the provision of social welfare, infrastructures, health, housing etc. to benefit the less fortunate citizens.
The second tool is subsidy. The only visible subsidy we have in Nigeria is on gasoline which, in fact, has created room for corruption in the oil industry. The subsidy for kerosene which is supposed to benefit the poor class is also soaked in corruption and therefore the people are not deriving any benefit. The policy of the federal government whether to retain oil subsidy or not is still hanging. However, the areas where subsidies should benefit the poor class are free education from primary to secondary schools, grants to tertiary education, low rents and housing for low income earners, free drugs for children and the aged people and transportation at low fares. Redistribution of wealth is also achievable through social benefits which involve giving cash allowance (i.e. dole) to unemployed people.
Some commentators have frowned at those Nigerians owning private jets whilst majority of the populace is living in poverty. My opinion is that this should not be an issue because it is not good to kill the goose that lays the golden eggs. No country in the world would prevent or impose punitive actions on citizens for being wealthy if the wealth is acquired through legitimate and lawful means. Also, it is the duty of the tax authorities to ensure that these people are fulfilling their financial and tax obligations to the nation.
The above suggestions are ways by which the country’s wealth can be distributed. However, it is the implementation that would make the recent Rebased Gross Domestic Product, GDP, meaningful to many Nigerians.
Bakare, a political and economic analyst, is based in Lagos. E-mall: [email protected]
— May 26, 2014 @ 01:00 GMT