Lagos and the burden of taxation without transparency
The Lagos state government demands taxes from its citizens with the aggression of a junkyard dog but totally resents the obligation of transparency, writes ISAAC ANYAOGU.
It was James Otis, a lawyer in colonial Massachusetts and member of the provincial assembly, in 1761, who said that ‘taxation without representation is tyranny’. This saying animated the American colonists enough to reject the Sugar Act and the Stamp Act imposed by the British parliament, where they had no representation. This sowed the seeds of revolution and the birth of a nation.
But making this comparison about Lagos may seem like stretching the borders of reason – up to a point. In theory, Lagos state citizens have representation in the form of their 40 elected House of Assembly members, but their incestuous relationship with the executive makes it difficult to tell if they represent our future or our demise.
The colonists argued that it was illegal under the Bill of Rights to impose taxes on them when they were deprived of their due rights as British subjects. It also defies reason to impose taxes without being accountable. It is even immoral to carry on with a cavalier, almost imperial attitude to demands for transparency by the public.
Lagos state has scrubbed details of procurement contracts from its website, its personnel risk their jobs by talking to the media, it rejects the Freedom Of Information Act and the state’s budget details are concealed from the public. Everything that used to be at variance with democracy now has a budgetary allocation in Lagos.
A state and its taxes
On February 26, when the Lagos state governor Akinwunmi Ambode signed the N1.046 trillion 2018 budget into law, few people raised questions about how it was going to be funded.
In a state that recorded internally generated revenue of N503.7 billion last year, that recently won the status of oil producing state with prospects for improved revenue, and is attracting new foreign direct investments, it is easy to be lulled into the false comfort of indifference.
This year, Lagos began enforcement of its new environmental law of which section 137(1) (a) mandates private or corporate individuals to obtain permit before embarking on borehole drilling or surface water treatment. The law imposes fine of N100, 000 or six months jail term on private individuals and N500, 000 in addition to forfeiture of equipment corporate entities that violate the law.
On 29th January 2018, the Lagos State House of Assembly passed a Law to Provide For The Consolidation Of Property And Land Based Charges And Make Provisions For The Levying And Collection Of Land Use Charge In Lagos State, (Land Use Charge). It raised property rates astronomically because they are valued on market rate. The state was not prepared for the groundswell of opposition that greeted the taxes.
| S/N | Taxes | Purpose |
| 1 | Capital Gains Tax (Individuals only) | on profits from sale of capital assets |
| 2 | Stamp duties | on legal instruments executed by individuals |
| 3 | Business Premises levy | on commercial property |
| 4 | Hotel occupancy and Restaurant Consumption Tax: | on goods and services consumed in hotels, bars, restaurants and event centres |
| 5 | Withholding Taxes | amount deducted at source from payment accruing or made to individuals, corporates on incomes, investments and remittances |
Lagos state tax guide
Lagos does not joke about enforcing its tax laws. In December 2017, it shut 11 hotels, restaurants and event centres over alleged failures to remit their taxes totalling over N350million. It is charging high profile celebrities like David Adeleke, (Davido) and Ayo Makun (AY) to court on charges of tax evasion.
Those in the informal sector are not exempted. Market women, commercial bus operators, tricycle and motorcycle operators and artisans pay different forms of taxes and levies collected either directly by the state government or the local government through various proxies, sometimes upon the threat of a broken head or a shattered windscreen.
Every government agency is expected to generate revenue. Sources say agency heads are assessed on the basis of revenue generated.
Analysts are concerned that the concept of a welfare state is lost on the government. “It seems to me that the Lagos state authorities have finally lost their identity as a government and fully morphed into a corporate board of directors. The state is one huge market, and the government seems more concerned with maximising profit from market gaps than in providing functional public services and utilities,” observes Ayo Sogunro, in an op-ed article for The Guardian.
Sogunro further said, “There is rot in a government that considers making money for corporate interests as its primary policy consideration; a government that seeks to profit from the masses for the benefit of the political elite; a government that only acts as transaction broker between the electorate and grubby private hands.”
Birth of an opaque state
The administration of Lateef Jakande (1979-1983), was effective and open. He constructed over 30,000 housing units, general hospitals in Gbadada and Ikorodu, 20 health centres and a mass transit system. He raised funds from tenement rates from affluent areas in Victoria Island and Lekki and processing fees for lottery, pools and gaming licenses.
When civil rule returned in 1999, Bola Tinubu as governor embarked on large-scale infrastructure projects and invested heavily in education. His struggle with the Federal Government over the state’s right to create new local council development areas led to seizure of funds meant for local councils. Lagos got creative about raising revenue through taxation with the appointment of Babatunde Fowler, as executive chairman of the state’s board of internal revenue in 2005.
In 2006, it became autonomous and self-accounting with the passage of the Lagos State Revenue Administration Law. Fowler was appointed executive chairman. From 2006 – 2013, Lagos ramped IGR from N3.6bn per month to over N20.5billion per month in 2014 under Fashola. Tax processes were more efficient and information technology tools were introduced into tax administration.
But the state gradually got opaque as increased tax collection prompted citizens to start questioning use of their money. While Fashola improved the state’s infrastructure, he rejected public scrutiny into its finances. In 2012, he refused a Freedom of Information request claiming it does not apply to the state because the law had not been domesticated. A Lagos High Court ruled in November last year that the FOI applies and does not require “domestication” by the state to have effect.
Following a furore over the purported spend of N78.3m on Fashola’s personal website and sinking two boreholes at Lagos House, Ikeja at the cost of N139million in 2015, the state scrubbed details of its public procurements from its government’s website. Lagos violates its own public procurement agency law which mandates it to publish details of major contracts in a procurement journal while maintaining an archival system for both electronic and print editions.
“This action which is a clear violation of the objectives of the agency to ensure probity, accountability and transparency, is also an outright negation of governor Akinwunmi Ambode’s promise to Lagosians,” writes BudgiT, a civic organisation, in a September 9, 2015, letter to the public procurement agency. “In his campaign manifesto, Governor Ambode stated that his message is to embrace the three tenets of Probity, Accountability and Transparency (PAT).”
In their response vide a July 11, 2017 letter to another request made a month before, the agency said: “The agency is currently working towards a holistic upgrade of its website in order to make it more interactive and advanced in line with international best practices on E-procurement.” It is now eight months, it is still not there.
Ambode at different fora harps on how Western countries develop by paying taxes but conveniently ignores the fact that they are transparent about tax payers’ money. All public procurements are on the New York state government’s website. It would be unthinkable for Andrew Cuomo, governor of New York to say an FOI request does not apply to the state. As a matter of fact, there’s a link on the government website directing you on how to make the request. But Lagos argues FOI does not apply to it, ignores any FOI request and yet calls itself a ‘centre of excellence.’ Indeed, it would have been hilarious, if it weren’t so sad.
Lagos, a pace setter for tax administration
Taiwo Oyedele, PwC head of Tax at a media training organised for journalists last year said that if more Nigerians pay taxes they would hold their leaders accountable. Lagos has a tax compliance rate is about 30%, higher than the national average of 6 percent, and better than the average rate in BRICS nations at 24%. Greater public scrutiny naturally follows better compliance but Lagos is failing at being responsive to transparency obligations.
True, it has embarked on massive infrastructure projects investing in efficient transport system rail (Okokomaiko-Marina; Iddo terminal-Alagbado); Automated Guideway Transit (Ikoyi-VI-Ajah line); Bus Rapid Transit (Mile 12 – TBS), construction of jetties and ferry service, upgrading schools and hospitals and better environmental regulation, yet these do not invalidate an obligation to be transparent.
“We continue to find it weird that a state that promotes payment of taxes doesn’t find it important to be fully transparent. We call all Nigerians and residents of Lagos to promote our #OpenLagos campaign,” BudgiT says on its social media platform.
Lagos has Nigeria’s most sophisticated and savvy populace, and many do not need much persuasion to pay their taxes hence they cannot afford to remain docile on this matter of transparency for apathy is the balm that sooths tyranny.