South Africa’s stock market is valued at more than $1.1 TRILLION than Nigeria’s. South Africa’s budget is about $100B more than Nigeria’s. And on tax, they’re up by more than $100B also.
Why that tax disparity? It is very simple: Nigeria allows most of us free pass on asset taxes. You pay property tax in South Africa while we live free in Nigeria.
Nigeria can triple its tax revenue by a single line of code in the books: every year, all properties will pay 0.5% of the property value as tax. But if you do that, you will lose the next election, and no poliician wants to do that.
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That is why they have not modified that in the National Assembly. Understand that property tax is among the few taxes that will affect the rich more than the poor since the poor have no property. More so, if you begin that, some empty estates in Abuja would be forced to have tenants as taxes pile up. (Please what I am writing is not Land Use charges as Lagos currently does; I am writing of taxing the valuation of the property.)
In my 3T2030 Agenda for Nigeria, which is my federal governing philosophy, I posited that by 2030 Nigeria could become a $3 trillion economy. A core part of my playbook is fixing rural Nigeria through capitalization of rural assets, changes in land use act and regional fiscal autonomy. I published the document in 2021. Of course, my plan was to have a conversation about it, but when they released the forms for the presidency, I quickly realized that I am a teacher!!!
Of course, it comes down to this: people willingly pay taxes when taxes are working on their lives. And that is the challenge in Nigeria since you can still pay the taxes, and still be responsible for your own police station, water board, electricity board, and everything!
In New Jersey, USA, real estate tax is more than 2%, and that means the state collects 2% of the property value. If you just replace the controversial 0.5% cybersecurity levy with 0.5% property value levy, the government will even extract more resources, but that will not happen as to a large extent only the rich will pay. Sure, I get the point: they can tap that on rents. But at least, they have to pay it first!
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Charging a property tax requires some hard work, and when you add the political blowback, it becomes a hot potato no politician is ready for. How do you ascertain value of a property? It means that all the inflated property prices will have to come down, since you need to service whatever amount the property is purchased or valued at.
Anyway, no point suggesting how to rake in more taxes, because Nigeria has more of spending problem than revenue’s. Yes, the country needs plenty money to develop, but knowing what to spend on and how to spend it is a greater challenge. Once our managers see plenty money, the looting mode is quickly activated.
We still have much to prove when it comes to things of money, the maturity is still not there.