Reflection on Tax Exemption in Cross River State

I watched an emotional video clip showing Governor Ben Ayade of Cross River State, expressing his deep dissatisfaction over the collection of tax from low income earners. The governor broke down in tears while expressing his pains that many low income earners live in abject poverty and that he couldn’t do much to help them. For this, the governor decreed that henceforth, low income earners will be exempted from paying tax in Cross River State.

This speech on the tax exemption for low income earners, given by Governor Ben Ayade, took place during the inauguration of an anti-tax agency headed by Bishop Emma Isong. This agency is tasked with ensuring that low income earners were not forced to pay tax. Among the low income earners listed are the taxi drivers, okada riders, hawkers, small saloon owners, farmers, “mama puts”, and so on. He saw the collection of tax from these groups of business owners as inhumane and unlawful.

The kind gesture of Gov. Ayade towards the poor is well received by many Nigerians, who see it as a sign of sympathy from a leader that understands the plight of his people. They applauded his kind gesture and hoped that many other governors would follow suit. But then, maybe Nigerians shouldn’t celebrate just yet. A lot of work still needs to be done if this exemption will touch the lives of the poor. In fact, the state needs to collaborate with several other agencies for this to work.

However, I am not a tax or a finance expert. But from the little I know, I think the following observations from the video clip may call attention to the people of Cross River State and the appropriate authorities to re-evaluate their master plan.

• Committee Members

I believe the Governor understood the implication of constituting a committee that is made up of only religious leaders to handle affairs of state. Permit me to say that religious leaders are experts in their field – religion – and not in politics or state governance. My little knowledge of religion and politics shows that they move in different directions because they don’t agree at all. I have also known that most religious organisations banned their leaders from meddling in state politics so that they could perform their functions as the conscience of the leaders without bias. Besides, history has shown that when religion and politics become one, the state suffers.

Another problem with the constitution of the committee members is that they are not the ones that impose tax and levies on people. I mean, why didn’t the governor consider inviting local government chairmen, NURTW chairmen, union heads, and other agencies that impose and execute tax collection? What about the law enforcement agents, why weren’t they part of the committee? What will clergy men and women do against these tough, blood-thirsty, do-whatever-it-takes-to-collect-the-levy agents when they don’t even have law enforcers in their team? These are my observations anyway, they may be inaccurate.

• The Exempted Tax

I actually got confused when the Governor talked about people collecting illegal taxes. I don’t know if he wanted to abolish the collection of illegal taxes or if the legal taxes will become illegal with the implementation of the directives. However, I know that tax collection is not done by the state government alone. In local markets, I see local government agents, town agents, village agents, Igwe agents, and what have you, collecting dues and levies from hawkers and petty traders. There is even the levy that is paid by people for using lands that are considered private properties. What I mean here is that some local markets are sited in private properties and both buyers and sellers pay to transact businesses there. Most times, buyers pay their own levy when they buy goods that need haulers or, like they do in Onitsha Army Barracks Tomato market, when they buy goods in bulk.

The point I am trying to make here is that the governor was not specific on whether he is exempting these low income earners from paying taxes that are levied by the three tiers of government, or if it is only the one levied by the state government. Believe me, if other levies are still in existence, then nothing changes. The greatest challenge of these small business owners is not from the state government, but from constituted unions, agencies and so on.

• Transfer of Responsibility

I was not impressed when the Governor said the citizens should desist from paying taxes and all. He, as a Nigerian living in Nigeria should understand the helplessness of Nigerians towards the law enforcers. It’s not today that governors have been banning taxes. Even he, Governor Alade, has banned payment of tax by low income earners in his state some years ago. But did it work? Obviously it did not.

All I am trying to say here is that the governor should forget about the citizens helping themselves. There is nothing any civilian can do to tax and dues collectors. If he truly wants to help, he should ensure that the facilities he put in place are functional and should be strong enough to enforce his directives.

• Laxity in Government

This is not supposed to come in here but somehow, it is here. It is actually unheard of that a public office holder resists the collection of tax because his administration could not provide basic amenities for the citizenry. The governor questioned the right of the government in collecting produce tax when they didn’t provide fertilizers, irrigations and other basic facilities needed by farmers. I have never known my mother to collect free fertilizers but I know she always buys good ones at subsidised rates from the local government. The only problem we can see here is that they are not always available because business owners buy them in bulk to sell at higher rates. So, if the government of Cross River State could not provide farmers with fertilisers, or make improved seeds and seedlings available to them to buy, then that government should be faulted.

• The Exemptees

Permit me to call them “exemptees” here. Now, who are these people exempted? What is the modality for exempting them? How can they tell if that woman that sells Ofe Akwu by the corner is not making more profit than Genesis restaurant? Or who can tell if that hawker that is exempted by the government does not, in a week, make more than triple of what that heavily taxed civil servant makes in a month? Sometimes the size of a shop does not directly indicate the size of the business. People can borrow to open something that seems big because they see that as a business strategy. This does not mean that they are not low income earners at that point in time. I just hope this new directive will not be a case of robbing Peter to pay Paul.

I applaud Cross River State governor for his courage in exempting low income earners from paying tax. His well-meaning gesture will help small business owners to rejuvenate at this point in history. But then, he needs to play his card well so that his good intentions don’t turn out wrong.