Why Nigeria Needs Tax Innovation to Save Our Schools

When you finish from a Nigerian university, within months you are history. In top U.S. universities, they never forget: from helping you get discounts on insurance to better deals with car dealers, they keep supporting. I got this from my alma mater – it wants me to save on insurance, and they know that renewal comes in days!

And once in a while, they ask for a change. Yes, you can put in an envelope anything you can afford. And within weeks, they send you a document to help you deduct it during tax filing.

Simply, the universities thrive because the U.S. tax system motivates people to actually give. I have proposed that ASUU (Academic Staff Union of Universities) can avoid incessant strikes if government can reform our tax system. That would push companies and people to become more generous to our schools.

Donation money given to schools is tax deductible because the schools are tax-exempt under the U.S. Internal Revenue Service tax code. This is the key reason. If Apple or GM were to do the training in-house, the tax benefits will not materialize. They will still train the young people, but they cannot deduct that money. But by giving the money to colleges, they get the trained people and still get the deductions. This makes it easier when you need scale, beyond what you can have inside as staff for talent pipeline.

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The Nigerian tax system is not designed to support philanthropy. That is why we do not have a vibrant one. It does not mean that a nation must be rich first before its tax system can be engineered to stimulate philanthropy. ASUU can lead on that, through Tax Reform, and make it possible for individuals and companies to put money in the schools and get tax benefits. Sure, ASUU members may be busy, but that should not stop them from helping the government to revamp our tax codes to drive innovation.

Think about it: if Dangote Group gives Kano State University $1million today, it is largely pure business expense. But in U.S., that $1 million could technically save Dangote Group money if done smartly since it can deduct it thereby reducing its total business tax obligations. The implication is that people and companies give not just because they like giving but because you can use one stone to kill two birds: you do well, you also get well.

Nigeria needs tax reforms that would help education.

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