The mainstream economists justify inequality that it provides opportunity for innovation and investments. That the rich, is rich because of his/her talent and hard work. And this is not bad; in fact, it will benefit everyone. The rich will be geared to invest and innovate more and in doing so creating more jobs. Thus, the rich are the drivers of the economy. What a farce?!
The level of inequality in the world far surpasses what can be justified as talent and hard work, and there is growing evidence that show precisely so (these are continuously shown in Oxfam Reports). Tom Goodwin observed the big online corporations we have around the world and wrote: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.” So, what makes them rich? Taking advantage of discoveries and inventions financed by government, they created platforms that we want to use and extorts us dry. The whole issues of innovation by these corporates are product of fully funded government research and secured through patents, licences, lobby and tax evasion. Therefore ‘rentierism’ not hard work makes them rich.
Inequality may be a global economic phenomenon but in Nigeria it is extreme. Research done by Oxfam Nigeria (2024) has revealed that Members of the National Assembly earn an average a monthly salary that is 367 times more than the current national minimum wage of N70,000 a month. Moreover, the top 10 percent of the population controls 31.4 percent of the national income, while the bottom 50 percent hold only 22.6 percent of the national income. Hence, combined wealth of five (5) of the richest individuals in Nigeria, amounting to $29.9 billion, can theoretically eradicate extreme poverty in Nigeria.
Since there is global consensus that inequality is bad and it is a ‘policy choice’ on the part of policy-makers, then the solution demands change of choice. Government policies and programmes should be centred on “Redistribution, Distribution and Regulation.” Redistribution is concerned primarily with “taxation” but not any kind of tax, rather, ‘progressive tax.’ In Nigeria, the government focused more on Value Added Tax (VAT) because it is easier and more effective to collect, but it is regressive. The burden is taken by the buyers who are the low-income earners. The progressive tax in Nigeria only exists as a policy document that has yet to see the light of the day. It needs to be translated to practice and has to touch even the aspect of dividend. Moreover, the Corporate Income Tax Act, Petroleum Industry Act, Finance Act, Petroleum Profit Tax Act and other Acts and circulars related to Industrial sector are filled with waivers and concessions that would, particularly, benefit foreign firms. This needs to be reviewed. Multinational Corporations are no longer deterred by progressive tax. Neither do they need all the waivers and concessions in order to invest in a country.
But taxation is not fully redistributive until the revenue generated is spent in infrastructures and social amenities mainly in the areas of education, health, agriculture, housing, and social protection schemes such as pension and insurance. Housing is an area that is usually under-emphasised in addressing inequality. Yet, this is an aspect where large portion of income is taken away from the low-income earners. Poor housing has direct link to poor health thereby confounding the excess expenditure of low-income earners. In agriculture, crop production aspect has the ability to create more job employment than that of livestock. Therefore, the government across all level in Nigeria has to emphasise on crop production.
In addition, government has to put more efforts with regards to regulatory policies. It has to ensure that embezzlements of public funds in public service are curtailed and corporate governance is well observed. Corporations have to be closely monitored to ensure that they abide with the standards and laws guiding their practices. A new minimum wage of N70,000 was passed in August 2024. The most important task is to ensure that the minimum wage is observed by private enterprises and government at subnational levels. To achieve this, government should support existing trade unions and the formation of more trade unions in the private sector and encourage them to be a ‘watch-dog’ agent. Trade unions will not only help government monitor the adherence of minimum-wage but also tax evasion which is preventing billions from being in the public coppers.
Nigeria should lead the third world countries to seriously stand up to challenge the existence of tax havens. These countries are securing the future of few at the expense of many. They exploit their own citizens and the world population. It is not right that international organizations are silent about it. But it is not surprising. Most of these international organizations are controlled by countries that are either themselves being a ‘tax haven’ or are allied to them; as their elites have investment in tax havens. In fact, World Trade Organisation (WTO) seems to legalize and support the existence of tax havens. This has to stop! But for it to stop, there is need for ‘reform and re-form.’ That is re-structuring the international organizations and ensuring more representation as well as changing the decision-making process and means of achieving their purposes and principles making them more transparent and accountable. Treatise and conditions on loans and other forms of aids has to change and renegotiated.
Fundamentally, in Nigeria, the solution is in our constitution. We need to revisit our constitution and specifically check Chapter 2, which stipulated the fundamental objectives and principles of the state policy. Some parts of the chapter are worth quoting at length. Section 17(1) stated that “the State social order is founded on ideals of Freedom, Equality and Justice.” Section 16(1c) directed that “the State shall, within the context of the ideals and objectives for which provisions are made in this Constitution, control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunities.” Section 16(1d) gives the State the mandate to “…manage and operate the major sectors of the economy.” Section 16(2c) nailed it: “The State shall direct its policy towards ensuring that the economic system is not operated in such a manner as to permit the concentration of wealth or the means of production and exchange in the hands of few individuals or of a group.”
It is sad that our politicians neither study nor adhere to our constitutions. Therefore, we see every day the government derailing from it logical purpose of existence. Government is contracting while it should be expanding. The economy is now run by few private individuals. In fact, government is becoming more like a corporation, thus, welfare is measure on the basis of revenues. In little modification to the words of John Locke, the end of government is the welfare of its people. The words of Louis Brandeis, former US Supreme Court Judge, surmise the issue at stake succinctly, “we can either have democracy in this country or we can have great wealth concentration in the hands of a few, but we cannot have both.”
Ibrahim Lawal Ahmed writes from Zaria and is reachable via [email protected]
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