Why Nigerians don't pay tax

Mar 03, 2022|Gbemisola Alonge

Last week, we published a story about how the Nigerian government needs to improve the current tax structure to enhance its collection, particularly from remote workers in Nigeria.

Although the article focused on how the government can collect more from people, we also recognise that Nigerians are not favourably disposed to paying taxes. About half of the people surveyed by the Nigerian Economic Summit Group (NESG) believe that tax avoidance is wrong but understandable. The reaction of many of our readers upon reading that story last week echoed the findings from the survey.

Some takeaways:

Taxation can be viewed as a contract where people agree to contribute a portion of their income to the government in return for adequate public services that benefit the entire society and redistribute wealth.
The government upholds its end of the contract first by ensuring that people progressively contribute to the taxes in the communities and have the public services they need to improve their wellbeing.
To improve tax collection in the country, the Nigerian government must first communicate the social contract by investing the people's taxes to the most socially productive use while communicating the requirements of the social contract to Nigerians.

This reluctance comes from people feeling like the government has failed to hold its end of the social contract of taxation. Taxation as a form of social contract is a common development phenomenon that people enter with the government where they contribute a portion of their income in return for improved social wellbeing. Therefore, taxation creates a vertical (between the people and the government) and a horizontal (among the people themselves) contract. This way, people agree to relinquish some economic independence to support the government in achieving a collective aim of societal development.

By paying taxes, people are saying; I'm going to give 10% of my income every month to the government to improve my life and that of other citizens—which is the vertical aspect of the social contract. The horizontal connection here is an agreement between the people themselves to improve their collective lives by contributing to the wellbeing of the entire society.

Once one party (the government or the individual) fails to fulfil its end of the obligation, the contract is broken, and