Taxpayer’s role in nation building 

The critical place of tax in any nation’s development cannot be underplayed especially in a country like Nigeria. With our huge infrastructural gap, experts say prompt payment and proper utilisation of tax revenue can help authorities significantly bridge the country’s huge infrastructure gap and set it on the path of proper progress; BENJAMIN UMUTEME writes.

Whenever the issue of tax in Nigeria is mentioned, it evokes emotions and arguments either for or against payment. However, one fact is constant; every country needs tax revenue in order to make progress.

In Nigeria with a huge infrastructure deficit, tax revenue is very critical if authorities are to bridge the huge gap.

And in a bid to bridge this huge gap, the President Muhammadu Buhari’s administration embarked on massive borrowing in an attempt to bridge this gap. But after almost 8 years, the government effort seems like a drop of water in the ocean.

This was the sentiment shared by the World Bank in its public finance review. According to the global lender, despite the borrowings, the level of infrastructure was still low

The report noted that to close the infrastructure gap, Nigeria would need to spend 4 per cent of its GDP yearly.  

“Closing Nigeria’s infrastructure gap would cost at least four per cent of GDP growth per year,” the report said.

With the volatility in the oil market and global push to move away from fossil fuel, it has become obvious that other sources of revenue are critical to building a prosperous and progressive country.

Place of tax revenue

Over the years, it has become obvious that revenue from tax can drive development. From Europe to the Americas and Asia, tax continues to play a big role in their development. Therefore, in Nigeria the place of tax revenue is becoming more critical as the day goes by, especially with dwindling revenue from what used to be our main source of foreign exchange.

Tax remains the most common and important government intervention to redistribute income among the population. It is an attempt to share the burden of economic growth through a progressive taxation system. The tax burden on the upper income groups is higher, and the burden is lower for lower income groups. It is used as payment for the government’s services, and even in other areas of the economy.

What really is tax? 

Taxes are citizen’s contribution towards national development. They are paid by citizens as their obligation under the social contract where they contribute to the government to provide social amenities, welfare services, and infrastructure. Taxes are based on one’s income, and they form the main source of revenue for any government. Taxes help in the development and maintenance of infrastructure, like roads, and they can even help to create or maintain the institutions needed for the rule of law and the functioning of the democratic process.

Taxes are government’s revenue for financing public spending, including building roads, school buildings, and hospitals, and for funding government services, including police, the armed forces and other paramilitary agencies of government.

And the government cannot provide these resources if citizens do not pay their own share of the taxes. Thus citizens have an obligation to fund these services.


For many in Nigeria it is a case of why would they need to pay tax when they can’t seem to see the evidence of previous payments? However, it is pertinent to note that in spite of the fact that mismanagement of tax revenue has limited the benefits of its payment to citizens, it is without doubt that payment of taxes has immense benefits to the citizenry.

Citizens must recognise that they are responsible for the building of their country’s civilisation through the taxes they pay. It is one of several ways that a government is run. It is the biggest source of revenue to the state.

The cost of running a country like Nigeria is humongous especially with a population of over 200 million. It is through taxes that citizens pay the government is able to perform civic operations.

Also, through taxes, the governments at all levels are able to cater to the needs of the citizens. Issues of subsidies that citizens enjoy, pension and gratuity for old people and all other obligations of government to citizens in all sectors are all from taxation. By paying taxes, citizens provide the government with the ability to further cater to the welfare of citizens.  

In addition, money is spent on healthcare and education. This is why we have government hospitals where healthcare is relatively cheap compared to private hospitals. Over the years, many have come to testify that the quality of service at government hospitals improved tremendously because more and more citizens are buying into the need to pay their taxes.

The same is happening in the education sector. Many have come to agree that if not for the Tertiary Education Trust Fund (TetFund), Nigeria’s tertiary education would have gone comatose. TETfund is 2.5 per cent of the assessable profit of any company that operates in Nigeria.

Taxes have helped a lot and without the taxpayers remitting their taxes, Tetfund would not have enough funds it has been disbursing to higher institutions. Between when it was established in 2011 and 2020, the Fund disbursed N2.5 trillion to universities among other interventions in the country’s education sector. It is this synergy between the federal inland revenue service and TETFund that has helped to the development of higher institutions.

For instance, through these taxes, the government is able to fund road construction, bridges (Loko – Oweto Bridge; Second Niger Bridge etc) , provide medical care (Primary Health Care Centres across the country), build schools and equip them with the necessary infrastructure. There is no gainsaying that a majority of the infrastructure in our tertiary institutions were built through TETFund interventions. 

Enhancing tax administration

To foster economic growth and development governments need sustainable sources of funding for social programmes and public investments. Programmes providing health, education, infrastructure and other services are important to achieve the common goal of a prosperous, functional and orderly society.

Taxation not only pays for public goods and services; it is also a key ingredient in the social contract between citizens and the economy.

How taxes are raised and spent can determine a government’s very legitimacy. Holding governments accountable encourages the effective administration of tax revenues and, more widely, good public financial management.

And many have argued that good public financial management should be at the heart of taxation. Even the Executive Chairman of the Federal Inland Revenue Service (FIRS), Muhammed Nami did allude to this when he tasked governments in Africa on effective utilization of tax revenues for the good of their citizens.  

Speaking at the African Tax Administration Forum (ATAF) 7th General Assembly, last year, Nami urged authorities to begin to rethink tax governance, engender public confidence and trust in government by providing value for taxpayers’ money in line with their obligations under the social contract they have with citizens.     

“The Fiscal social contract which hinges on the willingness of the citizens to pay tax in return for the provision of public service, is a clarion call on the government at all levels in Africa to rethink governance.

“In my view, if we must transform the tax system and enhance revenue collection in Africa, there is a need for government at all levels to engender public confidence and trust in government by providing value for taxpayers’ money,” he said.

In the same vein, Director Intelligence, Strategic Data Mining and Analysis at the FIRS, Kola Okunola, said the various interventions by the federal government in all sectors of the economy is all due to taxes.

According to him, “The government is building the foundation for a better nation. Tax money is used to pay workers salaries. If we do not generate, we would not be able to pay salaries.”   

Minister of Works and Housing Babatunde Fashola, described tax as a commonwealth. He explained that during any construction, all the companies that supply materials are paid and their monies are taxed.

He said: “Again, the money that you are paid comes back in terms of supply. And the money that you are paid is taxed and it comes back again. That is why it is called the commonwealth.”

The FIRS Executive Chairman further advised governments at all levels to properly apply tax revenues to address critical infrastructure.

“My advice to the three tiers of government is that they should continue to apply the funds that we generate to critical sectors of the economy so that they are able to give value to the people. The beautiful infrastructure we see abroad is because government officials apply the taxes that people pay. We appeal to them to invest the little we generate judiciously so that citizens will be encouraged to pay more. And we are able to fix Nigeria together and we are also able to address the issue of constant borrowing by the three tiers of government to fund their budgetary requirement,” he added.