Most visits to the market tend to be largely uneventful, with most of the thrill coming from the hustle of a bargain. However, my trip to Balogun market aka Lagos market with a friend to buy blankets for a charity project was highly eventful and would’ve been wholly frustrating, were it not for its practical economic revelation. The interesting part of this trip happened after we had purchased our blankets. Given that we were buying 200 blankets, we needed these blankets taken to our car, so we got a couple of boys that carry goods to customers’ cars.
On our way to the car, a random tout stopped us and asked us to pay N100 before we could continue on our short journey. Incredulous at the obvious attempt to extort, I asked him what this random ’tax’ was for. With a smirk on his face, he replied ‘you no know say this na Lagos?’ (For the non-Nigerians and aje-butters, this means ‘Don’t you know this is Lagos?’) After our protest that we didn’t see what service we were being ‘taxed’ for, we caved in, paid and were promised it would be the last time. So you can imagine our surprise when we were repeatedly stopped three more times. For every intersection at the market, we had to pay a fee to very unscrupulous looking fellows -no receipt, nothing. My friend and I were livid at the extent of blatant extortion going on in the market.
At some point, we were even threatened with violence. I had enough, so I channeled my inner ‘aje-pako’ and challenged the tout by yelling “guy, no dey do this kian thing. How much una wan collect?! Na una build road?” ( ‘Stop this. How much do you want to collect? Did you guys build the road?’) My question was of course ignored, but then what else do you say to someone who’s expecting his breakfast for that day to come from your pocket? We reached the height of this extortion craze when we were about to leave the market and another tout jumped in front of the car waving an obviously fake receipt. Like the others, he demanded that we pay before we could leave. Why? Because we had goods in our car…and well, because ‘this is Lagos.’ Yes, at this point, we were tempted to hit him.
I had seen similar extortions happen to Lagos bus drivers and in spite of their initial protests, they end up paying. All I could think at that point was that FIRS has to come take capacity trainings from these Lagos touts. They can be brutally efficient at tax collection – literally. So it got me thinking: what makes for a good tax system and what lessons can one take out of such an experience?
A good tax system should meet six basic conditions: fairness, adequacy, simplicity, transparency, administrative ease and enforceability. Lagos tout tax system achieves 50% of those: simplicity, administrative ease & enforceability. Their method of taxing is simple- you pay them in cash and they let you go…sometimes with an obviously dodgy receipt, sometimes not. The administrative ease is also spot on – they simply wait at a place you will certainly pass: bus stops for bus drivers, and in our case, the road out of the market. If enforceability refers to the act of compelling observance or complicity with the law, then Lagos touts excel at it. Drivers who refuse to pay up can be beaten, the glass of their bus smashed or their seats torn off. Terrible way of ensuring compliance, but can’t say that it doesn’t work.
On the other hand, these touts thoroughly fail at the other critical conditions of a tax system: fairness, adequacy and transparency. By the time we left that market, we were deprived of N500 for no reason other than ‘This is Lagos’. No one has any clue where the money accrued from touts go to. Some say Tinubu…which frankly, wouldn’t be much of a shocker given how institutionalised extortion is in Lagos. Money collected by touts certainly does not go towards security, health or infrastructure. Wherever the money goes, the act is illegal and plain undemocratic.
The Government-federal and state- can learn from both the deeds and misdeeds of Lagos touts. First, they can both ensure enforceability (hopefully, not by brute force) and maintain high standards of fairness and transparency. The balance is necessary. These features not only incentivise people to pay, they also ensure that money paid is used judiciously. You want Nigerians to pay tax; you’ve got to show them exactly where the money is going.
Second, the system of taxation needs to be streamlined. Much like we did in the market, Nigerians face way too many random taxes from too many random government agencies. In a meeting in January with our Aunty Ngozi, the Finance Minister, business owners complained about two things: the random state, government, and ministry taxes they faced. Second, they complained that they couldn’t see the effect of government taxes since they were still providing their own electricity, water, and road – fair points. You can’t possibly hope to grow an economy by double-fleecing its job creators.
With low government revenue from oil revenue, Nigeria needs ways to fund Government spending and non-oil taxes seem to be the next revenue spigot. The good old days of oil-tax constituting the majority of government revenue are over. The government seems determined to plug our massive tax holes including raising VAT from 5% to 10%. With these obviously unpopular, but necessary moves, the Government will need to get its act together and not behave like Lagos touts. Tough act, but good luck to it.
NB: I’ll enthusiastically campaign for the gubernatorial candidate that promises to get rid of Lagos touts – they’re a nuisance.
Featured Pic Courtesy of nationalmirroronline.net