It appears the Lagos state government was spooked by the report by the International Centre for Investigative Report (ICIR) that the Lagos chapter of the National Union of Road Transport Workers (NURTW) alone generates over N123.08 billion annually in illegal taxes on buses, motorcycles and tricycles. This amount is over a quarter of the tax revenues generated by the state government.
Although the union has had a pact with the Lagos state government to collect such illegal taxes and levies in return for political support and ready supply of thugs, the state government doesn’t seem to be aware of the amount the union realizes. With the publication of the report, the Lagos state government is envious and wants a piece of the pie too. Last week, it announced it is also imposing a daily tax of N800 on all buses operating in the state. It amounts to an annual levy of N288, 000 on every bus.
As usual, the state government, through the Commissioner for Finance, Rabiu Olowo, lied that it was only harmonizing the levies hitherto paid by transporters in the state, which will see bus drivers now pay N800 instead of the over N3000 they used to pay to the unions and street thugs daily.
“We want to harmonise, to have a single charge of N800. We want to moderate the fee payable to government”, Mr Olowo said.
The Special Adviser to the Governor on Transportation, Toyin Fayinka, reiterated the Commissioner’s point and explained that the N800 daily payment is a one-off payment.
“A bus driver from Badagry having paid N800 to Badagry local government and going to Mike 2, won’t pay again to Ojo local government. The payment at point of departure takes care of the daily levy and other charges by the government,” Fayinka stated.
But if there is any doubt the government was lying, the leader of the NURTW in the state, Musiliu Ayinde Akinsanya, aka M.C. Oluomo puts it to rest at once. At the same event, he made it very clear that the N800 daily levy to the government would not cover the levy collected by the union.
“I want to make it clear that the N800 only covers all the money collected by the MDAs; it does not affect NURTW tickets.”
So Lagosians must be in no doubt about what the government is doing. It saw a report that NURTW is making about N125 billion yearly from taxation and levies and wants a piece of the pie too. The sad reality though is that these taxes will be passed on to the poor in the state in the form of higher transportation costs.
But this is also a logical reaction to revenue loss by the state government, which, since 2020, has increased the rate it pays to Alpha Beta LLC, Tinubu’s proxy firm that purports to provide tax collection services to the state, from N800 to N2.5 billion, according to credible bank documents obtained by People’s Gazette.
Payments to Alpha Beta, a company incorporated in 2002 ostensibly to handle computation, tracking and reconciliation of internally generated revenue in Lagos, but which has become a conduit by the former Lagos state governor, has been at the heart of conflict between Tinubu and his two predecessors in office. As governor, Tinubu got the pliant state assembly to sign off on a 10 percent monthly commission to the firm on accrued revenue. But even after leaving office, he continued to authorise outrageous deductions from the state coffers, which led to a face-off with his successor, Babatunde Fashola. Fashola eventually settled to paying the company N800 billion monthly, a fee Ambode, who took over from Fashola, was unwilling to increase.
However, since 2020, Babajide Sanwo-Olu has increased the monthly payments to N2.5 billion, ostensibly to build a financial war chest for Tinubu’s presidential campaign. That has created a shortfall in the state’s revenue and the governor has decided to pass the cost to the poor people of Lagos, who are already overtaxed and pauperized.
Lagos state, as I argued a few weeks ago on this page, has made nonsense of the standard theory of taxation and accountability, which states that as the state increasingly depends on the direct taxation of its citizens for revenue, it will become increasingly more accountable to its people. That has not happened in Lagos. Over 50 percent of its revenues comes directly from taxation – the only state that has been able to achieve such a feat in Nigeria. If the theory is correct, we should begin to notice greater demand for and rendering of accountability by the Lagos state government. But the reality is that Lagos state remains the most opaque state in the country with zero accountability and almost zero demand for accountability by the people of the state. Despite all the legitimate taxes collected, the state government never publishes its audited accounts and refuses to supply any freedom of information requests about its revenues or expenditures. It’s standard reply to any FOI request is that the bill, passed and signed into law in 2011, “does not have automatic application in Lagos state and it has not been domesticated in the state by the State House of Assembly,” even when various court judgements expressly stated it applies to the entirety of the country without exception.
What is more, Lagos state is perhaps the only state in the country where the entire government machinery is controlled by a single individual. He alone determines and decides who occupies whatever elective or appointive position in the entire state. Consequently, all public officials in the state are only responsible and accountable to him alone and not to the taxpayers in the state because only that individual determines their fate and not the so-called electorate.
Is it not shocking that despite the fact that over 4.5 million Lagosians pay their tax regularly and with over 6.5 million registered voters, turnout at elections in Lagos hardly exceeds 1.5 million every election cycle? The missing link in the taxation-accountability nexus is the middle class. But this is a discussion for another day.