Thursday,
November 09, 2017 / 9:40 AM /FDC
Mature democracies understand the role of party manifestos in
their campaigns, and traditionally present policies in line with their
ideologies. The last U.S election was arguably one of the most contentious and
divisive elections in the country’s modern history. Both of the main candidates
made similar pledges to make “America great again” but as they say, the devil
is usually in the details.
A good distinction was their respective positions on tax reform.
President Donald Trump pledged to cut taxes for all income brackets, while
Hilary Clinton wanted to raise taxes for high income households.
The goal in both cases was to boost the economy by putting more
money in the hands of the people. Both candidates had different “hows” to the
same “what”. They tabled their arguments about the financial costs to
government and benefits – short and long term – to the citizens. The end game
is to improve welfare. Voters in the U.S as well as politicians are cognizant
of this and the ability to better articulate the ‘how’ is usually where
elections are won and lost.
Globally, some of the most crucial yardsticks for measuring
political performance are jobs and inflation. The Misery index captures this.
It measures economic well being by adding seasonally adjusted inflation to the
rate of unemployment. History has shown that, a rising misery index typically
reduces the likelihood of the incumbent being reelected.
The misery index has accurately predicted nine of the last
thirteen elections in the U.S. Informed voters are simply much more sensitive
to the economy and the “how” of making it better for even future generations.
The Nigerian voting culture is different but not for the right
reasons. Such details of economic or foreign policy do not motivate the average
Nigerian voter. A significant proportion of the electorate would rather vote
along religious and ethnic lines.
Many politicians do not recognize the need to show up to publicly
televised debates to properly articulate their policies. Perhaps because they
know Nigerians are typically moved by grandiose promises; the more ambitious,
the greater the appeal. A Nigerian political manifesto seldom includes details
like '5% cut in the tax rate for those with annual incomes below N1 million for
the next five years, to be funded by increased VAT on luxury goods from 2019'.
To stand a better chance of winning at the polls, the Nigerian
politician would rather pander to jostling that come with the elections. Not
enough attention is given to details of past or proposed policy. And even when
the past is considered, it is done with a focus on grand infrastructure
projects.
The Turning Point
A number of questions do arise. How did mature democracies become
mature? Do democracies simply just become more mature with time or is there a
catalyst to this transition?
The answers lie in the accountability nexus between democratic
representation and taxation. The well-established connection is simple. No
taxation without representation. The higher the taxation, the greater the
reason for taxpaying citizens to demand good governance.
In the same way, the lower the level of taxation, the less likely
citizens will demand representation. Taxation therefore, stands as the anchor
for democracy and democratic accountability
Nigeria is a textbook case of limited state dependence on taxes
leading to bad governance outcomes. At approximately 6% of GDP, Nigeria’s tax
revenues are one of the lowest in the world. Decades of a reliance on
petrodollars engendered a culture where governments had little incentive to be
accountable, responsive, or efficient. Worse still oil rent meant less need for
tax revenues and no need to secure large tax bases or enforce tax compliance
over the years.
However, for Nigeria, the plunge in oil prices and the
accompanying revenue shortfall may just have come with a silver lining –
renewed aggression in tax collection and broadening the tax base. Perhaps the
time has finally come for the Nigerian voter to hold the politicians to a
higher standard.
A shift to Ideology
Aside from the obvious benefit of demanding that our politicians
present more than impractical promises, comprehensive policies allow citizens
to align their desires of advancing their economic welfare with the economic
ideologies of political parties.
Taxation may not be a silver bullet, but perhaps the shift to a
dependence on tax revenues will alter the political discourse and uplift the
level of policy discussion that will transform the polity. The voting taxpayer
must simply demand that it does.
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