WE NEED ALTERNATIVES TO DEBTS, TAXES AND GOVERNMENT SPENDING

WE NEED ALTERNATIVES TO DEBTS, TAXES AND GOVERNMENT SPENDING

Nigerians believe that the government should do everything for them. The list ranges from building roads, to providing jobs to education, to funding businesses and generally, sharing money.

Aside its strong stance against corruption, the government has tried to prove itself the hero and has gone on a welfare spree. We’ve seen things like trader moni, grants to farmers, banning importation and closing the borders to protect the markets of local farmers. However, these have not resulted in a buoyant economy. Instead, the country is sinking deeper in debt. This begs the questions, is the government biting more than it can chew? and are there alternatives?

The FG’s debt increased by 587 billion naira in just three months and its continual rise remains a source of concern. Government has spent a lot on various welfare and protectionist plans. This wouldn’t be a problem if the government had the money. Unfortunately, it doesn’t. The FGN thinks it can solve all problems but has forgotten that all these require a lot of funds. Ask the United States which spends a whopping $1 trillion on welfare. How does it get that money? Taxes. Well, the government doesn’t have much money of its own so you and I have to fund its projects. If taxes were voluntary donations, it would be correct to say that governments run the largest crowd funding operations. However, taxes aren`t exactly donations. Little wonder many citizens shudder at the mention of increased taxes.

The Nigerian government is planning to increase taxes, the most famous being the fifty percent increase in Value Added Tax (VAT) from 5% to 7.5%. Amidst renewed threats of strike action, the labour union is pushing the government to implement the new minimum wage of thirty thousand naira, but it appears government will only do so by increasing taxes. You may think that an increase in wage will lead to an increase in purchasing power. However, if VAT is increased which will in turn increase the prices of goods and services and inevitably reduce purchasing power, isn’t the purpose then defeated? The Nigerian experience has consistently demonstrated the later. Little wonder we clamor for new minimum wage every few years. Aso Rock doesn’t have a money orchard and you can’t give money if you don’t have it. Therefore, we should be wary of schemes that tend to substantially increase government spending. Instead, we should be more concerned about increasing the number of successful private businesses in the society, while cutting down on government spending.

Speaking up against government spending is often mistaken as suggesting that projects should not be undertaken, to make life better for citizens. However, the idea that government spending should be reduced, does not mean that less should be done to improve the lot of the masses. It only means we need to consider more effective methods of achieving the same result. One alternative that has worked elsewhere, is public private partnerships. The private sector needs to replace government as the dominant employer of labour. This will reduce the pressure on government and enable government to focus on providing justice and the rule of law in the society. Under an enabling environment, the private sector, governed by the rule of law, is far more capable of creating jobs and fixing public infrastructure, than government.

It is not the duty of government to fill the role of an Almighty provider. It is as Bastiat puts it, “an unjust displacement of responsibility”. Nigerians need to understand this and change their demands from asking the government to provide everything to asking the government to focus on security and the rule of law while creating more room and enabling environment for the small, medium and big enterprises in the private sector to fix infrastructures and create jobs. Otherwise, we’d either drown in debts or we drown in taxes or we drown in both debts and taxes.

Ogechukwu Egwuatu

Bio Ogechukwu Egwuatu is a final year student of French and German at the University of Nigeria, Nsukka, a local coordinator at African Students For Liberty and an Op-Ed Writer at The Chale Institute. She is available on Twitter @peacedennis2 and on Medium at Ogechukwu Egwuatu.

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