The Lagos Way and the Bell Jar Effect
The impressive results of the administration of Babatunde Raji Fashola in Lagos State are being financed through an aggressive revenue drive by its relevant agencies.
At the core of this aggressive revenue generation is the Ministry of Finance and the Lagos State Board of Internal Revenue in addition to other agencies and directorates.
Lagos State receives about N2 billion monthly as its share of statutory revenue allocation and VAT proceeds, but its internally generated revenue exceeds N10 billion monthly.
With the expanding list of development projects planned for execution in the next few years, LSG is already ramping up its IGR especially as statutory allocations are declining.
In Nigeria's version of the practice of Federalism, the bulk of sectors for revenue generation outside taxation of individuals are controlled by the Federal Government.
Although Lagos State generates the largest VAT proceeds, the money is shared among the 36 states and the Federal Capital Territory using a formula that shortchanges the state.
Thus Lagos State has limited options in the various means it can resort to in ramping up IGR to meet its developmental challenges which are unique due to its mega status.
However LSG has not shrieked from taking up this challenge and has over the years implemented other measures to increase its taxable base.
Lagosians deserve some praise as they have borne the brunt of the aggressive revenue drive embarked upon by LSG.
They are however consoled by the developments they see going on around the state and the plans slated for implementation in the near future.
Lagosians have a legal duty to pay their taxes but the Babatunde Fashola administration is executing its development agenda in a way that makes the duty easier to discharge.
However, in the light of the global economic crises, which has not spared the Nigerian economy, LSG aggressive pursuit of IGR may run into a head wind.
This is because as the economic fortunes of Lagosians and businesses in Lagos nose dive, the IGR of Lagos State will also be affected.
From the near collapse of the Nigerian Stock Market, to the financial crises rocking the banking sector, and the ongoing lull in the property market, no sector has been spared.
While developed nations are packaging stimulus packages containing a mix of tax cuts and massive spending, the possibility of that happening in Lagos State is quite slim.
The Babatunde Fashola administration is not insensitive to the plight of Lagosians but the developmental and social challenges confronting the state are awesome.
Since the infrastructural developments of the 1970s Lagos State has been in a state of steady descent into a mass slum except for the brief revival experienced in the mid 1990s.
The developmental momentum already attained by the Babatunde Fashola administration efforts needs to be sustained and supported all well meaning Lagosians.
Also Lagos State is relying on debt financing to push its developmental agenda, and with the recent N50 billion bond, the debt level of the state may be in excess of N300 billion.
There is nothing wrong with the debt situation of Lagos State as long as its IGR supported by statutory and VAT proceeds is sustained at an acceptable level.
Should the economic fortunes of Lagosians continue to decline which is likely to result in a fall in IGR, then the state’s creditors may cash in on their bonds.
To avoid this, the LSG may further intensify its already aggressive IGR drive leading to possible confrontation between Lagosians and the state government.
There is evidence across Lagos State that LSG has already intensified its IGR drive since the start of 2009.
In January 2009, our office block was sealed up by officials of LAWMA for not paying for a drum to be used for garbage collection and was only reopened after a fine was paid.
Next it was the turn of officials of the Ministry of Environment who have served us notice that our sound proof generator is causing noise pollution.
Now we have been served with another notice to pay Land Use Charges for the same building running into millions of Naira.
I have also received inquiries from some clients who are locked in battles with their landlords over who has responsibility for paying the Land Use Charge.
While we celebrate the monumental developments going in Lagos State, we also must avoid a situation where willing horses may be ridden to their deaths.
The recent stimulus packages announced in most developed nations’ shows that governments can not afford to ignore the economic misfortunes of their citizens.
But at the same time we cannot even contemplate the reduction or stoppage of the development agenda of LSG.
And the willing horses are mostly Lagosians in the legal as opposed to the extra-legal sector, and who are a small percentage of the over 15, 000, 000 people in the state.
Lagosians in the legal sector as it were are trapped in a bell jar and kept in display for the IGR drive of LSG.
Most Lagosians in the extra-legal sector are caught off from the bell jar while enjoying the developments that are being financed by those in the legal sector.
Integrating the legal and extra-legal sectors in Lagos State and albeit, Nigeria, is one of the principal challenges that has to be overcome if the tax base is to be expanded.
