Buhari Should Tax the Rich More and Raise Minimum Wage -By Ahmed Adamu

There have been misconceptions that giving tax incentives to the rich helps to incentivise job creation, because the capitalists are perceived as the job creators. The truth is, they are not. The ordinary consumer is more of a job creator than a capitalist.

Business people taking credit for creating jobs is highly unfair. Business people hire people as their last resort, as they only hire to keep pace with the consumer demand. The Nigerian Personal Income Tax Act is unfair for allowing a fixed tax rate for resident companies, while varying that of personal income tax rates. The rigidity of the resident company tax rate allows for the unnecessary overgrowing of a few companies and the making of many more to close down. Small, medium and big companies pay 30% of their profits as tax, irrespective of their return and size.

Consequently, the rich are getting richer and more citizens in the middle class are relegated. Statistics have shown that we have more unemployment as the number of millionaires increases over time. If millionaires create jobs, we will not have the level of unemployment we are having in the country now, which is of a record high (23.9%), without including the estimated 30% more who are under-employed.

The individual consumer needs to be incentivised. If the minimum wage is to keep pace with the inflation rate, the minimum wage would have been above N25,000 by now, five years since it was reviewed to N18, 000. Jobs are the consequence of the eco-systemic feedback loop between customers and businesses. If the middle class thrives and does well, both the capitalist and the poor benefit.

Therefore, let the rich be taxed more, so that we can create more middle class people, who consume more and then create jobs by virtue of their consumption. The company tax system should be proportionate to the income level. Business with profits less than N80 million should be taxed at 25%, those above N80 million but not up to N500 million should be taxed at 30%, and any profit margin above N500 million should be taxed at 35%.

This should not include companies operating in the petroleum sector. There should not be credit breaks for big companies, except for special circumstances. However, tax breaks can be allowed for small and medium companies. Minimum wage should be upgraded to N25,000.

With the pending austerity measures, government expenditure (recurrent) must be reduced by at least 10% every year for four years, the tax rates should be increased and compliance enforced. Compliance will not be a big deal because people now have trust and confidence in the government.

However, there should be the immediate reflection of benefits derived from tax payments. This should be showcased in areas like the improvement of access to electricity, the increase in the minimum wage, the improvement in the access to quality and affordable health care and educational system.

All leakages of government revenue resulting from corruption should be blocked and channelled to power sector, at least in the short term.

Ahmed Adamu is the President, Commonwealth Youth Council.