VAT INCREASE: ANOTHER NEO-LIBERAL CAPITALIST ATTACK ON THE WORKING PEOPLE

By Kola Ibrahim

Just like its predecessors, the Goodluck Jonathan/PDP government, in line with its anti-poor neo-liberal capitalist agenda, has concluded plans to unleash further attacks on the working and poor people with the recent increase in the Value Added Tax (VAT). According to a report in the ThisDay newspaper edition of 26 June, 2010, the President had a parley with National Assembly members on the need to legalise the increase of the VAT from 5 percent to 10 percent. According to the Deputy Minority Whip of the House of Representatives, Femi Gbajabiamila, very few members of the House are opposed to the increase. This implies that the planned increase is already assured of the support of all the capitalist politicians in the legislature irrespective of party affiliations.

This increase represents another round of attack on the living standard of the working and poor people who are already eking a living from pennies. It is worth stating that the argument of the government is nothing but a show of clear intellectual decay. For instance, the Executive Chairman of the Federal Inland Revenue Service (FIRS), Mrs. Ifueko Omoigui-Okauro, has claimed that Nigeria is having the lowest tax rate in the world, hence there is need to suck the already skinny working people to death in order for us to be in the ‘league of respectable nations’.

But Mrs. Okauro failed to tell Nigerians that Nigeria is one of the countries with the worst social infrastructural facilities, low wages, high cost of goods including food and fuel, where cost of production is one of the highest, no thanks to decayed public infrastructures like erratic power supply, dilapidated transport system among others; multiple taxes and pervasive corruption that sharply increases the cost of production. This has nothing to do with the “low” taxation of working people, but everything to do with looting and tax avoidance by the ruling class, tax holidays for private companies (Multinationals and local) and the general chaos of capitalism. She failed to inform the nation, where already over 90 percent of Nigerians (around 125 million) are living on less than two dollars a day, that even a small increase in VAT will lead to increase in cost of goods and consequent lack of access to basic needs of life by already impoverished Nigerians.

The tax increase is not meant for public need but to satisfy the insatiable looting thirst of the capitalist ruling class. The truth is that the working and poor people are already overtaxed as a result of anti-poor policies of privatization and attendant mass retrenchment, commercialization of education, health and other social services; collapsed infrastructure, among others. It is a known fact that every Nigerian household is a government on its own; generating their own electricity, water, medical service, etc. Even, people may now have to construct their own roads, while cost of education and health has made many people turn to medieval solutions, religion centres and native doctors.

This thus takes us to the opposition to the VAT increase. Among those who indicated their opposition to the VAT increase is the Lagos State government under an opposition party, Action Congress of Nigeria (ACN). But, the opposition of the ACN government is Lagos in not only half-hearted but also treacherous. According to the state governor, Raji Fashola, who promised to sue the federal government, the basis for opposing the tax increase is because it will deny the state governments the right to introduce further tax on the working masses. Thus, it has nothing to do with the interest of the masses, but is over who to introduce the poisonous pill. The argument of the Fashola’s government is that, since the federal government already has enough means of looting and exploitation of the working masses, it should leave some chances for the state governments to milk the poor. But, the Fashola government collects around N20 billion as internal revenue (mostly from multiple, illegal and obscene taxes) every month which hardly reflect in the living standards of people in Lagos.

Labour must oppose the VAT increase because it is a regressive tax that hits the poor, workers and even middle class far more than the rich. This is because the same rate of VAT on goods and services is paid by everyone irrespective of their income and wealth.

Labour should support taxation based on income and wealth while anybody who earns below the minimum needed for a living wage should be exempted from income tax. By the calculation of the NLC, the current minimum living wage should be N52, 200. This should be the minimum upon which income tax will be based.

But, as the experience of all capitalist countries have shown, the rich and big companies will always seek to find a way to avoid or minimise the taxes they pay using tricks to hide income or wealth or simply moving it to so-called “tax havens”. This is why socialists demand the public ownership of the commanding heights of the economy and natural resources as the essential basis for society to democratically decide on how to use its wealth.

Ultimately, the labour movement must mobilize the enormous power of the working and poor people to ensure that economic and political power is taken away from the current self-serving neo-colonial capitalist class. This will mean that the labour movement must start building a political platform to contend political power with the ruinous capitalist class. This is why the building of Labour Party by the labour movement as a fighting political platform of the working but poor people become more urgent now than ever. The labour leadership must shed their unnecessary and dubious toga of political neutrality.