Tax obligation and state legitimacy: A critique of the disconnect between state demands and people’s desiderata

• Author: Adedokun, K.
• DOI: https://doi.org/10.47348/JCCL/V7/i1a3
• Published date: 16 May 2022
• Date: 16 May 2022
• Citation: (2021) 7(1) JCCL&P 63
• Pages: 63-79

https://doi.org/10.47348/JCCL/V7/i1a3

63

TAX OBLIGATION AND STATE

LEGITIMACY: A CRITIQUE OF

THE DISCONNECT BETWEEN

STATE DEMANDS AND PEOPLE’S

DESIDERATA

KAREEM ADEDOKUN*

Associate Professor, Department of Business and Private Law

Kwara State University, Malete, Kwara, Nigeria

ABSTRACT

The payment of taxes is one of the obligations recognised under

any civil rule system. This informs why Nigeria, in its practice of

constitutional democracy, emphasises prompt payment of tax as a

basic duty of citizens to foster development, economic growth, and

building. There is a fiscal contract through which citizens accept

and comply with taxes in exchange for government’s effective

services, the rule of law and accountability. It is a mutually beneficial

process whereby citizens will receive improved governance while

the government receives larger, more predictable, and more easily

collected tax revenues. However, there is an obvious reversal of the

fundamental obligations of the government, resulting in the sharp

contrast between the state demands and people’s needs. This work,

using doctrinal and survey sampling methods, critically examines

the accountability and responsiveness of the government in its fiscal

contract with the people, by embarking on a review of the correlation

between the government’s obligations of good governance and the

citizens’ civic duties of prompt payment of taxes. The review finds

that the Nigerian tax system does not have a positive effect on

nation-building as there is an apparent infrastructural deficit that

impugns the taxpayers’ and investors’ confidence in the integrity of

the tax system. Besides, there is no state machinery for an effective

inclusive tax dialogue. Consequently, the initiation of the process

of constructive engagements with the government is suggested to

achieve an inclusive tax bargain which it is hoped will usher in a

regime of responsive governance for sustainable development.

* National Certificate in Education, LLB (Ilorin) LLM, PhD (Ahmadu Bello);

BL (Abuja).

(2021) 7(1) JCCL&P 63

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(2021) 7(1) JOURNAL OF CORPORATE AND COMMERCIAL LAW & PRACTICE

https://doi.org/10.47348/JCCL/V7/i1a3

Keywords:tax obligation, nation-building, fiscal contract,

accountability, responsive governance.

I INTRODUCTION

One of the benefits of constitutional democracy is the opportunity

for a positive relationship between the government and the people.

The participatory nature of governance constitutes a threshold

for a variety of benefits derivable from the functionality of the

government. In as much as the government provides for the essential

needs of the people, the citizens accept that they must contribute part

of their resources in the form of tax to the growth and development

of the state by discharging their civic duties promptly. Payment of

taxes is one of the obligations recognised under all civil rule systems,

as no government can function effectively without a dependable

source of revenue. This is the reason that Nigeria, in its practice of

constitutional democracy, emphasises prompt payment of tax as

a basic duty of the citizens, as it is fundamental to development,

economic growth and state-building.1 There is a bargain rooted in

the social contract that postulates that the power of the government

to demand payment of taxes is derived from the consent of the

people, who comprise mostly 21.2 per cent employed in unskilled

labour, 6.71 per cent of millionaires. The Constitution emphatically

declares that ‘sovereignty belongs to the people of Nigeria from

whom government through the Constitution derives all its powers

and authority’.2 It is in the form of an implied agreement between

the taxpayers and the government to surrender a quantum of their

income in exchange for mutual societal utility and protection.

In the perspective of the Organisation for Economic Cooperation

and Development (OECD), the agreement between the state

and the citizens on tax matters is termed a ‘tax bargain’ or ‘fiscal

contract’ through which the citizens accept and comply with taxes

in exchange for government’s effective services, the rule of law

and accountability.3 It is a mutually beneficial process, such that

if well implemented, citizens will receive improved governance

while the government receives larger, more predictable and more

easily collected tax revenues.4 It means that upon receipt of tax

proceeds, the government is under correlative obligations to link

revenue enhancement much more explicitly to broader government

1 Constitution of the Federal Republic of Nigeria (CFRN), s24(f) (1999).

2 CFRN, s14(2).

3 Organisation for Economic Cooperation and Development ‘Citizen-State Rela-

tions’, available at https://www.oecd.org, accessed on 12 April 2020.

4 Ibid.

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