Warri — Albert Einstein said several years ago that the hardest thing to understand in the world is the income tax. Ronald Reagan, one time President of the United States of America also underscored the importance of tax when he asserted succinctly "We need true tax reform that will at least make a start toward restoring for our children the American Dream that wealth is denied to no one, that each individual has the right to fly as high as his strength and ability will take him '

Scholars of development economics have shed a sea of ink on the issue of taxation and its import to economic development. Amidst the penumbrae of arguments, the central tendency is that taxation is the price people pay for government services. Most often, because of the inherent tendency of people to resist payment of tax for essential services, taxes are compulsory payments individuals make to government. The element of coercion is justifiable in that legitimate government activities can hardly be carried out without fiscal resources. These activities include defense, protection of life, property and individual liberty - which are fundamental rights enshrined in the Nigerian constitution. Irrespective of the school of thought one belongs, one is doubtless bound to contribute a certain portion of his income to government for the provision of essential social services. Similarly, it is the duty of government to apply such monies in the most efficient way to improve the living standards of the people.

Thus in any democratic society, while the governed enjoy certain basic rights, they implicitly impose upon themselves some correlate obligations such as the right to be watched, inspected, spied upon, directed, law-driven, and taxed. However most governments in the Less Developed Countries (LDCs) are under-resourced for various reasons ranging from the lack of a firm tax base as a result of an under-performing or under-developed economy to the challenge of economic planning owing largely to dearth of qualified manpower.

The constitution of India vests the power to impose taxes on the Parliament and the most conspicuous tax collected in India is the Personal Income Tax (PIT). In Nigeria the PIT is imposed on persons who are either in government employment or those who are self-employed under a business name or partnership. Initially, the collection of PIT was the exclusive preserve of the Federal Inland Revenue Services (FIRS). However, the current law guiding PIT can be found under the Personal Income Tax Act (Cap P8 Laws of the Federal Republic, 2004). The law empowers Federal and State' tax Boards to identify, and assess the incomes of people and impose taxes appropriately. The PIT is levied on all persons: Public Servants, members of the Armed Forces, the Police, Immigration, teachers, and even the revenue collectors themselves.

Like other types of taxes, PIT adheres to the fundamental canons of taxation. The PIT follows the equity principle hence the popularization of Pay As You Earn (PAYE) system. Besides, the process of collection is in accordance with the principles of accuracy, simplicity and efficiency. The PIT is also administered in a transparent manner such that tax payers know how, when and why they are being taxed. The cost of collecting such taxes must be reduced to the barest minimum. This is what underscores the idea of taxing the salaries of workers from source. There are two advantages of this procedure. First is to ensure equity in taxing depending on the cadre of grade level of the worker. Second is to minimize the tax evasion syndrome, which has plagued the Nigerian system and diminished the Internally Generated Revenue (IGR) profile of many States.

As a compulsory contribution from an individual to defray government expenses incurred in the common interest of all, tax and specifically PIT is compulsory and any defaulter is liable to some form of punishment. Government uses the taxpayers' money for the provision of essential social services such as health and education infrastructure, potable water and public utilities. Because such services are provided for both the taxpayers and children, the principle of quid pro quo, which permits tax payers to claim something equivalent to the tax paid, does not apply.

Since Bayelsa State was created 13 years ago, successive administrations have had to contend with the knotty issue of attempting to boost (IGR) through the implementation of a viable and sustainable tax system. The State has been relying almost solely on one source of revenue namely: monies derived from the Federation Account. Because of the global economic meltdown, revenues accruing to the State are declining. There is vast empirical evidence that taxation correlates highly with economic growth in addition to some spill-over effect on effective service delivery. Taxes have positive welfare effect on the citizens, as adherence to tax laws could result in greater sophistication and diversification of revenue sources, and by extension the economy.

At the global level, no economy in history has ever achieved high per capita growth without a sustainable tax system. In fact the advanced capitalist economies depend heavily on taxation in running their economies. In Europe, U.S.A and Latin America, tax evasion is a punishable offence without the option of fine. In Mexico, Canada and Venezuela, a fast growing source of revenue has been PIT and Value Added Tax (VAT). In Brazil, a substantial proportion of IGR is derived from PIT, which propels the economy on the path of self-sustained growth. In Japan, monies accruing from PIT are deployed to build industries. The global economic power of Japan is PIT.

In Bayelsa State, the present administration is determined and has shown renewed commitment in pursuing aggressive infrastructural development in the State. Essentially too, the State has consistently experienced dwindling financial allocations from the federation account due largely to the resurgence in militancy. Now, there is an urgent need to explore other statutory means of broadening the revenue base of the State. It is against this background that government has expressed its intentions to intensify the collection of Personal Income Tax, having conducted staff audit and ascertained the accurate workforce of the State.

The use of Income as a basis for taxation is a settled debate. That is why it is surprising that a tiny segment of Bayelsa people are expressing resentment to the implementation of the PIT. It is even most Irksome that the Nigerian Labour Congress (NLC) Bayelsa State Chapter, is yet to appreciate the socio-economic benefits of the PIT.

When properly managed, the revenues to be generated from the PIT can be applied to the development of the real sectors of the economy. In addition, it would increase expenditure on such public works as roads, bridges, schools, hospitals and industry. The economic benefits of such projects would be employment generation and wealth creation. These lofty objectives are in tandem with efforts at achieving the Millennium Development Goals, MDGs. The Bayelsa State Government is committed to raising the standard of living, promote ecotourism, encouraging private enterprise and increasing the productive capacity of the overall economy.

By now, the Bayelsa State Government should borrow a leaf from Lagos State, and other States which have benefited optimally from the PIT. Government should therefore be committed to use the PIT funds prudentially for job creation, and retention; provision of massive infrastructure; improvement in healthcare delivery services, provision of quality education and other tangible deliverables. The long-term positive impact is economic rejuvenation and the influx of Foreign Direct Investment. These are part of the democracy dividends promised by the Timipre Sylva administration.

Considering these enormous economic benefits, Bayelsa people: civil servants and self-employed people alike should appreciate the PAYE tax as their modest contributions to the development of the State. Similarly, the NLC should embark on aggressive sensitization campaign to enlighten public servants on the merits of the Personal Income Tax to the development of the economy. The fact is that other States such as Lagos, Kano among others are reaping enormous benefits from the PIT. Bayelsa State is in dire need of diversifying her economy through an equitable tax regimes that will attract investments. Thus the implementation of the PIT is no longer negotiable.

What should be of concern to patriotic Bayelsa people is not so much of paying the PIT but to enjoin the Ministry of Finance, the State's Revenue Boards and other relevant agencies empowered to administer the PIT to ensure that monies accruing from it are judiciously used to effect the rapid development of the State. It is the candid opinion of this writer that if properly implemented, the dividends of the PIT would far outweigh the sacrifices.

Timitim wrote from Warri, Delta State