The “We Pay the Least Bills” Rhetoric and Price Comparison Bias Used in Nigeria

Nigerians pay the least electricity bills, the least water bills, the least taxes, the least petrol price per litre, the least…the list continues. It is the most common appeal and justification rhetoric many Nigerian agencies and businesses use when they want Nigerians to start paying for increased fees, fares, fines or whatever they call it. Some experts will call it a comparison to global and international standards. This comparison bias was recently used by the chair of the Presidential Committee on Tax Reforms to add to the justifications why (rich) Nigerians should pay higher taxes. That even in South Africa, people pay higher than us. The price comparison bias can be great if Nigerians can experience the same level of benefits South Africans get by paying higher taxes. It would also be good to reduce fees, and prices of some items or services, that are way higher than other global standards. Did you know Nigeria charges some of the highest landing rates/taxes to airlines which inevitably makes our flight ticket prices much higher? So, when will the debate start that “we pay the highest, so it should be reduced” apply here?

For a long time, the choir of Nigerians pay the least electricity bills have been sung. How about if the argument starts with ensuring every Nigerian knows how much it costs to produce 1 kWh of electricity? When I worked a lot closer with government-owned water utility agencies back then, we lamented poor water bill payments and how it affected balancing the books which we needed to show as a justification for the utility’s financial viability to become privatised. At a point, we almost fell into the same trap of price comparison bias. However, we were saved. We asked how much it cost to produce 1 litre of water and we compared it with how much is 1 litre priced on the water bill. Unsurprisingly, the bill of 1 litre of water is lower than the actual cost of producing it. Thanks to the 30-year-old bill regulations that has been a herculean task to change.

Nigerians are now more conversant with the landing cost of petrol per litre and other associated costs of getting petrol to them. They understand that those in Lagos State will have it cheaper than those in Borno State due to the cost of transportation, and there is no north-south debate about the difference. By extension to other services, how much does it take to generate, transmit, and distribute 1 kWh of electricity to say Gombe State? Whatever bill is out there can be broken down to how much it costs to get it to the doorsteps of Nigerians, who need to start knowing these costs. While other fees cannot be easily justified like this, the intrinsic value, necessity, and fairness need to be proved as well. Many

If we cannot make it easy for tax administrators or whoever to justify new taxes, just how should this idea be sold in a more reasonable and intelligible way? An issue like tax is tricky. I am neither a finance, economics, nor tax expert per se. However, as an engaged and interested citizen, I can to some extent ask questions which I hope are reasonable enough to provide us with better justifications to pay higher, than using the how much South Africans are paying card. Tax payments perhaps can be better justified if they are linked to tangible services paid through taxes and enjoyed by the people, say hospitals, schools, roads, railways, etc. By this, making it specific and linking what sectors get what percentage of the collected tax.

If the government really wants to increase tax rates and drive collections higher, it needs to know how to tangibly respond to the question of what you did with the one you collected before. Nigerians lament paying for power bills because of the erratic and poor supply. So it is not always about the cost of production, but also the benefits they can enjoy. Therefore, the new tax administration should come with specific sectors or services, say the foundational economy, where taxes collected from Nigerians will be spent especially in the next 4 years. The foundational economy relates to those services to be enjoyed by citizens regardless of their wealth status or income levels. There should be more procedures and even sections that increase fairness, equity, transparency, and accountability in the proposed tax reform bills. Not all Nigerians understand more taxes can bring down the high level of inflation we are crying over, and stimulate economic growth or deficit reduction. They will however understand if we say 5% of what is collected yearly will be spent on primary healthcare. The governors have rejected the removal of TETFUND from the tax bills because they have seen what the organisation has achieved in our glorified higher institutions.

Tax payment is heavily linked to how the citizens trust the government in utilising the taxes judiciously, and how informed they are of the positive outcomes of the tax. I have not seen any Nigerian government take the issue of public trust seriously in a way to develop strategies for increasing it to a certain level. When you trust someone, you can give them loans without writing it down and calling a witness (but don’t do it). Similarly, when Nigerians start trusting the government more, they may be easily convinced to pay more taxes without much hesitation especially if they care that much about raising eyebrows.

Sadiq Gulma.