Strengthening Tax Accountability Links: Fiscal Transparency and Taxpayers Engagement in Nigeria

Being an Introductory speech delivered as the Chairman of the 2021 annual tax week of the Chartered Institute of Taxation of Nigeria Ibadan & District society at the Jogor event centre on 28th of August, 2021


It is important that we have a brief understanding of what accountability entails.  Accountability simply implies an assurance that a person/institution entrusted with a particular task carries out the given mandate and does so in a way that is in accordance with the norms and rules applicable to such task.  It however involves at least two parties the one who has been entrusted with something that gives rise to the accountability obligation, and the principal who gave the mandate in the first place, or an agent delegated this authority.

Tax accountability is one that is democratic in nature, and it is of a special case where the principal is “the people” and the parties owing accountability are those entrusted with political power.

A situation characterized by democratic accountability can be defined as a situation where:

  1. Political power-holders carry out their mandate and exercise their powers in a way that is transparent, in the sense that it enables other institutions – and the public – to see what is actually done, and assess whether it is in accordance with the mandate and the relevant norms and rules;
  2. Power-holders are answerable in the sense of being obliged to provide reasons for their decisions in public (which also implies an element of responsiveness); there are institutional checks or control mechanisms in place to prevent abuse of power and ensure that corrective measures are taken in cases where the mandate is contravened, or rules are violated.
  3. Democratic accountability requires in addition institutional mechanisms through which ‘the people’ can punish (remove) officials who do not meet the standards, and influence laws and policy decisions.

Taxation is believed to promote these qualities in public officials and institutions because this is necessary in order to make the citizen accept their tax obligations. If governments are perceived as accountable, more people will pay their taxes “voluntarily”, which lowers the need for coercion, generally reduces the costs of tax-collection and also strengthen accountability links between the government and taxpayers.

Conversely, if people do not see their governments as accountable, there is an increased likelihood that state demands for (new or higher) taxes will be met with protest and violence that is costly and might even jeopardize the position of those in power. The starting point for an emerging new literature on the interconnections between taxation and democracy in the developing world is the acknowledgement that bargaining over tax policies and the budget is the primary way in which different state and societal goals can be reconciled in a democracy (Moore, 1998).

The link between taxation and accountability is typically illustrated by the battle cry from the American colonies’ fight for independence from Britain – “no taxation without representation”. Because taxpayers were consulted about the revenue raising system compliance in tax collection became quasi-voluntary thus, reducing collection costs.

Conclusively, there is increasingly strong evidence that taxation can contribute to expanded government responsiveness and accountability. However, such positive connections are not guaranteed. Rather, they are shaped by the political and economic context and specific policies adopted by governments and civil society actors. Therefore, without an environment that enables tax accountability, there is a risk that taxation will amount to little more than forceful extraction.

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Disclaimer: OGE’s article is to provide information on technical and contemporary issues within field of Accounting, Finance, Taxation and Forensic Accounting only. It is not to be misconstrued to be a professional advice and opinion. OGE Professional Services will not be responsible for any misrepresentation therefrom. Please, seek appropriate professional advice where needed.

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