...A prosperous state begins with prosperous people
...You cannot tax a people into prosperity. You must first create the conditions for them to prosper.
There is a fundamental economic truth that every responsible government must understand: a state cannot tax its people into prosperity. Taxation is necessary for governance, infrastructure development and the provision of public services, but it cannot, on its own, create a prosperous society. A government that places excessive emphasis on collecting revenue without creating the conditions for its citizens to earn more, establish businesses, secure employment and accumulate wealth risks weakening the very economy it seeks to strengthen.
The true measure of a government's economic success is not simply how much revenue it generates from its citizens, but how much wealth it helps them create.
Governments exist to provide an enabling environment for economic growth. They must build infrastructure, ensure security, improve education, facilitate access to capital, support entrepreneurship and establish policies that encourage productivity. When these conditions are in place, businesses expand, jobs are created, incomes rise and the tax base grows naturally. Revenue collection then becomes a consequence of economic prosperity rather than a burden imposed on struggling citizens.
Unfortunately, in many developing economies, including Nigeria, taxation is sometimes approached primarily as a means of generating immediate government revenue, with insufficient attention paid to the economic realities of the people expected to pay.
This raises an important question: can a government genuinely claim to be developing its economy when the businesses that should drive growth are struggling to survive, workers are battling declining purchasing power and many households are finding it increasingly difficult to meet their basic needs?
## Taxation Is Necessary, but Wealth Creation Must Come First
No serious argument against taxation can ignore the role taxes play in financing public services. Governments require revenue to build roads, maintain hospitals, improve schools, provide security, develop transportation systems and execute other public projects.
A functional tax system is therefore essential to sustainable development.
However, the existence of a legitimate need for revenue does not mean that every tax increase, levy or revenue-collection measure is economically justified. The critical issue is whether taxation is designed to support productive economic activity or whether it becomes an additional obstacle to it.
A government that taxes profitable businesses fairly, closes loopholes, reduces waste and invests revenue in productive infrastructure can stimulate economic growth. Conversely, a government that imposes multiple levies on struggling enterprises, increases the cost of doing business and offers little in return may inadvertently discourage investment and reduce productivity.
The distinction is important.
**Taxation should be a tool for financing prosperity, not a substitute for creating it.**
When government revenue depends excessively on squeezing existing economic activity rather than expanding that activity, the system risks becoming counterproductive. Businesses may reduce their operations, postpone expansion, increase prices, move into informality or close altogether. Workers may lose their jobs, and the government's future revenue base may shrink.
In other words, collecting more today can sometimes mean having less to collect tomorrow.
## You Cannot Tax What the People Have Not Earned
One of the greatest mistakes in public revenue administration is to treat citizens as though their capacity to pay taxes exists independently of their economic circumstances.
It does not.
A trader operating a small shop, a young graduate searching for employment, a commercial driver struggling with operating costs and a small-scale manufacturer battling high energy prices do not have the same financial capacity as a large corporation generating substantial profits.
Yet, when taxation is designed without sufficient regard for income levels, business margins and the actual capacity to pay, the burden can fall disproportionately on those who are least able to bear it.
For millions of Nigerians, the immediate challenge is not a refusal to contribute to national development. It is the difficulty of generating enough income to survive in an economy where housing, food, transportation, healthcare, electricity and other essential expenses consume a substantial portion of household earnings.
For small businesses, the situation can be equally difficult. Many entrepreneurs must contend with expensive electricity, poor access to affordable credit, infrastructure deficiencies, security concerns and fluctuating operating costs.
Adding poorly coordinated taxes and levies to these challenges does not automatically improve their ability to pay. In some cases, it makes survival more difficult.
A government must therefore ask itself a basic economic question before introducing a new tax or intensifying enforcement: have we created the conditions under which the people can sustainably afford this obligation?
Tax compliance is easier to achieve when citizens have reliable incomes, businesses make reasonable profits and public institutions deliver visible value.
## The Danger of Turning Revenue Generation into Government's Primary Achievement
There is a difference between a government that mobilises revenue to develop its economy and one that measures its success primarily by how much money it collects.
The former sees revenue as a means to an end. The latter risks treating revenue collection as an end in itself.
When government agencies are under pressure to meet aggressive collection targets, there is a danger that enforcement becomes more important than economic impact. Officials may focus on identifying additional fees, issuing demands, imposing penalties and expanding the number of taxable activities without adequately assessing the cumulative burden on businesses and households.
The result can be an environment in which entrepreneurs spend more time responding to revenue demands than developing their products, employing workers or expanding their businesses.
This is particularly concerning at the subnational level, where state and local governments must balance their legitimate revenue needs with the need to encourage investment and economic activity.
A state government should not be satisfied merely because its internally generated revenue has increased. It must also examine whether the number of functioning businesses is growing, whether unemployment is declining, whether household incomes are improving, whether investment is expanding and whether poverty is reducing.
If revenue rises while businesses close, employment opportunities disappear and citizens become poorer, the government must examine the quality and sustainability of its revenue strategy.
Higher collections alone do not necessarily indicate a healthier economy.
## Governments Must Create Wealth Before They Can Sustainably Expand the Tax Base
The most sustainable way to increase government revenue is to grow the economy from which that revenue is drawn.
Consider a state that invests in reliable electricity, good roads, security, industrial clusters, vocational training, affordable financing and an efficient business-registration system.
Such investments can help small enterprises grow into medium-sized businesses and medium-sized businesses develop into major employers. Farmers can access markets more easily. Manufacturers can reduce production costs. Young people can establish technology enterprises. Investors can expand existing operations or establish new ones.
As economic activity increases, businesses earn more, workers receive salaries, more people enter productive employment and household purchasing power improves.
The government then benefits from a broader and more sustainable tax base.
Compare this with a state that prioritises revenue enforcement while neglecting the infrastructure and economic conditions required for businesses to thrive. Even if it records an immediate increase in collections, its long-term revenue potential may be undermined by weak investment, business closures and declining economic activity.
The lesson is straightforward: **the prosperity of the people is one of the strongest foundations of sustainable public revenue.**
A prosperous population does not automatically eliminate poverty or guarantee effective tax administration. However, a productive economy gives citizens a stronger capacity to meet their obligations without sacrificing basic welfare.
## Small Businesses Should Be Partners in Development, Not Convenient Targets for Revenue
Small and medium-sized enterprises are essential to economic development. They create jobs, support household incomes, stimulate local commerce and provide opportunities for people who may not have access to formal employment.
For many Nigerians, entrepreneurship is not merely a lifestyle choice. It is a response to limited employment opportunities and the need to support families.
Governments should therefore regard small businesses as partners in economic development rather than easy targets for revenue collection.
This does not mean that businesses should be exempt from every legitimate tax obligation. Rather, taxation should be predictable, proportionate, transparent and consistent with applicable law.
Governments should eliminate unlawful collections, harmonise overlapping levies, simplify registration and payment procedures, and ensure that taxpayers understand their obligations. Small enterprises should not face repeated demands from different agencies for similar activities or be subjected to arbitrary assessments.
Where appropriate, simplified tax regimes and thresholds can protect genuinely small businesses while ensuring that larger, more profitable enterprises contribute fairly.
Equally important, governments should make it easier for businesses to operate formally. When registration is straightforward, compliance costs are manageable and public services improve, more enterprises may be willing to participate in the formal economy.
The objective should be to expand the number of viable businesses, not merely increase the pressure on those that already exist.
## Taxation Without Accountability Weakens Public Trust
Citizens are more likely to accept taxation when they can see a credible connection between what they contribute and the services they receive.
When roads are improved, schools function effectively, hospitals provide quality care, security improves and public infrastructure supports economic activity, taxpayers can better understand the value of their contributions.
But when people are confronted with multiple levies while essential services remain inadequate, public confidence can deteriorate.
This is why revenue generation must go hand in hand with transparency, accountability and responsible public expenditure.
Governments should disclose how revenue is raised and spent, publish accessible budget-performance reports and demonstrate that public funds are being used efficiently. Wasteful expenditure, corruption and poorly executed projects undermine the moral authority of any administration demanding greater financial contributions from citizens.
It is difficult to persuade struggling households to accept additional burdens when they believe public resources are being mismanaged.
Taxation is not simply a financial transaction between government and citizens. It is also part of the social contract that sustains democratic governance.
The state collects revenue in the public interest, and citizens are entitled to expect responsible management of the resources entrusted to their government.
## From Revenue Collection to Economic Empowerment
A government committed to prosperity must move beyond the narrow question of how much revenue can be collected and ask a more productive question: what can be done to increase the earning capacity of the people?
This requires deliberate investment in sectors that create jobs, raise incomes and improve productivity.
Agriculture should be supported through access to modern equipment, storage facilities, irrigation, processing centres and reliable markets. Rather than focusing only on agricultural levies, governments should help farmers increase production and move up the value chain.
Manufacturing should benefit from industrial infrastructure, stable energy supply, accessible financing and policies that encourage local production. A thriving manufacturing sector can generate employment, reduce dependence on imported goods and expand the taxable economy.
The informal sector should receive practical support that makes formalisation worthwhile. Traders, artisans, transport operators and other small entrepreneurs need affordable finance, accessible markets, business training and predictable regulatory conditions.
Young people require quality education, digital skills, vocational training and pathways into employment. A young person who acquires marketable skills and secures a productive job becomes better positioned to support a household, contribute to the economy and meet legitimate tax obligations.
Tourism, technology, creative industries and other growth sectors should also receive attention according to each state's comparative advantages.
These are not alternatives to taxation. They are the foundations upon which sustainable taxation can be built.
## What Should State Governments Do Differently?
First, state governments should conduct a comprehensive review of their tax systems to identify overlapping levies, arbitrary charges and practices that impose unnecessary costs on productive economic activity.
Second, they should prioritise economic infrastructure and public services that reduce the cost of doing business. Roads, electricity solutions, water supply, security, logistics and digital connectivity can improve productivity and attract investment.
Third, governments should support entrepreneurship through business-development services, targeted financing arrangements, industrial clusters and accessible markets. Such programmes must be transparent and designed to deliver measurable economic results.
Fourth, tax policies should be guided by evidence. Before introducing a new levy, government should assess its likely effects on household welfare, business survival, employment, investment and overall economic activity.
Fifth, revenue collection should be transparent and professional. Citizens must be able to verify legitimate tax obligations, obtain receipts and challenge unlawful demands without fear of harassment.
Sixth, governments should measure development using indicators beyond internally generated revenue. These should include job creation, business survival rates, investment growth, household income, poverty reduction, productivity and access to essential services.
Finally, governments must demonstrate fiscal discipline. Expanding revenue without controlling waste is not a complete economic strategy. Public expenditure should be carefully prioritised, projects properly evaluated and public funds directed towards activities that produce lasting benefits.
The objective is not simply to collect more money. It is to build an economy in which more people can earn more money.
The Real Test of Leadership Is How Much Wealth the People Create
A state's economic strength should not be judged solely by the size of its budget or the amount of revenue its agencies collect. It should also be judged by the economic opportunities available to its citizens.
Can a young graduate find meaningful employment? Can a small business expand without being overwhelmed by regulatory costs? Can a farmer increase production and earn a reasonable income? Can a manufacturer operate competitively? Can a family afford food, education, healthcare and decent housing?
These are the questions that reveal whether economic policies are translating into genuine prosperity.
A state may record impressive revenue figures while many of its citizens remain economically vulnerable. Conversely, a state that deliberately expands productive opportunities can gradually develop a stronger revenue base as more people and businesses become economically successful.
The distinction lies between extracting value from an existing economy and creating the conditions for that economy to produce more value.
Good leadership must understand that taxation cannot substitute for jobs, investment, productivity, security and effective public services.
## Conclusion: Make the People Wealthy, and the Revenue Will Follow
The argument that a state cannot tax its people to prosperity is not an argument for abolishing taxes or allowing citizens and businesses to evade their lawful responsibilities. It is an argument for getting the sequence and priorities right.
Governments need revenue to function, but their most important economic responsibility is to create the conditions under which citizens can become productive, businesses can thrive and household incomes can rise.
Taxation should be fair, lawful, predictable and proportionate. Revenue must be used responsibly, and the burden placed on citizens should reflect a genuine commitment to public welfare and economic development.
The most effective government is not necessarily the one that extracts the highest amount from its citizens. It is the one that builds an economy in which more citizens can afford to contribute without being pushed deeper into hardship.
A government that expands opportunities, creates jobs, supports enterprise, improves infrastructure and protects investment will gradually build a broader and more sustainable tax base. A government that relies excessively on levies while neglecting wealth creation may collect more in the short term but weaken its economic foundations in the long run.
A prosperous state begins with prosperous people
You cannot tax a people into prosperity. You must first create the conditions for them to prosper.
When citizens become wealthier, businesses become stronger and productive opportunities multiply, taxation becomes more sustainable, public revenue becomes more dependable and government gains greater capacity to deliver development.
Ultimately, the purpose of government should not be to make the people permanent sources of revenue. It should be to help them become creators of wealth, engines of production and partners in the development of their state.
A prosperous state begins with prosperous people
