For the record, this article is not meant to give celebrities who don’t pay their taxes a pass. I think we all should pay what we legally owe, including those whose work puts us on the big screen, the sports field or in the recording studio.
But I do have an understanding of the multitude of reasons celebrities give for not paying tax. And I think you should too.
The Nigerian tax system is totally messed up… yes, messed up in all ramifications. I concur with the argument that monies generated from taxes in Nigeria are not judiciously used by the government. Or we haven’t seen what the money is being used for.
When singer and actress Lauryn Hill and other American artists pleaded guilty and even got incarcerated for tax evasion, a lot of you must have asked: “Why can’t our celebrities pay taxes like their American counterparts?”
But the real question is, how many Nigerians pay tax? As you are reading this article, I can bet that you probably don’t know where the LIRS or FIRS offices are in your local government.
So before you all jump on the government-must-tax-Nigerian-entertainers bandwagon, a few important points are worth noting.
Most Nigerian entertainers are evading tax, not because they intentionally want to, but because they don’t know their taxable income. Likewise, the Nigerian government, through all its tax agencies, is losing billions of naira every year from the entertainment industry because they are yet to discover a proper structure for taxation of the industry.
I know it seems like a great thing to take home a million-naira plus pay cheque for singing a song, starring in a TV show or making a movie. And I’m sure the financial perks and other benefits of stardom aren’t lost on celebrities. But think for a moment about what it must be like to get one or two big cheques a year (either lump sums, advances or royalties) and then have to manage that money wisely all year long, maybe not knowing when the next cheque will come in.
Most people in Nigeria are wage earners or businessmen and women who get regular cheques once a month or daily money from their businesses. Some employees in the oil sector might get paid twice a month. Overall, the average person who’s working can count on a pretty steady pay cycle. But that’s not the case with entertainers. Sure, they get their paydays – big ones, in fact. But when they get paid, it’s like receiving a huge financial windfall. And we all know what happens with most windfalls. They blow the money. Despite all the bling and the perceived glamour that come with being a celeb, the truth is that it’s tough being a celebrity and keeping your finances straight.
There’s also the issue of financial oversight. Most naija celebs don’t know what to do with their money when they get paid for gigs or appearances. Some have gone broke for trusting the wrong people to handle their money or to give them financial advice, that’s why a lot of artists who once lived comfortably have pretty much kissed their riches goodbye.
Being a celebrity anywhere in the world means you’re constantly in the spotlight. That additional scrutiny doesn’t just come from the public or the media. Celebrities, with their “I’m-living-large” lifestyles and their out-sized pay cheques, are also prime targets of fraudsters.
In fact, if you’re a public figure who is routinely taking home cheques in the six, seven and eight figures range, you have pretty much put a bull’s eye on your back when it comes to the tax collectors. Simply put, the tax authorities in Nigeria know they cannot make an example out of celebrities for tax evasion. Nigerians generally don’t believe in paying tax and coupled with corruption in the system, it is hard convincing a Nigerian to remit a chunk of his or her earnings as tax to a corrupt government.
So you cannot bash naija celebs for non-payment of tax without taking certain factors into consideration, because that would be a case of the pot calling the kettle black. Have you paid your tax? I can bet that even the tax collectors in Nigeria don’t pay their tax. Saying that millions of Nigerians are enjoying some kind of financial Christmas – in the form of tax evasion – would be an understatement. So why should we expect celebrities to be any different simply because their cheques are bigger? It doesn’t work that way. Their expenses are bigger too, in many cases way bigger than most people can imagine.
Also, unlike the average employee, celebrities don’t have taxes automatically taken out of their pay cheques. The corruption in the Nigerian tax system has got so bad that even the workers having taxes automatically taken out of their pay cheques have cried out that their taxes are not being remitted as claimed by their employers. And the tax agencies are not doing enough to rectify the decay in the system. And someone is screaming that the government should start taxing entertainers?
Tell the average Nigerian that he or she has been mandated by the law to pay tax and you will have yourself a barrage of insults to deal with. Yes, it is that bad. If the government does a thorough manhunt for tax offenders, even you who are reading this article right now will perhaps get in trouble with the law.