The Back to Back Social Contract
Lagos State High Court Considers Tax-for-Rights Debates; Also CBN Guidance on Ultimate Beneficial Owners; and Does Emefiele's Travails foretell What to Expect for Monetary Independence?
Lagos State High Court Considers Tax-for-Rights Debate
I recall getting sent home due to non-payment of school fees about once or twice. Was it a good experience? In Secondary School, yes!!! (Sorry Mom 🤣) Mostly great, because then I had the opportunity of playing PS 2 at IB’s shop all day, while my mates were in class.
Do I recall being beaten in class for failure to do so? Nah. This is good cos I hear stories about that and here is a tweet about such. In essence, I think we (or a majority of us) all agree on the folly of beating kids up for the failure of their parents to pay school fees.
In other news, the Lagos State government may be doing something quite similar… No, not beating kids. But a policy recently challenged at the High Court of Lagos State is basically saying - for kids to access free education, parents have to show up with their tax clearance certificate. A lawsuit brought against that is saying - stop making the kids pay for the sins of the fathers/mothers.
Sometime last week, the High Court made a ruling in the case of Incorporated Trustees of 1SH-16 Human Rights & Social Justice Initiative v. Lagos State Government & 3 Ors. A brief background to the case is that sometime before 2020, the Lagos State government required the submission of the Tax Clearance Certificate of a parent before the kid could be enrolled into public schools. A token fee of N3000 was also imposed as a charge for the transfer of students into public schools.
You can access a copy of the Court ruling here.
The main argument of the Applicant (the NGO) was that pursuant to the Child’s Rights Law of Lagos, the Compulsory Free Universal Basic Education Law, and the African Charter on the Rights and Welfare of the Child, every child has a basic right to free and compulsory basic education. They argued that making the payment of taxes as a condition for children to access public education, and the sale of registration forms, is a violation/potential violation of the child’s right to compulsory free education.
The main argument of the Respondents (Lagos State) jointly represented, stated that the Applicant had no locus standi, and that no reasonable cause of action has been disclosed in the Applicant’s brief. Also, they contended that the right to education is not justiciable, being a right under Chapter 2 of the Constitution.1
In considering the several arguments, the decision of the Court can be summed up as follows:
On the question of whether there was locus standi, the Court maintained that the NGO, being an Applicant, has locus standi to make litigation in the public interest, under the FREP Rules, 2009.
On the question of a reasonable cause of action, the Court interpreted the bundle of grounds on which the Applicant sought reliefs and concluded that based on a community reading of obligations of citizens to pay tax, and the obligation of Lagos State to provide basic education, under the Constitution, there is no existing law barring Lagos State from demanding that citizens comply with their constitutional duty to pay tax, to ensure that their wards attend compulsory and free education.
The Court also made allusions as to the non-identification of the “disadvantaged children of Lagos State” as a signal that there were no victims or likely victims to the claim. It acknowledged that though this is a public interest litigation suit, the operation of Section 46(1) of the Constitution, and the reference “…in relation to him…” requires that there must be known or identifiable victims, and thus no reasonable cause of action. On whether revealing the identity of the likely victims and whether this may have repercussions, the Judge basically said “Trust me, bro”
On the question of justiciability, the Court considered the Respondents’ case on right to education not being justiceable under Chapter 2, and the counterargument of the Applicant that it is an effective right under the African Charter on Human and People’s Rights Act (as domesticated by Nigeria). On this, the Court interpreted that since the action was brought under FREP Rules, the claim must fall under Chapter 4, and since the right to education was not covered under Chapter 4, it could not be successful.
Okay. Quite a fascinating read. Back-to-back agreements in commercial terms pretty much go like this:
A back to back agreement is used in commercial arrangement where you enter into a contract with a third party and some or all of your duties and obligations are to be performed by a third party, or you are reliant on the actions of a third party in order to fulfil your obligations
Here is a direct excerpt from the Ruling that I find interesting:
“… ensuring possibility of compulsory and free basic education of a child is not only on the government but a shared duties (sic). This requires parents to do all to ensure the child is able to attend school due to keeping their civic responsibilities; while the government provides enabling environment. Part of this duty is to be available within the state that provides this services; the evidence which is of tax payment.”
Is the drive of the Lagos State government under that policy what one will call a back-to-back social contract? Is that an acceptable interpretation in the conceptual basis of human rights? The case demonstrates an undercurrent debate on whether a back-to-back social contract exists or can be deemed between the parent, child and the State.
Lagos State: “Your Dad should really pay taxes if he is serious about you going to school, because how do you expect me to fund the textbooks and tables and chairs?”
Question.
Can you tie the right of a child, to the duty of a parent under the law? Tying a social duty as the condition precedent for the attainment of a human right is a perversion of the intendment of human rights IMO.
Generally, I’d say the Court rather took quite an adventurous reading of Section 24 CFRN and the Child’s Rights Law of Lagos State, to answer a self-formed question as to whether States can demand a citizen to pay tax. Of course, they can. Duh!
The question that the Court obviously skirted is interpreting the possibility of a violation of the right of a child - a duty which is self-imposed on the State - by placing a stopgap (tax payment by the parent) as a condition for getting into school.
An easy way to understand this is to ask the Court, are a child and parent treated as separate legal persons under the law? If the answer is yes, why are we conditioning the achievement of an obligation by the parent, to the enjoyment which a separate person in the eyes of the law is bound to enjoy? If the answer to that is No, is it possible to suggest that the rights of Orphans, get extinguished the moment the parent dies? What would be the plan in such an instance, based on the assumption of the Judge that every child being enrolled, has a parent?
In the broader context of how things work, taxes for rights could make sense for the equal responsibility that citizens should bear to the State. On the other side of things, for a country dominated largely by an informal economy and poor people, placing a barrier to children accessing education - a large percentage of whom don’t know what tax clearance certificates are, seems like a counterproductive solution.
Like Taiwo Oyedele describes it, “When Nigerians attempt to fix a problem, they create two more.”
What is the ultimate objective of asking a parent to bring a Tax Clearance Certificate before enrolling a child? To encourage more people to clear their taxes? Will the policy encourage a poor demographic to trudge into different tax offices to obtain their TCC? Will it encourage them to stay home and just keep the kids out of school? The orphans nko?
On the side, another obiter I find interesting from the Judge’s Ruling is the excerpt below:
“It is thus my considered view that demanding transfer fee from parents moving from a different State into Lagos state government primary schools as registration or transfer fee is not unreasonable but protects the rights of citizens of Lagos state who have made their civic tax contributions and carried out their responsibilities in view of the nature of Nigeria Federal structure.”
Fascinating POV. As far as I know, the Universal Basic Education initiative is funded primarily by the Federal government. So I find it interesting that this is the protectionist case being made, against the interest of out-of-state parents/children.
CBN Guidance on Ultimate Beneficial Owners
Sometime last week, the Central Bank of Nigeria, CBN released its Guidance on Ultimate Beneficial Owners of Legal Persons and Legal Arrangements. You can access a copy of it here.
In summary, the Guidelines are aimed at helping financial institutions improve their AML/CFT/CPF standards, with respect to identifying the controlling interests of a business. Among other things, the Guidelines harmonize the concept of control in legal entities, with the one stipulated by the Corporate Affairs Commission.
Emefiele’s Showdown with DSS Foretells Monetary Independence
The current CBN Governor, Godwin Emefiele has been in the news after running into some trouble with Nigeria’s secret police, the Department of State Security. There have been reports of his office being swarmed by DSS officials. BusinessDay also reports he may have cut a deal to resign to be allowed back into the country. While things have tempered down a little bit, I’d say it’s still important to talk about.
Why? Well, I think it’s an ominous sign. Many speculate that the sudden seemingly state-led pressure being faced by Emefiele is not too distant from his hard stance on the Naira Redesign Policy and the attendant deadline, which come into effect just a couple of weeks before Nigeria’s elections.
Although highly speculative, I think I agree with the suspicion. Two policy thrusts point to the fact that the CBN stance may hurt certain quarters. Introduction of new Naira notes (won’t circulate as fast for a cash-based economy) > Cash Withdrawal/Deposit Limits (won’t let cash trawlers move cash in volumes, and as fast as they typically would). A Bloomberg report supports this inference.
Nigerian elections have historically run elections with the usual cash booms, as political parties jostle in a Cash-for-Votes scheme. In fact, we saw a Bullion at Bourdillon sometime ago. It’s hard to see how the policies won’t affect them. Not entirely sure about his intentions, but it would seem that this may be a good cause that Emefiele is fighting. We are merely speculating.
Ultimately, what matters is how the closing act of his admin foretells how careful the next CBN Governor may need to be. The current CBN Gov does not have a colourful record, thanks largely to the effect of his policies between 2014-date, his wayward means of printing an unauthorized Ways and Means loan for the Buhari admin, supervising a raging inflation and the seemingly strange ideas he got into his head, of mulling a run for the Presidency under a political party.
In summary, the concept of monetary independence has been far eroded in the past few years. Kingsley Moghalu, a former CBN Deputy Governor complained about this.
Will things get worse for the next CBN Governor in the next Admin? This Stears article tells a grim story of the kind of bargain the next CBN Governor may expect, regarding monetary independence. While Emefiele pretty much catches his breath from the hide-and-seek game, the kinds of monetary policies to expect, under a beleaguered CBN Governor, is one to watch out for. We’ve got ample time for that.
That will be all for this week. Do have a great weekend, and GET YOUR PVC.
Justiciability is a concept most law students learn in 100 Level that says, the rights under Chapter 2 of the Constitution are not enforceable rights. They are merely aspirations. Something like that sha.