Utomi’s Laffer Curve misapplication: The right economist, the wrong conclusion — by Segun Showunmi

Professor Pat Utomi, you are invoking the right economist but drawing the wrong conclusion.

The Laffer Curve is not an argument against taxation; it is an argument against badly designed taxation.

You cannot confuse an inefficient tax system with an efficiently designed one, just as you cannot confuse how much government collects with how responsibly it spends what it collects. They are two separate but complementary questions.

Nigeria needs both: a government that spends responsibly and a tax system that raises revenue fairly, predictably and efficiently.

Arthur Laffer’s argument is straightforward: excessive tax rates can discourage investment, production and employment, shrink the tax base and ultimately undermine revenue. But nowhere does that theory suggest that a country with a fragmented, inefficient tax architecture should refuse to reform it.

The real question is not whether Nigeria should tax, but whether Nigeria is taxing intelligently.

That is precisely the distinction the Tinubu tax reforms seek to address: fewer distortions, less fragmentation, better incentives for enterprise, a broader tax base and a more predictable environment for domestic capital formation.

Professor Utomi cannot invoke supply-side economics while ignoring the supply-side damage caused by multiple taxation, arbitrary levies, administrative confusion and the punishment of formal enterprise.

And surely, the argument that government must spend better cannot become an excuse for refusing to reform how government collects revenue.

Laffer is not a defence of fiscal disorder. He is an argument for getting taxation right.

Professor, you are using an economic theory designed to explain why tax systems must be intelligently structured to argue against the very restructuring Nigeria needs.

–Showunmi is the founder of
The Alternative Movement