ADF unit root test results.
\r\n\tThe eye is our window to the brain. Vision is the ability to interpret and understand the information that comes in through the eyes. The visual system utilizes brain pathways to process and understand what the eyes sense. The dynamic process of vision is to identify, interpret and understand what the eyes see.
\r\n\tAn image is a sight which has been recreated. It is an appearance which has been detached from the place and time in which it first made its appearance. Sensing is not the same as seeing. The eyes and the nervous system do the sensing, while the mind does the perceiving.
\r\n\t
\r\n\tMedical imaging is the process of using technology to view the human body in the interest of diagnosing, monitoring, and treating medical problems. It is especially beneficial when it comes to detecting cancer. Such a threatening disease requires very early detection to improve the chances of survival. Medical imaging is an extremely important element in medical practice in the world of today. While medical knowledge and discernment forms the basis of diagnoses and decisions, medical imaging plays a vital role in confirming any diagnosis. With scientific advancement and a continued effective use, medical imaging will continue to help with earlier detection of health issues and provide increased preventative care.
\r\n\tThis book intends to provide readers with a comprehensive overview of the latest and most advanced findings in several aspects of ophthalmic pathology, treatment and surgical strategies, ocular imaging, vision sciences, medical images and perception that focuses on the most important developments in these critically important areas. Enough has been achieved already to make it clear that these fields have enormous possibilities for improving the human health.
\r\n\t
Taxation is an important fiscal policy instrument at the disposal of governments to mobilise revenue and promote economic growth and development.1 Governments use tax revenue to carry out their traditional functions such as the provision of public goods and services; maintenance of law and order; defence against external aggression; and regulation of trade and business to ensure social and economic maintenance [1]. Effective tax revenue mobilisation reduces an economy’s dependence on external flows which have been found to be highly volatile.2 Taxation also allows governments’ greater flexibility in designing and controlling their development agenda; conditions states to improve their domestic economic policy environment, thus creating a conducive environment for the much-needed foreign direct investments; and strengthens the bonds of accountability between governments and the citizens [2]. The 2008/2009 global financial and economic crisis provided useful lessons for countries on the need to direct more attention to domestic resources mobilisation efforts, including through increasing tax revenues, and shift away from over-dependence on external financial flows and export revenues.3
Although tax structures vary considerably across countries, the primary objective of any tax structure is to attain maximum revenue and economic growth with minimum distortions. Different countries have different philosophies about taxation and different methods of tax collection. In the same manner, countries have different uses for their revenue which affect growth differently [3]. Agell et al. [4] have argued that the different uses of total government expenditure affect growth differently and a similar applies to way tax revenue is raised. Romer [5] emphasises factors such as ‘spill-over effect and learning by doing’ by which firms’ specific decisions to invest in capital and research and development, or investment in human capital, can yield positive external effects that benefit the rest of the economy. Solow [6], was the first to examine how taxation affects growth. He argued that steady state growth is not affected by tax policy; that is, tax policy, regardless of distortion, has no impact on long term economic growth rates, even if it reduces the level of economic output in the long term. On his part [7], argued that the different uses of total government expenditure affect growth differently and a similar argument applies to the way tax revenue is raised. The economic growth of Singapore for instance can be attributed to low rates of corporate and personal income taxes. Relatedly [8], argue that there exists a structural difference in taxation in developing countries and developed countries. For developing countries, they established that roughly two-thirds of tax revenue is derived from indirect taxes while for developed countries two-thirds comes from direct taxes. They suggested however, that tax structure can change over time to maximise the economic growth.
The differing views of the effects of taxation of growth notwithstanding, important conceptual questions arise however, with respect to the optimal level of taxation for a defined objective function - whether growth or revenue generation; how taxation burden should be allocated among tax payers; the extent of state involvement in taxation; and how tax revenues should be allocated among various public goods and services.
Lindahl [9] attempted to address these questions using a model which allows for determination of the extent of state provision of goods and services and the relative tax shares of two individuals who are free to reveal their preferences for state services against corresponding tax liability. The central thesis of the Lindahl model is the voluntary exchange between the taxes paid by the two individuals and the services rendered by the state. The Lindahl model therefore sought to seek a solution for the following problems: the decision regarding the extent of state activity; allocation of the total expenditure among various goods and services; and allocation of tax burden among tax payers.
From Figure 1 below, if we assume a linear and homogenous production of goods and services, SS’ is the supply curve of the state services while DDa and DDb are demand curves of two individuals - A and B; the vertical summation of which gives the [total] community’s demand curve for state services—DDl. When ON is amount of the state services produced, A contributes NE; B contributes NF while NG represents the cost of supply. Since the state is not a profit maker, it increases its supply up to OM, at which level A contributes MJ while B contributes MR which when combined, equals the cost of supply—MP. P is therefore, the point at which equilibrium (SS = DD) is obtained on the basis of voluntary exchange of goods and services.
Lindahl model.
Many economists however, tend to favour the Bowen approach [10] since it can be easily adapted to depict what happens when social goods are produced under conditions of increasing costs, as opposed to Lindahl model which assumes linear and homogenous production (Figure 2).
The Bowen model.
The model assumes the existence of one social good and two tax-payers - A and B whose demand curves are represented, respectively, by a and b; with a + b being the total demand. The supply curve ‘a + b’ implies that the social goods are produced under conditions of increasing cost. But economic theory posits that the cost of producing social goods is the value of private goods foregone; that is ‘a + b’ is also the demand curve of private goods. The intersection of the cost and demand curves at B therefore, gives a determination of how a given national income should, according to tax-payers’ desire, be shared between social and private goods - OE social goods and EX private goods. At the same time, it is possible to determine the tax shares of A and B, which are represented, respectively, by GCEO and FDEO out of the total tax requirement represented by area ABEO.
Irrespective of how a country chooses to share the tax burden among tax payers or allocates tax revenues among various goods and services, the tax revenue to gross domestic product (GDP) ratio is generally accepted as a crude measure of the tax effort of a given country and can be used as a basis for cross country comparisons. Compared to similar economies in Africa, Nigeria has a very low tax revenue to GDP ratio, with the bulk of government revenue being derived from oil and gas sector.4 Between 1981 and 2015, revenues from the oil and gas sector accounted, on average, for 75% of total government revenues, with the non-oil sector, of which taxation is part, contributing, on average, the remainder 25%, albeit with wide annual fluctuations [11]. Nigeria discovered oil in 1956 at Oloibiri in the Niger Delta after half a century of oil exploration, but commercial exploitation only started in 1968. By 1972, the oil sector share in total revenue was 54.4% against 45.6% share from non-oil sector. But by 1974 oil share of total revenue had increased to 82.1% with only 17.9% revenue accruing non-oil sector. Following the glut in the world oil prices in the later part of the 1970s however, the oil share in total revenue fell to 61.8% in 1978 while non-oil sector’s share rose to 38.2%. More recently, the oil sector share in total revenue has been on an upward trajectory peaking at 88.6% in 2006. As at 2012, oil sector share in total revenue stood at 75.3% while non-oil sector accounted for 24.7% of the total revenue [11]. Overall, tax revenue, as a proportion of GDP, has been on a downward trend in the recent past. From a high of 5.459% in 2009, the tax to GDP ratio stood at 1.557% in 2012 which compares unfavourably with, for instance, the situation in South Africa, with a tax to GDP ratio of 26.81 and 25.52%, respectively, in 2009 and 2012.5
Despite the many policy, legislative and administrative reforms effected in the recent past,6 the Nigerian tax system is still riddled with several challenges which limit its optimal performance. These challenges have been highlighted, variously, by [12, 13, 14, 15, 16, 17]; and include, but are not limited to the following: non-availability of tax statistics, inability to prioritise tax efforts, poor tax administration, multiplicity of taxes, regulatory challenges, tax evasion, tax avoidance, structural problems in the economy and a thriving underground economy. The role of taxation in promoting economic growth in Nigeria has therefore, not been optimally felt, owing to defective tax policy framework and administrative mechanisms. Tax administration process and the institutions saddled with the responsibility of tax collection often suffer from limitations in skilled manpower and financial resources; and appropriate tools and technology required to meet the ever-increasing challenges and difficulties associated with tax administration. Over the years, Nigeria has relied heavily on crude oil exports as a major source of government revenue, and consequently, neglecting other critical sectors of the economy that would have broadened the country’s tax base. However, the high volatility associated with crude oil prices has made it imperative for the country to explore other sources of revenue to help fund public expenditure.
In this chapter, we examine the relationship between the availability of higher resource revenue—oil revenue in this case, and lower taxation effort of other (non-oil) revenue categories and the effects of these on growth. Specifically, we seek to examine the role of Petroleum Profit Tax in stimulating economic growth in Nigeria; determine the contribution of Companies’ Income Tax to economic growth in Nigeria; ascertain the impact of Customs and Excise Duties on economic growth in Nigeria; determine factors responsible persistent low tax efforts in Nigeria; and recommend plausible policy proposals for enhancing optimal and effective tax administration in Nigeria. Whereas previous studies (See for instance [1, 18, 19]) have aggregated the various components of taxation and analysed their impact on economic growth, we disaggregate the various components of taxation in Nigeria with a view to ascertaining their respective influences on economic growth in Nigeria. We also expand the scope of the study to capture the effects of the most recent reforms and policy instruments relating to taxation in the Nigerian economy such as the Company’s Income Tax (Amendment) Act. 2007; the Federal Inland Revenue Services (Establishment) Act, 2007 and the Personal Income Tax (Amendment) Act, 2011. More broadly, we examine taxation as an instrument for stimulating economic growth in Nigeria, by tracing trends and performance of various categories of taxes. We also present a cross-country analysis of tax effort in Nigeria and a select group of African countries.
Policy, legislative and administrative reforms of the Nigeria tax system predate independence and can be traced back to early twentieth century when the then High Commissioner of the [then] Northern Protectorate issued the Stamp Duties Proclamation in 1903, followed immediately thereafter in 1906 by the Native Revenue Proclamation. This latter Proclamation systematised all the pre-colonial taxes by defining taxable rates; and procedures for assessment and collection, as well as penalties for default thus eliminating arbitrariness that had hitherto characterised the Nigerian tax system. It introduced the four certainties essential in tax practice: what to pay, when to pay, where to pay and who to pay to. The same Proclamation was re-issued as the Native Revenue Ordinance in 1917 to cover the Southern territories and by 1927, was applicable in the whole country. The year 1943 was a watershed period in the history of the Nigerian tax system as it witnessed the creation of the Inland Revenue Department (renamed the Federal Board of Inland Revenue in 1958), the precursor to the present day Federal Inland Revenue Service (FIRS). Following independence in 1960, other legal and institutional reforms were effected in 1961 through the establishment of the Federal Board of Inland Revenue (FBIR) and the Body of Appeal Commissioners as the first point of call for tax dispute resolution. In the same year, the Joint Tax Board (JTB) was created with the primary responsibility of ensuring uniformity of standards and application of Personal Income Tax.
Other major reforms to the tax system were effected in 1982 with the establishment of the Chartered Institute of Taxation of Nigeria [24] and 1993 with a review of the composition of the FBIR and establishment of the present day Federal Inland Revenue Service (FIRS) as the operational arm of the FBIR; as well as a review of the functions of the JTB. Further changes were effected in 2007 with the granting of financial and administrative autonomy to the FIRS following the recommendations of the ‘Study and Working Group on Nigerian Tax System’ which had been set up in half a decade earlier. These, and other reforms7 represented the first major attempt at shifting focus away from oil to a more sustainable source of revenue, that is, the non-oil sector. Since then, a raft of changes that cut across organisational restructuring of the Federal and State authorities, the enactment of a National Tax Policy, funding, legislation, taxpayer education, dispute resolution mechanism, taxpayer registration, human capacity building, automation of key processes, refund mechanism and several other areas have been effected.
The foregoing would lead to one logical question: why so many reforms? Given the low tax to GDP ratio, it is plausible to assume that the need to address the problem of low tax returns motivated the Nigerian Government to embark on these reforms. The scope of, and frequency with which tax reforms have been implemented should however, be viewed within the broader context of the structure of Nigeria’s economy and the centrality of taxes to the attainment of national development objectives. In specific terms, four main considerations seem to have informed these frequent tax reforms: the need to diversify the revenue portfolio to safeguard against the oil price volatility in the global market; the need for an accurate and reliable determination of the optimal tax rate, since Nigeria operates on a cash budget system, where expenditure proposals and overall fiscal management are anchored on revenue projections; historical overreliance on petroleum and trade taxes while overlooking direct and broad-based indirect taxes such as value added tax (VAT); and the ever-widening fiscal deficit, an ever-present threat to macroeconomic stability. According to [20], the objectives of tax reforms in Nigeria include the need to bridge the gap between the national development needs and the funding of the needs; achieve improved service delivery to the public; improve on the level of tax derivable from non-oil activities, vis-à-vis revenue from oil activities; constantly review the tax laws to reduce/manage tax evasion and avoidance; and improve the tax administration to make it more responsive, reliable, skilful and taxpayers friendly, as well as achieve other fiscal objectives such as managing inflation and improving balance-of-payment conditions. But the fiscal objectives were only a means to an end. The end objectives of the tax policy reforms were to generate revenue; promote growth and development; ensure effective protection for local industries and encourage greater use of local raw materials; promote value addition and greater geographical dispersion of domestic manufacturing capacities; and create jobs. And although specific policy, legal and institutional measures have varied over time, these objectives have remained relatively unchanged.
Tax regulations and laws refer to the embodiment of rules and regulations relating to tax revenue and the various kinds of taxes. A tax administration that encourages voluntary compliance, resolutely and legally enforces compliance, treats the tax payer as partner, rewards pro-tax behaviour and operates in an environment of accountability is a preferred tax system [21].
The federal system of government in Nigeria implies that fiscal power is based on a three-tiered tax structure: Federal, State and Local Governments, each of which has, in principle, different and distinct tax jurisdictions. Specifically, the Federal government taxes corporate bodies while State and Local Governments tax individuals. The Taxes and Levies (approved list for Collection) (Decree, 1998) gives the Federal, State and Local Governments the responsibilities for collecting the taxes and levies listed in, respectively, Parts I, II and III of the schedule to the Decree.
Part 1 of the schedule contains taxes to be collected by the Federal Government. These include: Companies Income Taxes; Withholding tax on companies, residents of the Federal Capital Territory, Abuja and non-resident individuals; Petroleum profits tax; Value added tax; Education tax; Capital gains tax on residents of the Federal Capital Territory, Abuja, bodies corporate and non-resident individuals; Stamp duties on bodies corporate and residents of the Federal Capital Territory, Abuja; and personal income tax of members of the Armed Forces of the Federation, members of the Nigeria Police Force, residents of the Federal Capital Territory, and staff of the Ministry of Foreign Affairs and non- resident individuals.
Similarly, Part II of the Schedule presents taxes and levies to be collected by the State Governments and they include: Personal Income Tax in respect of –Pay-As-You-Earn (PAYE) and direct taxation (Self-Assessment); Withholding tax (individuals only); Capital gains tax (individuals only); Stamp duties on instruments executed by individuals; Pools betting and lotteries, Gaming and casino taxes; Road taxes; Business premises registration fee; Development levy (individuals only); Right of Occupancy fees on lands owned by the State Government in urban areas of the State; and Market taxes and levies where State finance is involved.
Part III of the Schedule contains taxes and levies to be collected by the Local Governments and these include: Shops and kiosks rates; Tenement rates; On and Off Liquor Licence fees; Slaughter slab fees; Marriage, birth and death registration fees; Naming of street registration fee, excluding any street in the State Capital; Right of Occupancy fees on lands in rural areas, excluding those collectable by the Federal and State Governments; Market taxes and levies excluding any market where State finance is involved; Motor park levies; Domestic animal licence fees; Bicycle, truck. Canoe, wheelbarrow and cart fees, other than a mechanically propelled truck; Cattle tax payable by cattle farmers only; Merriment and road closure levy; Radio and television licence fees (other than radio and television transmitter); Vehicle radio licence fees (to be imposed by the Local Government of the State in which the car is registered); Wrong parking charges; Public convenience, sewage and refuse disposal fees; Customary burial ground permit fees; Religious places establishment permit fees; and Signboard and Advertisement permit fees.
And to address the hitherto inherent conflict of fiscal responsibilities and powers among the three tiers of government, the 1999 Constitution classifies governmental taxation responsibilities and powers into exclusive, concurrent and residual lists. The National Assembly, is empowered to issue legislation on the taxation of incomes, profits and capital gains, and on matters classified in the concurrent list—particularly those related to the division of public revenue. The State Houses of Assembly may prescribe the collection of any tax, fee or rate, or the administration of a law to provide for such collection by a local government council or any tax, fee or rate not expressly stipulated as being within the authority of the Federal government. The State government is empowered to impose tax on all items in the concurrent list as well as residual matters but to the extent that such laws are consistent with those of the National Assembly.
In sum, the Federal Government is limited to eight specific taxes while the State and Local Governments were restricted to 11 and 20, respectively. However, the Federal government controls most of the buoyant tax handles, accounting for 99% of the tax revenue. The most important tax laws in Nigeria include Company Income Tax Act (CITA), Capital Gains Tax Act and Stamp Duties Act, all enacted in 1990; value added tax (VAT) Act and Education Ac, both enacted in 1993; Personal Income Tax Act (PITA) of 2004; and the Petroleum Profit Tax Act and Information Technology Development Act, both enacted in 2007. In reality however, Nigeria’s tax administration environment is fraught with the problem of multiple taxation, which in the extreme compels companies to pay income tax to Federal Government, and other wide ranging taxes, levies and rates, to State and Local governments. This may be due, in part, to declining and fluctuating earnings from oil and the need by various tiers of Government to raise own revenue.
Tax policy provides a set of rules, modus operandi and guidance for all stakeholders in the tax system. Tax policy formulation in Nigeria is the responsibility of the FIRS, Customs Services, Nigerian National Petroleum Corporation (NNPC), and other agencies of government but under the guidance of the National Assembly. A good tax policy needs to satisfy both efficiency and equity criteria. Any tax policy is, however, continually subjected to pressure and changes. According to [22], the best approach to reforming taxes is one that considers taxation theory, empirical evidence and political and administrative realities and blending these with a good dose of local knowledge and sound appraisal of the prevailing macroeconomic and international situation to produce a feasible set of proposals sufficiently attractive to be implemented and robust enough to withstand changing times.
Whereas during the pre- Structural Adjustment Programmes (SAP) era tax policies were aimed at boosting government revenue; ensuring effective protection for local industries and equity in the geographic dispersion of manufacturing activities, the introduction of the SAPs in 1986 witnessed a shift in policy focus to using taxes to boost productivity and competitiveness of business enterprises; promoting exports of manufactures; and reducing the tax burden of individuals and companies. The specific measures introduced included a review of custom and excise duties; reduction of company and income taxes; granting of a wide array of tax exemptions and rebates; introduction of capital allowance; expansion of duty drawback and manufacturing-in-bond schemes; elimination of excise duty; introduction of VAT; and monetizing of fringe benefits and increase in tax relief to low-income earners [23].
More recently, a National Tax Policy (NTP) adopted in 2010 sought to provide a set of guidelines, rules and modus operandi that would regulate Nigeria’s tax system and provide a basis for tax legislation and tax administration. The 2010 NTP seeks to resolve some inherent problems of the existing tax system such as multiple taxation; uncertainty and leakages in the tax system; lack of accountability of tax revenue and expenditure; inadequate clarity on taxation powers of each level of government and encroachment on the powers of one level or state by another; uncertainty in the tax system and increasing cost of tax compliance due to lack of skilled manpower, inadequate funding, improper delegation of tax powers to third parties; the non-refund of excess taxes to taxpayers, due to the lack of an efficient system and funds; obsolete laws which do not reflect Nigeria’s current realities; and the lack of a specific policy direction for tax matters in Nigeria, as well the absence of laid down procedures for the operation of the various tax authorities. The 2010 policy in effect has shifted focus from direct taxation to indirect taxation. Its strategy is to reduce companies’ income tax rate from 30 to 20%, top rate personal income tax rate from 25 to 17.5% and a gradual increase in the rate of VAT from the current level of 5%. These strategies are aimed at encouraging investments, creating employment, increasing tax compliance and limiting opportunities for tax avoidance.
The relationship between taxation and economic growth has been widely studied. Some of these studies suggest that tax policies have positive and significant impact on the rate of growth of output, while others have observed that there is an inverse relationship between the two variables, that is, tax policies have a negative and significant impact on growth. Haq-Padda and Akram [25] examined the impact of tax policies on economic growth using data from Asian economies. They established that there is no empirical evidence that tax policies adopted by developing countries in Asia have a permanent effect on the rate of economic growth, a finding that is inconsistent with the endogenous class of growth models. The results of their study suggest that the relationship between aggregate output and the tax rate is best described by the neo-classical growth models because a higher tax rate permanently reduces the level of output but has no permanent effect on the output growth rate. Consequently, they recommended an optimal tax rate to finance the budgets, with debt instrument used in financing transitory expenditure while permanent expenditures are to be financed through taxes.
In a cross-country analysis, Ramot and Ichihashi [26] used panel data from 65 countries covering the period 1970–2006 to examine the effects of tax structure on economic growth and income inequality and established that company income tax (CIT) rates have a negative impact both on economic growth and income inequality. They also established that personal income tax rate does not significantly affect economic growth and income inequality. The authors therefore, recommended that there is a need to develop a modest design into the tax system since countries which are able to mobilise tax resources through broad-based tax structures, coupled with efficient administration and enforcement of the tax system’ are likely to enjoy faster growth rates than countries with narrow tax base and lower efficiency in tax administration. Also, governments should reduce tax evasion, which, they averred, occurs among the highest income group and has potential to distort horizontal and vertical equity in income redistribution. Finally, they recommended that very high earners or the highest income group should be subjected to high and rising marginal tax rates.
Ariyo [14] evaluated the productivity of the Nigerian tax system given the negative impact of persistent unsustainable fiscal deficits on the Nigerian economy for the period 1970–1990 to devise a reasonably accurate estimation of Nigeria’s sustainable revenue profile. The results of the study showed a satisfactory level of productivity of the Nigerian tax system. The author therefore, recommended for an improvement of the tax information system to enhance the evaluation of the performance of the Nigerian tax system and facilitate adequate macroeconomic planning and implementation. Kneller et al. [27], taking account of the financing assumption associated with government budget constraints, studied the effect of the structure of taxation and public expenditure to the steady-state growth and established that non-distortionary taxation and productive expenditure enhance economic growth, a finding consistent with the Barro model [28].
Widmalm [29] in a study established that there exists a negative relationship between personal income tax, measured by average income tax, and economic growth, while corporate income tax does not correlate with growth at all. In their estimation, Lee and Gordon [30] found out that the concrete tax rates that greatly affect economic growth are the top statutory company income tax (CIT) rates. From their estimation, they established that only the CIT rate had a significant negative impact on economic growth in all their regressions by controlling the endogeneity of tax measures while the personal income tax (PIT) rate and its progressivity did not significantly affect economic growth. The results of Lee and Gordon [30] are supported by the findings of Arnold [31] who established that the CIT and PIT rates reduce the economic performance of a country. Analogously, Padovano and Galli [32] argued that average tax rates lead to several biases and concluded that taxation has no impact on growth because of the possibility of high correlation with average fiscal spending.
Poulson and Kaplan [33] explored the impact of tax policy on economic growth within the framework of an endogenous growth model using data from 1964 to 2004. In this model, differences in tax policy can lead to different paths of long-run equilibrium growth. They used regression analysis to estimate the impact of taxes on economic growth. Their analysis revealed that higher marginal tax rates had a negative impact on economic growth. Jibrin et al. [34] used ordinary least squares (OLS) method to examine the impact of Petroleum Profit Tax on Economic Development in Nigeria for the period 2000–2010. Their findings revealed that Petroleum Profit Tax has a positive and significant impact on Gross Domestic Product. The authors therefore, recommended that government should improve on the effectiveness and efficiency of the administration and collection of taxes with a view to increasing government revenue.
Enokela [35] explored the relationship between VAT and economic growth of Nigeria using secondary data and multiple regressions. The results revealed that gross domestic product (GDP) is positive and statistically significant to value added tax; Government capital expenditure (GCE) is positive but insignificant to value added tax; and gross domestic product per capita (GDPPC) is negative and statistically significant to value added tax. The researcher recommended a zero tolerance for corruption to enable the revenue generated from VAT to be channelled to appropriate developmental projects. In a related strand of literature, Emmanuel [36] examined the effects of VAT on economic growth and total tax revenue in Nigeria using data covering the period 1994–2010. He formulated two hypotheses: that VAT does not have significant effects on GDP; and VAT does not have significant effects on total tax revenue. The results of the regression analysis show that VAT has significant effect on GDP; and also on total tax revenue. He therefore, encouraged government to sensitise the people to enable it increase the tax rate in order to increase its annual revenue for economic development. Relatedly, in a study by Wambai and Hanga, [37] titled ‘Taxation and Social Development in Nigeria: Tackling Kano’s Hidden Economy’, they found that the attitude of the government towards taxation need to change and recommended a tax system that concentrates on establishing simplicity, predictability and neutrality while Olusanya et al. [38] in investigating taxation as a fiscal policy instrument for income redistribution among Lagos state civil servants using Spearman’s Rank Correlation coefficient found a positive relationship between tax as a fiscal policy instrument and income redistribution.
Tosin and Abizadeh [39] studied economic growth and tax charges in OECD countries from 1980 to 1999; their study reveals that economic growth measured by GDP per capita has significant effect on tax mix of GDP per capita. The study recorded a decline in shares of payroll, goods and services and positive growth from personal and property taxes. At the regional level, Chiumia and Simwaka, [40] analysed the effects of taxation in sub-Saharan Africa. They found that taxes levied on personal and corporate income reduces economic growth. From their study, one could be tempted to conclude that the tax structure is largely irrelevant in less developed economies, although we know from theory that embedded in an effective tax system are benefits for both the taxpayers and the government.
The model specified for this study is adopted from Appah [41], Okafor, [42], Ogbonna and Ebimobowei [43] and Nwakanma and Nnamdi, [19]. We used a multiple linear regression model to capture the relationship between taxation and economic growth in Nigeria for the period 1986–2015. Included in the model are; real gross domestic product growth rate (RGDPgr), as the dependent variable; and companies income tax (CIT) revenue, petroleum profit tax (PPT) revenue, as well as customs and excise duties (CED) revenue as the explanatory variables.8
Petroleum profit tax (PPT) is the tax imposed on companies which are engaged in the extraction and transportation of petroleum products. It is related to rents, royalties, margins and profit-sharing elements associated with oil mining, prospecting and exploration leases [44]. Apart from providing revenue for the government, PPT also serves as an instrument through which the government regulates the number of participants in the petroleum industry and gain control over public assets [45]. In the context of Nigeria, like in other developing countries, the PPT is, in a sense, an instrument for wealth re-distribution between the wealthy and industrialised economies who own the technology; and expertise and technical know-how, as well as the capital needed to develop the oil and gas sector [34].
Companies income tax (CIT) is charged on the profit or gain of any company accruing in, derived from, brought into, earned in or received in Nigeria. The tax rate has been 30% and it is applied on the total profit or chargeable profit of the company but was reduced to 20% under the new (2010) tax policy. It should be noted that oil marketing companies, oil services companies are liable to tax under CITA at the rate 20% and Education Tax at the rate of 2% on the assessable profit.
Custom Duties constitute one of the oldest kinds of modern taxation in Nigeria having been introduced in 1860 as import duties. Excise duties are ad-valorem taxes on the output of manufactured goods and are administered by the country’s Custom Service. They are taxes on the country’s imports charged either as a percentage of the value of the imports or as a fixed amount contingent on quality.
The model was thus explicitly specified as:
where: RGDPgr = Real Gross Domestic Product growth rate; CIT = Companies Income Tax; PPT = Petroleum Profit Tax; CED = Customs and Excise Duties; and U = Stochastic error term while a0− a3, are parameters of the model.
The coefficients of all the explanatory variables are expected to be either positive or negative, depending on the peculiarity of the country’s tax structures. The intercept term is expected, a priori, to be positive as tax variables are not the only contributors to the country’s economic growth rates.
We employed the ordinary least square (OLS) method of estimation based on the desirable properties it possesses and the relative simplicity of its application. We carried out unit root test at 5% level of significance to assess the stationarity of the time series data. Descriptive analysis was also carried out regarding tax trends and tax efforts in Nigeria, to determine the effectiveness of existing tax structures towards enhancing optimal and effective tax administration. Finally, we used descriptive analysis to evaluate relevant national and cross-country tax data, with a view to evaluating their inherent patterns and trends, and determining the implications of these patterns and trends for tax policies and administration in Nigeria.
The results were evaluated based on the following criteria: economic a-priori criterion, statistical criterion and econometric criterion. We carried out tests to check if the signs and magnitudes of the estimated parameters conform to what economic theory postulates. The coefficient of determination (R2), was estimated to capture the proportion of the total variation in the dependent variable, Real GDP growth rate, that can be explained by the explanatory variables explicitly captured in the model. We also used the F-test to test whether the explanatory variables included in the model are, jointly, significant or not in determining the level of economic growth while the T-Test was used to test the statistical significance of individual parameters of the regression model. To test autocorrelation, we adopted the Durbin Watson (D-W) statistic because of the absence of lagged dependent variables in the specified regression model while for Heteroscedasticity, we adopted the White’s General Heteroscedasticity Test to ensure that the variance of the stochastic error term is constant. Our regression analysis relied heavily on secondary data published by the Central Bank of Nigeria (CBN), the National Bureau of Statistics (NBS), and Federal Inland Revenue Service (FIRS) covering the fiscal period 1986–2015 while data for descriptive analysis of tax trends in Nigeria, as well as cross country tax trends and performance among selected African countries, were sourced from FIRS and the International Monetary Fund (IMF).
To address the phenomenon of spurious regression usually associated with nonstationary time series data, we carried out the Augmented Dickey Fuller (ADF) unit root test at 5% level to ascertain the stationarity status of each individual time series data; the results of which are shown in Table 1 below.
Variables | ADF statistic | Order of integration |
---|---|---|
RGDPgr | −4.103592 | I(0) |
CIT | −3.262681 | I(1) |
CED | −4.473805 | I(1) |
PPT | −3.102251 | I(1) |
ADF unit root test results.
Source: Authors’ computation.
From Table 1 below, the time series data for RGDPgr is stationary at level, implying that the time series data on Real Gross Domestic Product growth rate is integrated of order zero (0) while the annual time series data on CIT, CED and PPT are all stationary at first difference, implying that they are integrated of order one (1). The finding with respect to Companies Income Tax, Customs and Excise Duties and Petroleum Profit Tax substantiates the theoretical assertion that most economic time series are usually not stationary at level, but they attain stationarity after first differencing.
Based on the results shown in Table 2 below, the estimated regression equation (Eq. (1)) becomes:
Variable | Coefficient | Standard error | T-statistic | P-values |
---|---|---|---|---|
C | 2.771101 | 0.888043 | 3.120460 | 0.0044 |
CED | 3.26E-05 | 1.08E-05 | 3.013292 | 0.0057 |
CIT | −9.26E-06 | 7.45E-06 | −1.242312 | 0.2252 |
PPT | −0.000850 | 0.001434 | −0.592753 | 0.5585 |
Adjusted R2 | 0.195645 | |||
D.W statistic | 1.707596 | |||
F-statistic | 3.351249 | 0.034229 |
Summary of regression results.
Source: Authors’ computation.
From the estimated regression results, the intercept term is positive (2.771101), implying that the growth rate of the Nigerian economy retains a positive value when all the explanatory variables explicitly captured in the regression model are held constant; that is, economic growth rate is dependent on other variables other the explanatory variables captured in the model. The signs of the coefficients of explanatory variables explicitly captured in the regression model conform to the a-priori expectations as the impact of tax variables on growth can either be positive or negative, depending on the internal dynamics of the economy as well as the incidence of the various categories of taxes. The coefficient of customs and excise duties is positive while the coefficients of Companies Income Tax (CIT) and Petroleum Profit Tax (PPT) are negative. The estimated regression results show that, a unit change in Customs and Excise Duties will result in an average change in Real Gross Domestic Product growth rate of 0.0000326 units, holding all other explanatory variables in the regression model constant while the coefficient of Companies Income Tax implies that a unit change in Companies Income Tax will result in an average change in Real Gross Domestic Product growth rate of −0.00000926 units, holding all other explanatory variables in the regression model constant. Similarly, the coefficient of Petroleum Profit Tax implies that a unit change in Petroleum Profit Tax will result in an average change in Real Gross Domestic Product growth rate of −0.000850 units, holding all other explanatory variables in the regression model constant.
The Adjusted R2 from the estimated regression model shows that only about 20% (0.195645) of the changes in Real Gross Domestic Product growth rate (RGDPgr) can be explained by the explanatory variables explicitly captured in the regression model, implying that the regression model has a poor fit. The low R2 is an indication that the tax variables explicitly captured in the regression model have not significantly influenced the total change in Real GDP growth rate in Nigeria. This poor tax performance as a driver of economic growth can be attributed to the economy’s heavy reliance on commodity export (crude oil) as a major driver of economic growth and the perpetually low tax to GDP ratio as a result of the plethora of challenges facing the Nigerian tax administration system discussed Section 2.
Based on the students’ T-test for each of the parameters in the model, the coefficient Customs and Excise Duties is statistically significant at 5% level of significance, while the coefficients of Companies Income Tax and Petroleum Profit Tax are not statistically significant at 5% level of significance. This implies that Customs and Excise Duties do have significant impact on the growth rate of Real Gross Domestic Product (RGDPgr), while Companies Income Tax (CIT) and Petroleum Profit Tax (PPT) have not contributed significantly towards stimulating economic growth in Nigeria during the period under review.
We also employed the F-Statistic (ANOVA) to establish the overall significance of the regression at the 5% significance level. The results show that the equation or model employed is statistically significant with P- value of 0.034229 and F = 3.351249, implying that the relationship between the growth rate of Real Gross Domestic Product and all the explanatory variables explicitly captured in the regression model is statistically significant at 5% level of significance. Thus, even though some of the individual coefficients of some of explanatory variables are not statistically significant, they are, jointly, statistically significant. That is, during the period under review, all the tax variables explicitly captured in the regression equation jointly exerted significant effect on economic growth in Nigeria.
Lastly, we evaluated the results based on econometric criteria. The estimated Durbin Watson statistic (D-W = 1.707596) shows that the regression model is devoid of first order serial correlation. Also, the White’s test of heteroscedasticity was carried out to ensure that the variance of the error term is constant. Since the calculated value of the test statistic is 5.147783, which is lower than the 5% critical value of 7.81 (P-value = 0.525004), the null hypothesis that the model is devoid of first order serial correlation is accepted; the disturbances of the regression model are homoscedastic.
The dynamics of taxation and economic growth in Nigeria should be understood not just from the perspective of the tax revenues discussed in the preceding section, but also from an analysis and discussion of other aspects of Nigeria’s tax revenue and the broader tax system, some of which may not easily lend themselves to econometric analysis.
Figures 3 and 4 below present recent trends in oil and non-oil tax revenues, as well as the share of oil and non-oil tax revenue as a percentage of total government revenues.
Oil and non-oil revenue—recent trends. Authors’ computation from Federal Inland Revenue Service (FIRS) figures.
As shown in the Figure 3, there has been a steady decline in oil tax revenue in Nigeria from 2011 to 2016. It is noteworthy to mention that oil tax revenue remained higher than the non-oil tax revenue from 2011 to 2014 which marked the beginning of the huge slump in oil prices in the global market. From 2014 however, non-oil tax revenues, though generally declining, albeit at a slower pace, began to outperform oil revenues. It follows therefore, that oil revenue as a percentage of total revenues has been on the decline in the recent past. The converse holds true for non-oil revenues as shown in Figure 4 below.
Oil and non-oil revenue as percentage of Total revenue (2011–2016).
From Figures 3 and 4, it is apparent that there is a need to pay more attention to other critical sectors of the economy, beyond oil, from which revenue can be generated in order attain fiscal stability and engender macroeconomic stability. An important question thus arises: since taxation is an important fiscal policy instrument for domestic resource mobilisation and economic growth, is Nigeria’ tax effort optimal for the desired impact on economic growth? In an attempt to address this policy question, we reviewed comparative tax efforts in Nigeria and selected African countries, focussing on the tax to GDP ratios, over the period 2003–2011.
From Figure 5 above, it is apparent that, historically, Nigeria lags other African countries in terms of the tax to GDP ratio, that is, tax effort. Over the 2003–2011 period, the average tax revenue as a percentage of GDP for Nigeria was 2.93%, with the corresponding figures for Egypt, Ghana, Kenya, South Africa and Algeria being 14.62, 15.89, 16.10, 25.48 and 35.04%, respectively. Algeria’s tax effort, that is, tax to GDP ratio, is 12 times Nigeria’s tax effort, while South Africa’s tax effort is approximately 10 times that of Nigeria. Nigeria tax efforts is less than one fifth that of neighbouring Ghana. The low tax to GDP ratio can be attributed to structural defects associated with overreliance on oil revenue as the main source of government revenue and the consequent neglect of other critical sectors of the economy. This low performance of the non-oil tax revenue has great potential of creating substantial macroeconomic instability and consequently, negatively impacting growth and development owing to the volatility associated with oil prices and the critical role of public expenditures in stimulating economic activities. Nigeria’s low performance in terms of tax revenue as a percentage of GDP also points to the existence of unexploited ‘fiscal space’ or untapped potential for tax revenue mobilisation.
Tax revenue (% of GDP) for selected African countries (2003–2011). Source: IMF.
In this Chapter we have examined the relationship between taxation and economic growth in Nigeria over the 1986–2015 period, with special focus on Companies Income Tax, Customs and Excise Duties, and Petroleum Profit Tax. Empirical results reveal that taxation had a significant impact on Real GDP growth rates in Nigeria during the period under review. However, the proportion of tax contribution to the growth rate of the Nigerian economy falls short of the optimal level in terms of the volume of economic activities and total value of output, as well as the country’s potential for revenue generation. This finding is instructive for both policy and decision making as far as the enhancement of Nigeria’s taxation structures and domestic resource mobilisation are concerned. Also, cross-country comparisons of Nigeria’s tax performance with the tax performance of selected African countries reveals that the county lags other African countries with respect to tax effort, that is, tax revenue as a percentage of GDP. Hence, policy measures that improve tax revenues as well as taxation capacity should be put in place to generate more revenues to positively stimulate economic growth. It hoped that ongoing tax policy and institutional reforms, as well as strategies aimed at diversifying and shifting the economy from over-reliance on the oil and gas sector, will not only elevate the relative position of non-oil tax revenues, but also improve the overall tax effort so that taxation can become an important instrument of fiscal policy, thereby ensuring macroeconomic stability and steady economic growth.
In more specific terms, the Government of Nigeria should institute an appropriate tax system which emphasises the broadening of the tax base and in some cases, reviewing upwards the tax rates to enhance the contribution of taxation towards economic growth and development. In this respect, the tax administrative system in Nigeria should be strengthened to address some of the challenges presently clogging the wheel of progress as far tax administration is concerned. Furthermore, voluntary compliance should be encouraged through continuous taxpayers’ education and the institutionalisation of a functional tax administrative system. It is also recommended that the tax execution agencies should forge good relationship with the professional associations involved in tax matters to elicit their support in reducing tax malpractices and other forms of fiscal corruption. In addition, regulatory authorities charged with the responsibility of collecting tax should further be strengthened to enforce compliance by taxpayers. There should be enhanced accountability and transparency from government regarding the management of revenue derived from taxation in terms of provision of public goods and services as this will enhance tax compliance among the tax payers. Lastly, as part of the broader economic diversification programme, tax revenue mobilisation should be used as a policy instrument to shift from the historical overreliance on oil revenues to non-oil revenues which are less volatile and are thus critical for the country’s macroeconomic stability.
Occupational medicine emerged in England in the first half of the nineteenth century during the Industrial Revolution. With the frequent number of illnesses and deaths in the workplace, occupational medicine emerges as a form of intervention and minimizing the damage caused by occupational diseases. A classic case is that of Robert Dernham, owner of a textile industry, who sought out Doctor Robert Baker to find out how he could minimize cases of illness and death in the workplace. Baker told Dernham to invite a doctor to periodically visit the workplace to find out what could be done preventively to reduce cases of illness and death [1].
\nIt did not take long for occupational medical services to emerge in various industries. The expansion of medical services in industrial rather than solve or minimize the problems of disease and death in the workplace, enabled a level of dependency of workers and their families of medical services. With the inefficiency of public health services, especially in peripheral countries, medical services in industrial companies have become an important factor for the dependence of the worker in relation to the industry [2].
\nThe concern to provide medical services to workers also becomes a concern of the International Labor Organization (ILO). In 1953, the ILO creates a document that generates guidelines on the “protection of workers’ health.” In 1954, the ILO convened a group of experts to create general guidelines on “Occupational Medical Services,” which in 1958 was replaced by “Occupational Health Services”. In the ILO document, the Occupational Health Services must: (a) ensure the protection of workers against all risks that harm their health and that may result from their work and the conditions in which it is carried out; (b) to contribute to the physical and mental adaptation of the worker, in particular by the suitability of the work and its placement in workplaces corresponding to their skills; and (c) contribute to the establishment and maintenance of the highest possible level of physical and mental well-being of workers [3].
\nDuring and after the Second World War, many industries suffered from cases of illness, but mainly from deaths in the workplace. The tension produced by the war significantly increased the number of deaths in industries, where the actions of doctors alone limited the containment of deaths and illnesses. It is in this context that occupational health appears, mainly in large industries, through a multidisciplinary team that comprised doctors, nurses, psychologists, sociologists, engineers and nutritionists. With this, the emphasis on occupational health becomes hygiene and the work environment [4].
\nIt did not take long for the occupational health movement to undergo a series of changes and influences. Despite the multidisciplinary perspective, the participation of workers in the occupational health movement was still peripheral. As a result, in the 1960s, a series of demonstrations took place, mainly in developed countries, for greater participation by workers in actions on health and safety at work [5]. From that time on, legislation on health and safety at work began to emerge, as occurred with Italy in 1970 with the enactment of the Law known as the “Workers’ Statute.” This law required, among many other actions, the participation of workers in the surveillance of health and safety at work actions and also the independent inspection actions of the industry [6]. Many developed countries, such as England, Sweden, France and Norway, for example, had their Labor Laws enacted and in all of them there were rights and guarantees of health and safety at work.
\nOccupational health and safety appear as elements not only of occupational health, but as effective actions to control and maintain work processes. In addition to the legal aspects, health and safety at work become normative. Prescriptive work becomes central to industries, as they aim to reduce the indicators of accidents and diseases in the workplace. Prescriptive work integrates two fundamental components: working conditions (physical environment and socioeconomic conditions) and prescriptions (norms, procedures and rules). But prescriptive work is far from real work. What is prescribed is not what actually happens. For this reason, even with the spread of health and safety standards at work, accidents, illnesses and deaths caused by work are still occurring and increasing in recent years [7].
\nAccording to data from the International Labor Organization (ILO) more than 2.7 million people die from occupational accidents. There are over 370 million people who suffer non-fatal accidents and are on leave for 4 days or more from work. Accidents at work generate an economic cost of about 4% of the Global Gross Domestic Product per year. These data show that advances in health and safety at work policies and actions have not had a positive impact on the work environment [8]. At this point, it is necessary to discuss the political dimension of this process and make evident the inequalities in relation to health and safety at work. As the ILO report itself shows, the countries that suffer most from deaths, accidents and illnesses at work are the poor countries. And it is not only due to an unfavorable economic condition, as many of these countries have rapidly industrialized, receiving many international industries, which seek low social and environmental regulations [9]. But it is the question of the value of human life [10].
\nWho deserves to live and who can die. Where regulations must be met and where those regulations must not be met. In view of these inequalities in relation to actions on health and safety at work, subsequent theoretical discussions take place. And an important aspect in this path will be the discussions about biopolitics and biopower carried out by Michel Foucault and Giorgio Agamben, which show this political process and power over life, generating different values about human lives. Thus, the general objective of this chapter is to reflect on health and safety at work from biopolitics and biopower, showing that there is an evident contribution to the discussions on International Health Security. Therefore, initially it will be important to present some methodological explanations. Then, the theoretical discussions on health and safety at work. Soon after, to present the ideas of biopolitics and biopower in Michel Foucault and Giorgio Agamben, highlighting the central aspects of health and safety at work practices. Finally, some final considerations.
\nThis text is characterized by a bibliographic essay [11], written from a bibliographic survey on the topic of Health and Safety at Work. The focus of this text was to understand Health and Safety at Work as an important perspective for International Health Security. As a result, papers were selected that discussed, at the international level, health and safety at work, bringing a history of the development of health and safety within organizations. In this history, actions in health and safety at work were taken into account since the emergence of the industrial system, as well as the nomenclatures on health and safety at work and the linear periods of time in which actions were developed. Although only one paper was cited in each period, the bibliographic survey made it possible to validate the information among the papers cited in the text.
\nSubsequent to this linear path on the evolution of health and safety practices at work in organizations, the second part was developed through a reading of health and safety at work based on the concepts of biopolitics and biopower by Michel Foucault and Giorgio Agamben. In this part, a survey was made on the texts of Foucault and Agamben that deal with the concepts of biopolitics and biopower, relating them to the discussions on Health and Safety at Work. The intention was to show that the rapid development of Health and Safety at Work and that it made an important contribution to International Health Security were linked to changes in the policy of capitalist countries. Biopolitics and biopower are the basis of International Health Security and are reflected in actions on Health and Safety at Work.
\nIn this part, the various actions on health and safety at work, nor the various safety and ergonomic standards created for the work environment will not be explored. The intention will be to conduct a comprehensive discussion on the topic with a view to understanding the intricacies of health and safety at work actions. Thus, some actions on health and safety at work will be presented but with the intention only of understanding its intricacies. The focus will be the description and not the prescription that is established in health and safety at work.
\nOccupational health and safety are terms linked to occupational health and have expanded the way illnesses and accidents are understood in the work environment [12]. Work-related risks are no longer seen only from a physical and chemical perspective and have included biological, ergonomic and psychosocial perspectives [13]. In addition, illnesses are no longer seen only as occupational illnesses that were generated by the work environment and started to include work-related disease and illnesses aggravated by work [14]. These expansions in the way of understanding diseases and accidents accompanied changes in the forms of production and management of industries and organizations [15]. From the industry managed in the Taylorism-Fordist model to flexible production (Toyotas’ model), the risks related to work have changed [16].
\nIt was for this reason that the risks of accidents, deaths and illnesses in the work environment started to be quantified and qualified based on technical and management attributes. The strategies to contain risks involved diagnoses of work and organizational environments (risk assessment) that generated strategies to mitigate and contain these risks [17]. Quantitative methods are used, to a large extent, for hygiene actions at work. And qualitative methods for actions in safety at work. Despite the human benefits existing in the various actions in health and safety at work, the focus is still on technical attributes and not human attributes. This focus generates a gap between prescribed work and real work, precisely because human beings tend to adapt work to their conditions of execution [18].
\nThis gap between prescribed work and real work is also reflected in the technical attributes related to the management of health and safety at work. The containment of a risk can generate new risks, as there is a complexity in the working conditions and in the activities developed. For example, the use of personal protective equipment may generate some type of allergy in the worker, precisely because the technical attribute of mitigating a specific risk was thought of, but not in adapting the material to the human organism. In addition, what could be called the minimum acceptable level of risk at work may not trigger a problem in the short term, but be responsible for illnesses, accidents or deaths in the long term. For example, exposure to a certain chemical element may not be harmful in sporadic exposures, but it is a dangerous element precisely because it is accumulated in the human organism. Actions in health and safety at work invalidate the individual aspects of workers, always taking into account aspects related to the majority. The human being continues to be adapted to the work environment and not the other way around. For this reason, health and safety at work actions tend to focus on physical, chemical, biological and ergonomic risks and very little on psychosocial risks. This is because these psychosocial risks are linked to individual attributes, which do not concentrate most cases [19].
\nWith this, it is not only the gap between prescribed work and real work that highlights the problems generated in health and safety at work, but also the problems of unequal treatment of these actions. This does not minimize the importance and existence of actions in health and safety at work but leads to some reflections that are equally important. If accidents, deaths and work-related illnesses continue to happen, then there is something unsaid about the rules and practices aimed at health and safety at work. There is a level of non-compliance with these prescribed actions, which escapes reflections on the number of accidents, deaths and illnesses in the workplace. These inequalities and this level of non-compliance are linked to a broader factor, which is the life of individuals. One might think that the central concern is with life, but there are other factors linked to work in industries and organizations that better explain investments in health and safety at work, as well as inequalities in the actions carried out [20].
\nInvestments in health and safety at work aim to reduce or minimize the costs of accidents, deaths and illnesses generated in the work environment. For this reason, the focus has always been on those risks generated in the work environment, marginalizing work-related disease and illnesses aggravated by work. Like many actions in health and safety at work, they show a minimum level of tolerance to physical, chemical, biological, ergonomic and psychosocial risks, since the total elimination of risk is somewhat illusory [21]. But what is central to this discussion is the value on the lives of these individuals. What hierarchical level are they in the industry or organization, what kind of risks are they exposed to, whether the role in the industry or organization is essential or not, whether the costs generated by accidents, illnesses and deaths are high or not and if following the rules is more advantageous or if working illegally is more favorable (not for the individual but for the industry or organization) [22]. It is this analysis related to inequality in actions on health and safety at work that the next part of this chapter will address. Both Foucault and Agamben reflect on the political level of life, which is a central element in health and safety at work.
\nThe political conception of life is not something that arises in today’s society. At the time of the Principalities, this political conception of life was constituted from death. The sovereign had the right to dispose of the life of his subjects. Of course, it was not an unlimited right, since this right was constituted from the actions of subjects who transgressed the rules or generated dishonor to kings or princes [23]. In these circumstances, the sovereign’s right was to make people die and let them live. This right was derived from the ancient “pátria potesta,” where the Roman father of the family had the right to dispose of the lives of his wife, children and slaves, since he had given them. Despite the strength that the sovereign’s right had in relation to his subjects, the Reigns and Principalities were disappearing during the history of civilizations. This allowed for the emergence of another form of policy on life, much more linked to the promotion and care of life than to its finitude and ability to make people die [24].
\nIn the mid-seventeenth century, wide-ranging discussions on the role of the modern state began to emerge. The focus becomes the various investments that could be made to attract and retain individuals in their territories. The actions at the State level were to promote life, through extensive investments in public health, in improving the quality of life and in improving the economic and social condition. Concerns within the states were focused on basic sanitation, urban cleaning, urban infrastructure and health care. In the midst of the emergence of public health, the use of statistics was of central importance [25].
\nIt was possible to assess, based on statistical data, for example, the number of births, the number of deaths, the most common diseases and the migration of people in regions or states. Statistics were so important that even today they are used to generate a level of normalization on diseases, accidents and deaths, not only in society as a whole, but also in industries and organizations. Statistics made it possible to create strategies and actions to contain problems related to the health and safety of the population. The central role of the modern state will be to make people live and let them die, which is the reverse of the sovereign’s power [26].
\nPolitical actions on the life of the population can demonstrate a level of humanity and care toward individuals. But the exact opposite is starting to happen. Actions at the State level move quickly away from normalization processes on health conditions, birth and mortality rates, infection and contamination flows for body discipline. This discipline of the glass was important to generate the strength of the industrial system, since the entire production system depended on the labor of the workers [27]. The transformation of docile and useful bodies also involved caring for life. In its eagerness to care for, protect and manage the population’s living conditions, the State ends up intensifying the processes of violence. This is because the recognition of what could be called the good life is directly linked to the bad life. It is this inequality that projects the existence of the best living conditions, as the worst living conditions must also be recognized [28].
\nIt is this inequality, this social hierarchy, that will function in government over life. The basis for this inequality will be established, during the nineteenth century, on the theory of biology, particularly on Darwinism. It is from the hierarchy of species, from the struggle for life between species, from the selection that eliminates the least able that a hierarchy over the population is also constituted. That same base that, within the State, was able to institute racism and war [29].
\nHierarchical relations within the population and the justifications for genocide in war are at the basis of social Darwinism. It is this inequality that will produce the “making a living,” the one considered most apt and who are at the top of the social hierarchy, and the “letting die” for the least able and who are at the bottom of the social hierarchy [30]. The concern with those at the bottom of the social hierarchy occurs only when the costs of “letting it die” are higher and have a direct impact on the industrial system [31]. When the profit is diminished by accidents, deaths and illnesses generated in the work environment, then the actions of “letting live” and not “making it live” are exercised.
\nThat is why the normalization process is important in health and safety at work, because despite generating docile bodies and adapted to the production system, they still generate a way of “letting live.” For this reason, too, the prescribed work is distant from real work, as the central concern is not to “make life” for those at the bottom of the social hierarchy, but to establish guidelines that minimize the negative impacts on the industrial system. Accidents, deaths and diseases generate costs for the industrial system and also for the State [32]. Production interruptions, the departure of specialized individuals, sick leave and the hiring of other workers generate large expenses for the industrial system. As well as generating expenses for the State with public health, with disability pensions and with the expansion of hospital systems. All these expenses and costs that burden the capitalist system induce the condition of the prescribed work, in an attempt to establish the discipline of the body, but it remains averse to the human condition [31].
\nIn the midst of this discussion there are differences in life. The Greek term for life as a “naked life” is Zoé, which expresses the condition of being alive. The Greek term for “qualified life” is Bíos, which expresses the political condition of life. Modernity is based on “Zoé” life. It is this politically conceived life that populations are limited [33]. It is on this political conception that it is allowed to kill, maim and fall ill without being guilty of murder, crime or torture. It is this biopolitics that allows us to look at the number of accidents, mutilations or illnesses in the world without blaming the capitalist system or entrepreneurs for this daily genocide. The normalization and standardization processes except the responsibilities for those events considered to be exceptional or pathological [10]. The prescribed work generates a level of non-responsibility and an attempt to adapt human beings to work processes and not the other way around. In other words, work processes and work organization are not altered to better adapt to human factors [34].
\nThe intensification of the processes of biopolitics and biopower, which are exercised over the population, made Zoé and Bíos take a different form from that constituted by the Greeks. Biopolitics appropriated Zoé and introduced it to the political condition. This naked and vital life was consumed by political bodies, which started to manage, organize and normalize it. Modernly, Bíos was marginalized, preventing individuals from having dominion over their own living conditions. As a result, the derivations of Bíos were marginalized in today’s society: bíos theórétikos (contemplative life), bíos apolaustikós (life of pleasure) and bíos politikos (political life) [35].
\nZoé was just a manifestation of the lives of individuals and never entered the political realm. The Greeks had the ability to separate oikos (domestic sphere) and polis (political sphere). Zoé belonged to the domestic sphere and was never within the political condition. Bíos, on the other hand, belonged to the political sphere and led the Greek subject to an active life. Bíos allowed the Greek subject to participate in the actions and decisions of the polís. It made the Greek subject capable of political struggles, the pursuit of pleasures and the choice of a contemplative life. When modernity is understood, it is exactly that active life that has been lost [36].
\nThe modern subject has long lost the ability to control his life (Zoé). Now it is the capitalist system, norms of health and safety at work and management in organizations that determine how it should live and act, how it should be and how it must comply. It is this process of mortification of the human being that has been instituted in modern society [37].
\nBut the question that remains is: would an adaptation of work processes to human conditions not have a positive impact on the capitalist system, generating greater profits and lower social costs? Maybe the answer would be “yes,” but as the good living condition is only verified on the bad living condition, then the best strategy is to maintain this inequality, no longer as a “make you die” condition, as it generates costs to the system, but with conditions to “let live.”
\nIt is visible that the discussions on occupational health and also on health and safety at work have advanced a lot in recent years. Everything that has been done to minimize the negative impacts of the industrial system on society is commendable. Much remains to be done, as the rates of accidents, deaths and illnesses related to work remain high. Here, the contradiction between investments in occupational health and the number of accidents, deaths and illnesses at work is already evident, which makes it evident that something is not correct.
\nAgain, it is necessary to repeat that this chapter is not against actions of health and safety at work, but the reflections instituted here aim to shed light on the problem, with the hope that all human life is treated as Bíos (qualified life) and as Zoé (naked life), so that you have respect and responsibility for all lives. The reflections developed here aim to make it clear that in addition to being naked, it is hierarchical and generates uneven living conditions. Only by shedding light on these findings can we fight the processes that maintain these conditions of hierarchy and inequality.
\nLife starts to be managed, controlled, and normalized, but not for the sole and exclusive good of the subject, but for the good of the capitalist system. Perhaps if accidents, deaths, and illnesses at work did not generate costs for the capitalist system, the right to health and safety at work would follow social inequalities. As these accidents, deaths and illnesses cause costs for the capitalist system and for the States, then investment becomes necessary. Here the standardization processes come in to safeguard the lives of workers, but what results is the negligence of the system in cases of accident and death.
\nThere is a risk of killing and maiming, without legal and social penalties for these deaths and mutilations. The work environments also follow this logic, as the level of unhealthy and dangerous on the factory floor is much higher than in the office. Control over ergonomic, chemical, physical, and biological aspects is much greater in the office than on the factory floor. Although the actions in health and safety at work are, for the most part, focused on the factory floor, perhaps due to the greatest risks, they are still exercised from top to bottom, without the knowledge of the real work performed. This creates a gap between the norm and real work, which sets the precedent for accidents, deaths, and illnesses to continue happening and existing.
\nFor this reason, reflect on biopolitics or this qualified life or the processes of social inequality that one can have health and safety at work actions really concerned with human lives. This will generate more effective contributions to International Health Security. Life needs to stop being politically appropriate. Life needs to return to being just a condition of the subject’s existence. It is necessary to have respect and responsibility toward individuals in a society. Only in this way can one think about how to adapt work processes and work organization to the human conditions of the worker. As long as these inequalities and hierarchies are not recognized, the prescribed work will have a central role, since it excepts responsibilities, leaving real work at the mercy of its conditions of production and the fate of destiny.
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