Wednesday, August 11, 2021


In recent times, agitation for Restructuring to achieve  true Federalism have gained serious attention all over Nigeria.

The most notable one came from the Governors of Southern Nigeria.

Even the middle belt are also raising similar issues.

Injustice and inequality in the way resources of Nigeria is being collected from one region and yet another region is the one benefiting mostly has been a major factor for all agitations

The history of VAT in Nigeria is that VAT used to be Sales Tax collected by state governments.

VAT Decree of 1993 was aimed at ease of collection and then VAT became very robust Tax through the effort of Federal Inland Revenue Services.

The implication of Decree 102 of 1993 is that Federal Military Government (Predominantly dominated by leaders from the the North then) saw VAT as a way to redistribute income to states with low income earning capacity.

That is one of the aims of taxation though.

However, Lagos State, Rivers, Ogun, Oyo, Kano and some other states are not being fairly treated while  states like Zamfara, Jigawa, Bauchi and many others can be described as states fulfilling the principle of robbing Peter to pay Paul.

With the current Derivation element of VAT, only 20% has relevance to Derivation and it should have been 80% in my opinion.

Sharing 50% of VAT among all the states and 35% among 774 local governments while Federal takes 15% seems very UNFAIR.

The other implication is that it has made many docile states to remain lazy because what is attached to VAT derivation encourages laziness.

If 80% is attached to VAT derivation or states are allowed to collect and keep  80% of VAT collected in their  respective states, then many lazy states will wake up and ensure ease of doing business in their states and also review their religious stands on certain goods through which VAT is generated substantially. 

You cannot approbate and reprobate at the same time.

He who comes to equity must come with clean hands.He who wants equity must do equity.

The huddle for states that are happy with the FHC judgement in Rivers is waiting at the Court of Appeal and Supreme Court.Trust the FGN, they will resist  this verdict.

However, to what extent would FGN and FIRS respect this judgement lies with the sincerity of states and FGN.

9th August, 2021 is a day never  to be forgotten in Nigeria and a day to honour the Judiciary for becoming bold to speak the truth with their conscience. 

Appealing the ruling is not the way out.The way out is to sit down on a round table and implement this restructuring that has been neatly done by the third arm of government since the legislative arm has failed or selfishly refused to do restructuring.

Any attempt to upturn the ruling will not solve the problem of equity and fairness desired by all states.

In conclusion, Consumption Tax Law in all states should be abolished forthwith because that is a clear double Taxation.

Each state should contribute 20% of VAT to FGN and retain 80% .

If you ask states to vote now, those in favour will be Lagos, Rivers , Ogun, Kano, Oyo and may be Estern  states willing to think out of the box to increase IGR.

Those against will be more from the North but honestly, all states should be in favour.

 Even the North has a lot of resources yet to be explored.  Livestock, and other agricultural endowment can sustain the North.FGN should then bail out states with low earning capacity from the 20% that each states will send to Federal Government.

To pretend that the status quo is good or  should remain is hypocrisy and an attempt to postpone the evil days for lazy states.

All states should see this judgement as for all of them and not for Rivers.

Like I stated earlier, 9th August, 2021 is a day that Nigeria can be said to have been restructured by the Judiciary and anyone who resist this may attract the wrath of God and men.This is now resetting Nigeria  to be like the United State of America where true Federalism is glaring in their Presidential system. 

11th August,2021

Dr.Gbenga Adeoye.

The author, Dr.Gbenga Adeoye  holds a Bachelor's Degree in Law.( LLB)

He holds an MSc. in Banking & Finance.
He holds a PhD in Management Accounting.

He also holds a Diploma in Crominology and Security studies.

He is a Fellow of The Institute of Chartered Accountants of Nigeria ( FCA) , a Fellow of The Chartered Institute of Taxation of Nigeria ( FCTI) &  an Arbitrator of UK and Nigeria.

He is an advocate of Peaceful Co Existence,  Tax Justice, Good Governance and Socio Economic Development of Africa in general and Nigeria in particular.

He believes that without Peace, there will be no progress no matter how small the entity is.He is of the opinion that National, State, Community and Family Transformation and Development is hinged on the  Quality of people in charge of our  affairs.

No comments:

Post a Comment