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Tuesday, October 19, 2021

On VAT, Stamp Duty Stand off

POLITICS is about who gets what, when and how. While homogenous unitary States may have fewer issues to grapple with, heterogeneous societies like Nigeria have to contend with so many factors that threaten the peace of the nation. There have been accusations of marginalization, nepotism, and cheating especially concerning allocation of Federal revenues in the country.
THE clamour for Fiscal Federalism has also been in the front burner, and a huge deciding factor in the demand for secession by some geo-political zones in the country. Therefore, the quest for the recognition of the principles of derivation over other determinants of revenue allocation had been borne out of the perception and fact that the Geese that lay the golden eggs in Nigeria are often the least to enjoy the proceeds of their eggs.
STATISTICS show that 55 per cent of the VAT revenue generated by the Federal Government is from the Value Added Tax, VAT collected from Lagos State and the remaining 45 per cent is being generated from the remaining 35 states and the FCT. Lagos, however, collected only a paltry sum out of these, and had to rely on loans to give the people the dividends of democracy. It is therefore no wonder that States, (based on constitutional provisions that the tax being location specific and not listed in the exclusive list), seeks the enforcement of their powers to collect VAT and stamp Duties. Lagos and Rivers have given the force of legislation to their intent at collecting VAT while other States are also on the wings. The implication is that some states would no longer go cap in hand to Abuja to beg for funds.
WE commend Governor Nyesom Wike for belling the Cat and being bold enough to deal with the problem directly as expected in a democratic setting. We enjoin other Governors to follow suit, especially within the principles of derivation. Governors who may be negatively affected by the enforcement of this perceived constitutional provision on economic federalism should look inwards, make their States investment friendly, and enhance the purchasing powers of their citizens in order to boost the VAT sector of their internally generated revenues.
STATE Governors should also rally round their members in the National Assembly to support the restructuring move in order to ensure that VAT unworthily, is not entrenched in the exclusive list. In order for the force of law to be in favour of the States, they must ensure that proper legislation are put in place for the collection and distribution of the tax.
HOWEVER, we also observe that States are encumbered with the constitutional interpretation of who collects VAT and have assumed that that also covers the disbursement of the proceeds of VAT. It is our candid opinion that the latter issue must not be subsumed under the former. The agitations over who collects VAT have however been debated with the disbursement as the salient points to determine the collection, but this is not the reality. While the VAT remains a consumption tax, the benefits on which tax is imposed may not have accrued from such States alone. Therefore, THE HOPE enjoins that while States are empowered to collect VAT, a certain percentage of it should be remitted to the Federation account in such a manner as to promote national development, without snuffing life out of the Goose that lays the golden egg. Hence, the agitations of States, for fiscal federalism must be guaranteed.
FURTHERMORE, there is the need for States to establish a modern, digitalized, and transparent structure that guarantees fairness, and equity for the purpose of collections of the VAT and Stamp Duty. These structures should be manned by specialized and trained personnel who would ensure that taxation does not in any way make their States hostile to investors and entrepreneurs.
AGAIN, we are aware that the citizens of this country have always questioned the use of the various and multiple taxes hitherto collected by the States. The power to collect VAT does not in any way dictate that such would be judiciously used. Therefore, Governors of each States must ensure that this revenue from consumption are not embezzled and or misappropriated. Given the nature of the tax, its usage must be project specific, especially in sectors that would promote the industrialization and global marketability of the States.

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