This writer is not a fan of Governor Nyesom Wike and would never be. But, we can’t deny the fact that he’s the architect of the strategic initiative that is about to redefine the wrong perspective of the Federal Government towards the much-talked-about true federalism, particularly fiscal federalism.
He’s the one that has gotten the landmark judgment from a High Court pronouncing that, states are indeed the organ of government that is supposed to be collecting Value Added Tax (VAT) as against the existing practice whereby FG collecting the same.
We would all be patriotic enough to completely leave the most controversial governor out of this, concentrate on the fundamental import of the judicial pronouncement, face the real problem head-on and see if the development could herald the regime of fairness, equity and justice amongst the three tiers of the government and more importantly, the long-suffering Nigerian people.
Even though, the Nigerians have not seen the last of the judgment as FIRS has appealed on behalf of federal government and we also envisage that matter will drag as far as Supreme Court, as it’s a matter of pride and claim of superiority, nonetheless, there is need for the federal government to let the judgment be and by so doing, chart a new course and direction in the implementation of our problematic federalism.
If the FG government permit the judicial pronouncement to reign supreme, below are the likely implications:
- Without doubt, this development may likely encourage the state governments to possibly identify other items in the Exclusive List that Law courts could adjudicate upon, to be transferred to Concurrent List for the benefits of state governments and millions of Nigerians at the grass root. Mineral Resources revenue generation is another revenue source that could readily suffer the same fate as VAT.
- Of course, the diverse items in the Exclusive list have made the federal government to be too powerful and unduly dominant; if government at the centre could be circumspect and allow VAT to go, it would obviously give some level of fiscal leverage to the states, as well as giving them sense of belonging and fulfillment.
- Presently, the tax revenue accruable to FIRS account on monthly basis has very significant content of VAT. Henceforth, FIRS revenues and contribution to FAAC would significantly be on the downward trends. The implication of this is that, FIRS would possibly lose its role as one of the important and dominant Agencies of revenue generation of Federal Government.
- States Revenue Generating Agencies would be strengthened, as they would have more responsibility to generate revenues through VAT for their respective states.
- States with bigger potentials to generate significantly from VAT revenues would likely depend less on the FG for monthly allocations and this may likely herald new regime of state gradually assuming the status of independency, notwithstanding that they are integral part of Nigerian federation.
- The most important aspect of this judgment is that, states presently with zero or low potentials of VAT revenue generation would have to henceforth think out of the box, with respect to strategies, as well as ingenious initiatives to bring business of diverse nature to their states that would possibly do a turnaround for them in term of VAT revenue generation. This competitive spirit may likely ignite a new chapter of growth and development in Real sector and other business concerns across the length and breadth of country. Ultimately, this may be a positive development for the nation.
Meanwhile, Nigerians await with patient breath the proceedings at the Appeal Court, and perhaps at the Apex Court thereafter, to confirm where the pendulum will swing. In view of the dominant influence of the federal government on the judiciary particularly in a matter of this very sensitive nature, we strongly appeal to the federal government to allow the third arm of the government to maintain its independency for the duration of the period of the proceedings in the court of law.
Kola AMZAT (FCA, FCIB, CTP, ACS)
CEO, WKA Consulting Ltd, Lagos.