By Olisa Agbakoba, SAN
The tax bill strikes at the heart of devolution of powers. The implications of the bill is seen from the revenue side but it does have wider significance. The resistance is not based on the distribution of tax revenue.
The hidden issues are more sensitive, if not spoken. The hidden issue strikes at the nature of Federalism in Nigeria. This is a most opportune time to take up the debate.
I don’t understand the role of the Federal Government to be a mere collecting agency !! The Federal Government has far more important responsibilities to Nigerians. VAT is simply a sales or consumption tax applicable at the State level. Certainly not Federal.
Consumption and sales tax are generally not matters concerned with the central Government. These are local and state Government revenue sources. The potential to generate tax at the base is underestimated. This has caused the stampede by states to lean on the Federal Government for revenue. But this is simply not sustainable. It is time to free up a centralized tax system to allow creativity at the local and state levels.
My recommendation is to abolish VAT and transfer it to the local and state Governments. Each state has its unique revenue resource. As a Jos boy, which is where I grew up, I’m very much aware of the potential of Plateau state in massive mechanized Agriculture with absolutely flat Savannah land that can grow every produce.
We must not forget that Europe does not have oil resources at all. Spain, as the world’s largest producer of olive oil, makes billions. The United Kingdom is the only country in the European bloc with oil reserves in the North Sea.
The tax reform bill may be the key we need to unlock the vast revenue potential of Nigeria hidden in a centralized and inefficient collection process..
Dr Olisa Agbakoba, SAN
