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VAT REVOLUTION AND NIGERIA’S RESTRUCTURING

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By Dr Azubuike Nkala


Matters of political dispensation and revolutionary nature start innocuously. Mercantilism which turned Britain away from feudalism and lordship of the manors to democratic culture started like normal run of life.

At that period majority of British citizens were fiefs while their poor fathers and mothers who work the land and produce the food that fed British population were the lumpem proletariats, living in abject poverty while the lords of the manors who own the lands and eat the food from the sweat of the poor live in stupendous prosperity.

They were the controllers of the Government and laws of the country. That was the situational state of injustice that changed Britain from totalitarian marginalisation and dictatorial wickedness to democratic egalitarianism. Details of how it happened will suffice for a treatise of another day but let us concentrate on Nigeria’s looming change dispensation which has just started.


THE VAT REVOLUTION OF RIVERS STATE GOVERNMENT
Governor Nyesom Nwike of Rivers state, to me tends to come off as a maverick, albeit like Apostle Peter of Biblical period. His temperament reflects the quick temper of late Governor Sam. Mbakwe of then Imo state of Nigeria’s second Republic. Governor Sam. Mbakwe was dubbed the crying Governor because he never kept quiet whenever the then Federal Government of Alhaji Shehu Shagari (NPN) denies any budgetary or financial rights due to Imo state (an NPP Government).

As a lawyer, like Nwike is, Dee Sam Mbakwe knew the statutory rights of Imo state in Nigerian Federation. And he does not waste time, neither does he fear to enforce such rights. That was the legend of Governor Sam. Onunaka Makwe. In similar vein we wish to commend Governor Nyesom Nwike for initiating the long-awaited restructuring of Nigerian Federation in our time. The concept of Federalism as enunciated by Max Weber stated that state Governments should be independent and coordinate with the federal centre of governance. Federalism means that states or regional Governments should control all the resources within each state or region, including the imposition and collection of taxes within the territorial entity of the state or the region while the states or regions will pay royalties to the federal centre.

On the other hand, the federal Government should control the external relations between the country and other foreign powers. The control of the army, immigration and the National coast Guards are vested on the federal centre of Government. On the issue of police, the function and enforcement of policing, according to federal principle is divided between the federal, state and local or District Governments. There are provisions for state police, Federal police and district police for effective enforcement of laws and checking of criminality within the country. It was within such delineations that Federalism provided for fiscal Federalism. Commendation, in this regard goes to the Attorneys-General of Rivers and Lagos state Governments for instituting the court cases against the Federal Government on the issue of the Value Added Tax, (VAT).

In the ordinary sense of understanding of the issue under Federal dispensation, the principle denotes that any tax collected from any state belongs to that state for use in provision of infrastructure and payment of salaries and wages within such states or territories. The intendments therefore, ousted the rights of the Federal Government from the collection of VAT from any state within the Federal structure. Regions or states are territorial entities with populations. The states provide for the welfare of its indigenes who correspondingly pay taxes to such state Governments for the provision of infrastructural facilities like schools, roads, Hospitals, colleges and universities, among others. It is in the realm of this understanding that the rivers state House of Assembly passed into law the Rivers state Value Added Tax Law, and the Governor had correspondingly assented to it.

As the Federal Inland Revenue Service (FIRS) resisted its implementation the Attorney-General of Rivers state sued FIRS and Federal Government, and secured judgement against them at the Federal High Court of Riversstate for leave to enforce the collection of VAT within Rivers state. That was a revolutionary judgement which has set the pace for the fiscal restructuring of Nigeria, albeit the first strategic step towards the implementation of fiscal Federalism in Nigeria. If Nigerians are to discountenance Governor David Umahi of Ebonyi state’s statement that state Governments have no right to collect VAT but the Federal Government, it will be on two perspectives. First will be because he detests to support any policy that will par him with Governor Nyesom Nwike who had earlier called for his psychiatric examination. Secondly, it is to consolidate hisfear of displeasing Muhammadu Buhari for whose sake he has refused to promulgate the Anti-open Grazing Law in Ebonyi state.

Such apologetic deference to Buhari and APC at the expense of Ebonyi people smacks off political rascality and megalomaniac pimpingship mentality. The tragedy of the matter is that he doesn’t want to antagonise Buhari and APC despite inflicting untold hardship on Ebonyi and South-East citizens. That was not how Dr M I Okpala administered Eastern Nigeria.

All the Vatable goods under reference are sold in the States and Regions, majority of them too are manufactured in these States, which in turn bear the burden of littering of refuse and environmental chemical impacts cum pollutions that emanate from pre-use and post use of the products. On the other hand, States are territorial entities that control their land spaces, regulate their environment regulate and protect their citizens, including the protection of the markets and properties thereto. It therefore, portends injustice and unitary-Diarchy to deny the states the right to collect value added tax in their territories. When Nigerian Military Government introduced Value Added Tax in 1993 the country was under unitary system of Government, so it was just as well that the Federal Government collected it and shared according to its preferred formula. But now that the country has returned to Federal system of Government, the Federating units (states) should in recognition of the principles of Fiscal Federalism collect all the value added taxes within their areas of control.

It is either that David Umahi, being an engineer by profession did not understand federal system of Government or that he is carrying sycophancy too far. The case of the states in Nigeria was supported by the constitution because Vat was listed in the concurrent legislative list of the 1999 constitution where both the federal and state Governments have constitutional powers to legislate.

In that case therefore, every value added tax in the states are the responsibilities of such states to collect because states are territorial entities controlled by governors elected by citizens. Although in the event of conflict on any item that the interest of the federal will subsist, but owing to the fact that states have territorialities, it is not possible for the federal government to override the interests of Rivers and Lagos states by going to their territories to collect value added taxes. On the other hand the attempt of the federal government to surreptitiously smuggle the matter into the exclusive by default will do greater damage to its case because it will amount to government of brigandage and gangsterism. If it were listed in the exclusive legislative list the federal government would have been constitutionally obliged to be the sole owners and controllers.

There is also the residual legislative list where the local governments are also permitted to legislate but in the event of any conflict of interest on any particular item or project in that residual list between the state and local government the interest of the state will override that of the local government. The matter is therefore staked up in favour of the state governments. It is thus in line with same pursuit that the Rivers state government has rightly appealed to the supreme court to vacate the order of the federal court of appeal for the maintenance of status Quo ante belium for the purpose of a speedy trial of the case. In fact, the right procedure should have been for all the states of the federation to seek to be joined in the matter both at the court of appeal and the supreme court in order to consolidate the case as one for the states, irrespective of their differences in terms of North or South or party differences.


As Mr Martins Oloja noted, it is difficult to stop a matter whose time has come. The Lagos has concurrently and proactively also passed int law the Lagos State Value Added Tax Enforcement Law which will empower the state to collect all the VAT within the territory of Lagos. All the state Governors are enjoined to promulgate their own VAT laws as the first step towards the realisation of true Federalism in the face of the refusal of president Muhammadu Buhari to call for a National Conference for the Restructuring of the country, which we all know will outlive him.

Once Fiscal Federalism is achieved in Nigeria, one may not bother about secession or dismemberment of the country. Although, the worry of Nigerians is that the Governors are corrupt, inane and selfish, especially when it comes to the implementation of matters that concerned the welfare of poor citizens, expectation is that because the benefits of passing state laws on VAT will boost internally generated revenues, majority of them will, like Nwike, Ortom and Sanwo-Olu shun the fear of Buhari, EFCC and APC -led Federal Government and create wealth for their citizens by domiciliating VAT in the 36 states of Nigeria, and the Federal Capital Territory, Abuja. Fear though, is that because most of Governors loot of public funds have been captured by the radar of the Economic and Financial Crimes Commission, EFCC, most will be lethargic to send Bills for a VAT law to their State Houses of Assemblies, but there is no stopping the matter whose time has come.


As Nigerians await the outcome of the verdict of court of Appeal against Rivers and Lagos states implementation of VAT, we must note the fact that the matter may not just end at the Appeal Court level. The battle is on and the onus is on the senior advocates to convince the courts on the merits of the case which is believed will be the critical roadmap for the restructuring of Nigeria.

This is because two methods of constitutional amendments are either through the constituent Assembly or vide the judgements of the courts, of which the supreme court is the primus inter pars. To God be the Glory.

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