Connect with us

Op Ed

VAT: Wike, FG And Authority Stealing – Azu Ishiekwene




The guns of Nigeria’s three-year civil war were silenced 51 years ago, but in the battle for a truly federal state, the echoes of warfare have never been more resonant.

On August 10, Rivers State, which at an average monthly federal receipt of N12b, is the third richest by dole amongst Nigeria’s poor 36 states, started a war with the Federal Government over the collection of Value Added Taxes (VAT).

The state governor, Nyesom Wike, a lawyer by training and leading member of the opposition People’s Democratic Party (PDP), found a loophole in the tax law. He got a ruling of the Federal High Court in Port Harcourt which affirmed that states, and not the Federal Government, are supposed to collect 100 percent of VAT.

The ruling, which could cost an already cash-strapped Federal Government significant revenues, also set off a chain of reactions from Lagos – and at least five other states – eager to cash in and reverse decades of lopsidedness in the country’s fiscal landscape. Only Kogi State, pleaded for charity and brotherly love, instead of law or economics – a plea that should have been directed elsewhere.

The current row may have been sparked by the nearly 60 percent drop in state revenues in a season when COVID-19 and the crash in oil prices have brought Nigeria’s prodigal government to its knees.

But the war between states and the Federal Government has a long, chequered history, dating back to the civil war era. Carving out the oil-rich Rivers State from the Eastern region was, perhaps, the first significant move to redraw the federal map at the onset of the war. It was an emergency, a strategic move by the Federal authorities to cut off supply, especially oil supply, to Biafra. It proved decisive.

It would turn out to be not the last, but the beginning of a series of brazen encroachments that has left states which were mostly created by the military without a thought for their viability, as mere receptacles of federal benevolence and brutality. The long spell of military rule after the civil war made matters worse. In contrast to the pre-civil war era, it reduced the states to zombies of Lagos (and later Abuja from 1991).

Victor Attah, former governor of the Southern Nigerian state, Akwa Ibom, said in a paper on the onshore/offshore dichotomy, for example, that up till 1970, derivation (revenue from minerals derived in the regions), stood at 50 percent.

After the civil war, Attah said, Decree 113 of 1970 put forward by the late sage Chief Obafemi Awolowo and promulgated by General Yakubu Gowon reduced derivation to 45 percent and at the same time appropriated the entire offshore oil revenue to the Federal Government.

The states endured. There was not much resistance that could reasonably be expected under the unitarist military rule. Also, it was thought that after the civil war, the Federal Government required considerable resources to rebuild the country.

But soon, like in most emergencies, understanding became indulgence and indulgence turned into abuse.

In his first coming, General Olusegun Obasanjo extracted another 20 percent to the centre, and his successor, President Shehu Shagari, took yet another 20, reducing onshore derivation to five percent.

By the time Obasanjo returned to office as civilian president 20 years later, the restiveness in the Niger Delta had boiled over. It had become so dangerous that the ad hoc measures, such as the creation of special funds and agencies by the governments before his, could barely contain the negative impact of the crisis on the country’s oil receipts.

Again, the perennially extravagant Federal Government hooked on cheap oil money, needed more fixes to shore up its falling income.

Instead of risking any legal landmines, however, Obansanjo settled for a “political solution”, in the now infamous onshore/offshore dichotomy, a fiscal gerrymandering which left at least 20 states worse off and the Federal Government twice as crookedly rich.

Nigeria is back at the same spot. Only this time the dispute is not about oil or derivation, but about VAT, the crown jewel of the top seven taxes in the country. It’s politically convenient to demonise Wike or to treat the current dispute as some sort of abhorrent beggar thy neighbour politics.

But the trouble is not with Wike. It is with those whose thinking has been so jaded by years of military rule they just can’t get over themselves. This VAT crisis should be a welcome lobotomy.

There’s nothing that Wike has done in respect of the current VAT controversy that is outside what the constitution provided for. The tax items under the exclusive jurisdiction of the Federal Government, such as stamp duties, taxation of incomes, profits and capital gains are listed in the exclusive legislative list. No one is quarrelling with that.

It’s shocking that those who have spent years clamouring for the restructuring of the country have conveniently lost their tongue or yielded to be taken hostage by cowardice in the current VAT debate.

It’s not about Wike. In a viral video, the Chairman of the modified VAT committee, Emmanuel Ijewere, told Channels TV in an interview apparently even before the increase in the VAT rate to 7.5 percent, that the original plan when VAT replaced sales tax in 1994, was for states to keep 100 percent of VAT income. The Federal Inland Revenue Service (FIRS) was supposed to receive five percent of the proceeds as administrative cost, for easing the confusion brought on by multiple sales taxes in the states.

That plan was discarded in spite of the original intention of the military government and in total disregard of the clear provisions in section 162 (1) of the constitution which excludes VAT or taxes on sales and consumption from the schedule of Federal Government taxes. Abuja grabbed more than its legitimate share.

This is not a one-off transgression. It’s a consistent pattern of wide-ranging impunity which began with appropriating minerals to prosecute the civil war and later expanded to cover swathes of economic and social activities from policing to prisons, copyright to trade and waterways, among others.

Lagos State, especially under Governor Bola Ahmed Tinubu, reclaimed acres of federal wasteland through judicial intervention and brought relief to the states in areas such as betting, town planning laws, creation of administrative councils, and taxes in the hospitality sector.

I’ve heard the argument that in the end, Rivers State and the six other states challenging the VAT law may not benefit from it as much as they thought; that the VAT on alcohol which is the favourite trope of opponents of the current system is only three percent; and that on account of the considerable receipt from the VAT element of import tax, the Federal Government may, in fact, be better off in the end.

Nonsense. It’s the same warped argument that has kept the Federal police a monstrous shambles that it has been all these years, because some say that whereas it’s OK for the Federal police to brutalise and exploit innocents, police in the hands of states would be turned loose on the enemies of governors. We love federal oppression so much we’re happy to be sacrificed for it.

The point is not whether states will gain or lose more if they got 100 percent of the VAT. It is whether in a democracy, we are ready to do what the law says, however inconvenient. Until the law is amended – and the Federal Government’s desperation indicates that it knows it’s on a wrong footing – the government of President Muhammadu Buhari should obey and stop the authority stealing.

The matter of efficiency of modes of collection can be discussed by all parties and hopefully, they can reach a common ground. But the unilateral decision of the Federal Government to appropriate VAT beyond its residual administrative fees for the past 27 years must be condemned by all and called out for the fraud that it is.

The benefit of not being a lawyer is that I enjoy the freedom to not think in blinkers. Those hiding under the ruling of the Court of Appeal that the parties should maintain the status quo ante as excuse for delaying the enforcement of the ruling of the lower court are mistaken.

Status quo ante, in this case, cannot be a return to the illegality of the Federal Government stealing VAT that does not belong to it. Status quo can only mean a return to what the constitution provides explicitly – which means states, and not the Federal Government, are entitled to 100 percent of VAT.

Buhari’s government must end the shameful avarice and illegality and do what the law says – until it is amended.

Ishiekwene is Editor-In-Chief of LEADERSHIP

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Op Ed

Joe Igbokwe: When It’s A Crime To Love Buhari, Nigeria And Igbo Land – by Femi Adesina



There are millions of us round the country who follow Muhammadu Buhari passionately. Some got enlisted in 1984 when the man was military head of state. Others joined along the line as the principal was Chairman of the Petroleum Trust Fund (PTF) in the Gen Sani Abacha years, or when he joined partisan politics in 2002, ran for President a year later, also in 2007, 2011, and 2015, when he eventually coasted to power.

Over the years, some of the Buharists (as we are called), have fallen off, and even joined the opposition. Yet some others have stood sturdy, steady, resolute, as constant as the Northern Star. Stand up and take a bow, Engineer Joe Igbokwe, the man from Nnewi, in Anambra State.

President Buhari is possibly the most credible politician we have seen in the country in contemporary times, with a magnetic pull that draws people to him in droves. That was the point I was making last week in this column, but which an illiterate journalist with an online medium twisted to say I claimed Buhari was better than Obafemi Awolowo, Nnamdi Azikiwe, Aminu Kano etal. He succeeded in his mission: generating hateful comments against me, but I leave him to God. For we shall all stand before the judgment seat of God to answer for what we have done, including all forms of lie against a fellow man. Our profession, or political and ethnic affiliations would no longer matter then.

We were talking of Joe Igbokwe before the brief diversion. Yes, this man loves Buhari to bits. He loves Nigeria, and he loves his native Igbo land. And you know what? That is now a crime in our country. Igbokwe’s life has been severely and severally threatened, his family hounded, and on October 3 this year, his county home in Nnewi was set on fire.

Igbokwe is a nationalist. His education, primary, secondary and even university he had in the Southeast. But since he got posted for national service in Ogun State in 1985, he had remained in the Southwest, identifying with the people, their politics, their ways of life, while not repudiating his love for his roots in Nnewi, and the Southeast generally. No wonder he is popularly called Agbalanze, after that Onitsha cultural association.

Continue Reading

Op Ed

Rethinking 2023 in the light of Good Governance



Good governance

2023 is by the corner and as expected, certain assumptions have arisen regarding the suitability of aspirants for the coveted seat of the Governor.

What many have failed to consider in the ensuing agitations for who succeeds the current Governor is that government is a vehicle through which democracy is delivered to the people. And so, those who desire public offices must have been tested and trusted to deliver democracy dividends to the people.

Moreover, given the tempo of infrastructural and economic developments established by the Governor Udom Emmanuel’s administration, only a leader with a foresight equal to that of the present administration will effectively fit into the shoes which will be left behind.

As such, the need to look critically before leaping becomes imperative.

Among the long line of contenders for the governorship race is Sen. Effiong Bob who has been in public affairs from time immemorial.

His credentials indicate an age-long experience in governance which beats that of every other aspirant, and his bevy of connections and intellectual intelligence makes him a top preferred choice for the office.

Sen. Bob is able and ready to serve conscientiously, and should be given the mandate to do so.

Source: Thebrigdenewsonline

Continue Reading


Schools must lay the foundations to bridge Africa’s skills gap



Dangote Refinery

As African businesses, including my own, seek to expand and boost prosperity across the continent, we face a hurdle that we and our governments must do more to overcome. The majority of those entering the workforce lack the skills required to meet the changing needs of the global economy.

Up to 20m increasingly well-educated young people are set to join Africa’s labour force every year for the coming three decades. As the World Economic Forum has argued, ensuring we have a strong ecosystem to offer quality jobs — and the skills to match — will be imperative if we are to fully leverage this demographic dividend.

By 2030, about a quarter of the world’s population under the age of 25 will be in or from Africa. So the economic prospects not only of Africa but of the world depend on the skills, capabilities and productivity of our youth.

Employers, including Dangote Group, need employees with a mix of strong cognitive and problem-solving capabilities, soft skills and 21st-century — often digital — skills. Yet there is a large gap in all three characteristics.

In a 2019 survey by PwC, 97 per cent of African chief executives said the lack of skills was affecting their organisations’ growth and profitability. We believe Africa will drive the future of the global economy, but if our youth do not have the skills, then how can they do so? This is one of the biggest problems facing African companies.

For Dangote, bridging the gap requires spending extra time, effort and financing on training and upskilling staff, building recruitment pipelines with investments in colleges and, in some cases, hiring from outside the continent. Such extra costs hinder the ability of the private sector and the economy to grow and diversify.

We have been providing vocational training for young Nigerians for a long time. We started the Dangote Academy in 2009 in our Obajana cement plant, where we train more than 2,000 technicians every year. More recently, in partnership with the German Association for Mechanical and Plant Engineering (VDMA) and its Foundation for Young Talent, we have launched a technical training programme in engineering. Many businesses are taking similar steps, investing millions of dollars a year.

But relying on companies and postsecondary training programmes to address the skills gap is not enough. The problems begin earlier in the education system, and investments must go beyond upskilling adults. Government must take a larger role. Quality education relies on an extensive, interlinked, robust infrastructure and ecosystem.

Across Africa, nine out of 10 children do not achieve basic reading and numeracy skills by the age of 10, which creates wide-ranging ripples. A third of students do not complete primary school, more than half do not finish lower secondary school and almost 90 per cent do not make it to higher education. Local conflicts and wider insecurity in parts of Africa, with the attendant mass displacement, further reduces access. The pandemic has closed schools and affected families’ abilities to pay for education. This no doubt has led to an increase in the number of children out of school, estimated at about 15m in Nigeria.

Skills acquired early in primary school form the foundation for later learning and are fundamental to a productive, capable workforce and a strong economy

A large proportion of job applicants not only lack basic qualifications but also struggle with simple computation and comprehension. This hinders their ability to take up jobs we are desperate to offer and impedes those already in employment. Skills acquired early in primary school form the foundation for later learning and are fundamental to a productive, capable workforce and a strong economy. Gaining digital skills, or more rudimentary technical and vocational qualifications, is harder without basic learning.

Governments and business together need to look to the future and set policies and plans to focus on foundational learning. Investing in these basic fundamental skills would allow African countries to enhance productivity, promote greater inclusion and build a workforce that can adapt to the markets of the future and drive prosperity for all.

Policymakers and business should provide retraining and upskilling to the existing workforce, and offer these in areas with vulnerable and disadvantaged populations. They should work together to ensure investments are made in high-quality and effective interventions.

Governments and the private sector must also increase their investments in key infrastructure with an eye on the effects on education, from power to communication, water supply and housing, research and social amenities, and not discriminate by gender or disability. The private sector must give governments clear indicators of future work needs so schools can adapt. There must be increased focus on and investment in foundational literacy and numeracy so students can acquire the skills fundamental to employability.

Together, the public and private sectors have a strong responsibility to accelerate progress. They must work in partnership, make fixing the education crisis a top priority and commit to acting fast. Failure to do so risks perpetuating low productivity, instability in the workforce and poor socio-economic outcomes. Successful actions will mean greater prosperity for future generations, and are the only path to ensure a vibrant, prosperous, productive Africa.

Source: FT

Continue Reading