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The new VAT combat is a protest – Part 2

By Eric Teniola
28 September 2021   |   3:02 am
By the way, talking about Dr. Okongwu, he is now almost blind, with loss of memory, coping alone in the only house he has in the world in Nnewi, Anambra state built for him by General Ibrahim Babangida

Continued from yesterday

By the way, talking about Dr. Okongwu, he is now almost blind, with loss of memory, coping alone in the only house he has in the world in Nnewi, Anambra state built for him by General Ibrahim Babangida. Yet this was a man who was Minister National Planning between 1985 and 1986, Minister of Finance between 1986 and 1990 and Minster of Petroleum thereafter. It is a sad story of a brilliant career. 

According to the Value Added Tax decree, item 40 (distribution of revenue) states that notwithstanding any formula that may be prescribed by any other law, the revenue accruing by virtue of the operation of this Act shall be distributed as follows, that is—(a) 15% to the Federal Government (b) 50% to the State Government and the Federal Capital Territory, Abuja and (c) 35% to the Local Governments.

In 1992, General Babangida appointed a study group headed by Professor Emmanuel Chukwuma Edozien (1937-2019), the late Ojiba of Asaba. It was this group that established the Federal Inland Revenue Service (FIRS) as the operational arm of the Federal Board of Inland Revenue and set up revenue services at other tiers of government—States and Local governments. 

Professor Edozien was a member, Housing Sub-Committee, Adebo Salaries Review Committee, member, Constitution Drafting Committee, Dean, Faculty of Social Sciences, University of Ibadan, chairman, New Nigerian Newspapers Ltd, member of Board, Eithiope Publishing Corporation, member, Economic Advisory Council, Government of Bendel state, now Edo state, Professor of Economics, University of Ibadan, 1976-1979, adviser to the President for Economic Affairs, 1979-1983; President, Nigeria Economic Society. 

In the same year, 1992, General Babangida also established another study group on indirect taxation headed by Dr. Sylvester Uzor Ugoh (90) from Umuokrika Ekwerazu; Alii- azu-Mbaise in Imo state, which culminated in policy shift from direct to indirect/consumption tax (VAT evolved).

To most Nigerians, Dr Ugoh is mostly remembered as the running mate of Alhaji Bashir Othman Tofa (74) in the June 12, 1993, Presidential election. But he was more than that, he was an outstanding Economist. He had his education at Holy Family College, Abak, 1947-1951, University of New Hampshire, Durham, New Hampshire, USA, 1955-1959, Harvard University, Cambridge, Massachusetts, USA, 1959-1961, 1963-1964, deputy director, Economic Development Institute, University of Nigeria, Nsukka, 1966-1972, executive director, SKOUP and Company (Management Consultants), 1973, member, Constituent Assembly, 1977-1978, Minister of Science and Technology, 1979-1982, Minster of Education, 1982-1983 and detained between 1984 and 1985.

The reports of Professor Edozien and that of Dr Ugoh were submitted to General Babangida. Afterwards, General Babangida then set up the implementation committee on VAT headed by Chief Emmanuel Itoya Ijewere (75), a Chartered Accountant.

Chief Emmanuel Itoya Ijewere started his accounting career in 1965 with Coopers and Lybrand. He is a past President of the Institute of Charted Accountant of Nigeria, also past President of Directors and past President of the Nigerian Red Cross Society. 

Upon being elected in 1999, President Olusegun Obasanjo, GCFR, invited Professor Adedotun Oluwole Phillips to submit a comprehensive paper on taxation in Nigeria for implementation. Professor Phillips was a lecturer/ Senior lecturer n Economics at the University of Ibadan, appointed Professor of Economics, University of Ibadan, 1978; head, Department of Economics, University, 1979-1981; Dean, Faculty of Social Sciences, University, 1981-1983; president, Nigerian Economic Society, 1981-1982; appointed director, National Institute for Policy and Strategic Studies, Kuru, Nigeria, 1983-1984; chairman, Federal Civil Service Review Panel, 1985-1987, former chairman, Nigerian Industrial Development Bank (NIDB), director-general, Nigerian Institute for Social and Economic Research (NISER), Ibadan, 1986; former member: National Economic Advisory Council.

President Obasanjo also appointed another group headed by Seyi Bickerston on taxation in Nigeria. President Obasanjo then appointed a taxation expert Mrs Ifueko Omoigui-Okauru as Chairman of the Federal Inland Revenue Service (FIRS).

President Obasanjo effected certain reforms in the taxation policy in the country. The main objective of the reform programme was to “operate a transparent and efficient tax system that optimizes tax revenue collection and voluntary compliance”.

The reform programme was charged with the responsibilities to diversify the revenue base from petroleum-related taxes; treat taxpayers in a fair and responsible manner; promote investment in a diversified economic base in order to promote further economic growth; simplify procedures and policies so that compliance is enhanced; reorganize the tax administration to increase effective compliances, reduce the compliance cost to taxpayers and make it more supportive of taxpayer services; promote integrity by both tax administrators and taxpayers and provide a reasonable allocation of responsibilities for fiscal matters between the partners in the federal system.

Other objectives of the reform program include a shift in relative emphasis from income to consumption taxes i.e. indirect tax; a revised comprehensive personal income tax regime; modernized accounting and derivation for taxable profit for companies Income tax;  restricting the number of tax instruments available to sub-national governments, as well as how these taxes are administered while ensuring that such governments have access to reasonable own source revenue; modernizing the FIRS and/or the Joint Tax Board so that it is equipped to administer the reforms in an effective manner and obtain financial and administrative autonomy for FIRS to make it more effective and efficient.

President Obasanjo then submitted a bill for the establishment of the Federal Inland Revenue Service (FIRS) to the National Assembly. The bill was approved in the Senate on February 20, 2007, presided over by Senator Ken Ugwu Nnamani (72) from Enugu, then of the Peoples Democratic Party (PDP). 

The Bill was also passed in the House of Representatives on February 21 presided over by Alhaji Aminu Masari (71) who hails from Masari village of Kafur local government, Katsina State of the PDP. Alhaji Aminu Masar is today the governor of Katsina state. The two houses jointly passed the bill and it was signed into law on April 16, 2007. It was jointly signed into law by President Olusegun Obasanjo, GCFR, and the Clerk of the National Assembly, Alhaji Ibrahim Nasiru Arab. 

The highlights of the bill state that This Act may be cited as the Federal Inland Revenue Service (Establishment) Act, 2007. A192 Federal Inland Revenue Service (Establishment) Act 2007 No. 13 Schedules First Schedule Legislation Administered By The Service
1. Companies Income Tax Act Cap. 60 LFN, 1990. 2. Petroleum Profits Tax Act Cap. 354 LFN, 1990. 3. Personal Income Tax Act No. 104, 1993. 4. Capital Gains Tax Act Cap. 42 LFN, 1990. 5. Value Added Tax Act 1993 No. 102, 1993. 6. Stamp Duty Act Cap. 411 LFN, 1990. 7. Taxes and Levies (Approved List for Collection) Act 1998 No.2, 1998, 8. All regulations, proclamations, government notices or rules issued in terms of this legislation. 9. Any other law for the assessment, collection and accounting of revenue accruable to the Government of the Federation as may be made by the National Assembly from time to time or regulation incidental to those laws, conferring any power, duty and obligation on the Service. 10. Enactment of Laws imposing Taxes and Levies within the Federal Capital Territory. 11. Enactment of Laws imposing collection of taxes, fees and levies collected by other government agencies and companies including signature bonus, pipeline fees, the penalty for gas flared, depot levies and licenses, fees for Oil Exploration License (OEL), Oil Mining License (OML), Oil Production License (OPL), royalties, rents (productive and non-productive), fees for licenses to operate drilling rigs. Fees for oil pipeline licenses, haulage fees and all such fees are prevalent in the oil industry but not limited to the above listed. Second Schedule Sections 3(4) Supplementary Provisions Relating to the

Board Proceedings of the Board
I. Subject to this Act and section 27 of the Interpretation Act, the Board shall have the power to regulate its proceedings and may make standing orders with respect to the holding of its meetings, and those of its committees, notices to be given, the keeping of minutes of its proceedings, the custody and production for inspection of such minutes and such other matters as the Board may, from time to time determine. 2.-(1) There shall be at least four ordinary meetings of the Board in every calendar year and subject thereto, the Board shall meet whenever it is convened by the Chairman, and if the Chairman is requested to do So by notice given to him by not less than four other members, he shall convene a meeting of the Board to be held within 14 days from the date on which the notice was given. Sections 2, 25 and 68. Federal Inland Revenue Service (Establishment) Act 2007 No. 13 A193 2 Every meeting of the Board shall be presided over by the Chairman and if the Chairman is unable to attend a particular meeting, the members present at the meeting shall elect one of them to preside at the meeting.

To be continued tomorrow.