The new VAT combat is a protest
The actions of Chief Nyesom Wike (57), governor of Rivers state; and Mr. Babajide Sanwo-Olu (56), governor of Lagos, have made us to take another look on the issue of taxation in Nigeria. Specifically the actions of these governors and their states of Assembly and the southern governors that met recently, have reawakened our thoughts on the issue of the Value-Added Tax (VAT). Tax simplification is not simple. The tax system is too complex and too complicated. The concept of tax complexity turns out to be quite elusive when one tries to pin it down. Very difficult to understand. What the governors have done so far is that they have ignited a flame out of emotions. No one knows how long it will burn out.
The Supreme Court and its interpretation will not be the final arbiter on the issue. In the end some state governors may realise later that they have been shortchanged. If it’s not too late, let the sleeping dogs lie. One thing seems certain, there will be duplication of taxes in this country and the people might not be truly sure of whom to pay their tax to, is it FIRS or state functionaries. The average Nigerian will be financially strangulated. There will be emergence of tax enforcers or tax brigades who will be worse than political thugs or Motor Park touts. It will lead also to over taxation and will cripple various businesses in the country. And in a country where unemployment is high, where super inflation is on the increase, with insecurity all around, debt profile keeps rising, bad roads, bad medical facilities, the system itself may collapse.
For some time now, we have been debating on how to share the bread, (FIRS collected 1.53trillion naira on VAT alone last year), no one is talking about how to bake the bread. If we are not careful, very soon, there will not be any bread to share on the table.
I am aware that the current VAT war is a protest on the central government and its certain policies of exclusion, partisanship, nepotism, ethnicity, non-consultation and unfairness. To top it all, the central government has been lackadaisical, indifferent and slothful to some areas in the country in an arrogant manner. In some instances the central government has been turning deaf ears to genuine advice and appeals treating its citizens like conquered and captured people. And that is not good for a fragile country like Nigeria.
Albeit, all relationship goes through hell, rare relationships get through it. A relationship is like a house, when a light bulb burns out, you do not go out to buy a new house. You fix the bulb.
Protest movements are often synonymous with inspiring leaders. Lack of leaders may exacerbate tensions and violence when protesters have no one to provide direction on how to confront the authorities. Interestingly, the leaders of those protesting against the centre today, were themselves products of the centre itself.
The present chairman of the governors’ forum, Dr. John Olukayode Fayemi (56) from Isan-Ekiti in Oye Local Government in Ekiti state served as Minister of Solid Minerals Development from 11 November 2015 to 30 May 2018. His term as Governor of Ekiti State ends in less than ten months from now. Chief Chief Nyesom Wike (57), an Ikwerre from Rumuepirikom in Obio-Akpor, Rivers State served as Minister of State for Education from 14 July 2011 till 2014. The present governor of Benue state, Mr Samuel Ioraer Ortom (60) from Guma Local Government Area of Benue State was Minister of Industry, Trade and Investment from 11 July 2011- 25 October 2015. As for Arakunrin Oluwarotimi Akerodolu alias AKETI (65), SAN, from Owo in Owo Local Government Area of Ondo state, he has always been a chronic fighter. He is married to an Igbo woman, Betty Iwuayanwu from Emeabiam, Owerri West local government of Imo State. Aketi grew up in a generation whose slogan was a luta continua victoria ascerta coupled with his addictive love for Fela Anikulapo-Kuti. Aketi has always been in the fore front in any struggle from Aquinas College, Akure to Loyola College in Ibadan to Comprehensive High School, Aiyetoro in Ogun state and to Obafemi Awolowo University in Ile-Ife, Osun state. It is his nature to lead in any struggle, his close friends, Dele Adigun, former Secretary to the Oyo State government, Olumide Akintan alias Oloor, Remi Osiberu, Dickson Akingbade, Professor Segun Tony Adegulugbe will affirm to this.
If these governors and many others are rebels today, the Central Government made them so.
I am one of those who believe that the arrogance of the Central government is creating problems in this union called Nigeria. The matter could have been solved if there was a strong dialogue and a line of communication involving the central government, state and local governments.
There are different types of taxes in the country today. We have the Personal Income tax Act (PITA), the Companies Income tax Act(CITA), the Petroleum Profit Tax Act(PPTA), Value Added Tax Act(VATA), Education Tax Act(ETA), National Automobile Council Act, Customs, Excise Tariffs, etc (Consolidation Act) and the Sugar Development Council Act.
The subject of discussion is the Value Added Tax (VAT).
The Value Added Act decree of 1993 was promulgated by General (rtd.) Ibrahim Babangida (80) GCFR. In fact it was part of the military legacy. The programme was first introduced by the first Minister of Finance under General Babangida, Dr. Kalu Idika Kalu (82), from Ebem, Ohafia in Imo state. He first served as Commissioner for finance in Imo state under the administration of Major General Ikechukwu Omar Sanda Nwachukwu (81). Dr Kalu had his education at the Ladilak Institute, Yaba, 1948, Colony Public School, Ebute-Metta, 1949-1950, St Jude’s School, Ebute-Metta, 1951-1953, King’s College, Lagos, 1954-1960, University of Wisconsin, Madison, Wisconsin, USA, 1961-1966, 1970-1972; research fellow and lecturer, Economic Development, University of Nigeria, Nsukka, 1966-1970, economist, World Bank, Washington DC, 1972-1980, head of economics, Skoup Company (Nigeria) Limited, 1980-1983 and commissioner for Finance and Economic Planning, Imo State, 1984-1985.
In his 403 page book titled “Letting a thousand flowers blossom”, Dele Sobowale narrated how VAT came to be. He said “VAT was one of Dr Kalu Idika Kalu’s unpopular proposals and for which he would have been lynched if the economic illiterates dominating discussion in the media could lay their hands on him. It was not even accepted by the majority of the cabinet members. On the day General Babangida adopted the proposal, Dr. Kalu was invited as was usual before such monumental decisions were made, to defend the initiative. The matter was thrown open for discussion. Dr. kalu’s reliable supporters—Chief Samuel Oluyemi Falae (82), Dr. Chu S.P. Okongwu (87), Alhaji Abubakar Alhaji (83), Professor Jubril Muhammad Aminu (82) and Professor Bolaji Akinwande Akinyemi (79)—constituted a small minority. The rest went after Dr. Kalu Idika Kalu’s with every verbal arsenal at their proposal. Suddenly, General Babangida stopped the discussions and started to summarise in a way that indicated that he had accepted the minority view. But, he was also politically sagacious enough to realize that it would be a tough sell. So, when he mentioned one of the sticking objections of those against, Dr. Kalu raised his hand. It was fortunate that sitting next to him was Professor Jubril Aminu who kicked Dr. Kalu under the table and asked him to put down his hand. Later, Aminu, warned him by saying “When the boss apparently adopted your proposal you have nothing more to say.” That was how VAT came to be.
To be continued tomorrow.