VAT and Wike’s winning wedge
“In June, Kano generated N2.8 billion and was given N2.8 billion.
Lagos State generated over N46 billion but got just over N9 billion. Rivers generated N15 billion but got N4.7 billion. Have you seen injustice in this country?” – Gov. Nyesom Wike of Rivers State.
Sir: The economic equation does not add up. And it hardly makes common sense too. If not, how do we explain the paradox of the pitiable penury of most of the states generating much of Nigeria’s commonwealth in the midst of plenty resources? The painful irony is such that their state governors keep going cap-in-hand to the federal centre to collect peanuts, every month-end! It is a crying shame, to say the least that decades after the agriculture-driven First Republic, Nigeria is still being run with a military-imposed constitutional aberration, characterised by a bloated centre that controls what it should not.
It would have been impossible for the then Chief Obafemi Awolowo-led Western Region to have brought to bear the praise-worthy achievements of Free Education policy, the vast infrastructural development, the first television station in sub-Saharan Africa, the Liberty stadium and the iconic Cocoa House back in the ‘60s; that is if the cocoa revenues went to the purse of the Federal Government. Ditto for the Michael Opara-led Eastern Region that championed the agricultural, educational and infrastructural development of the region.
Ordinarily, the Federal Government should concern itself with the issues of the formation and running of military structures, the federal police, international relations and some infrastructural developments relating to its offices. But here and now, in the 21st century Nigeria issues such as education, healthcare delivery, transportation and even internal security have been hijacked by the pseudo-democratic might of the all-conquering Federal Government.
VAT is a consumption tax paid when goods are purchased and services are rendered. It is charged at a rate of 7.5 per cent. It means that Port Harcourt judgment is a landmark one as Prof. Kingsley Moghalu, former CBN Deputy Governor rightly noted. Said he: “The Federal High Court ruling on VAT is the correct one, though we can expect litigation all the way to the Supreme Court. It strikes a strong blow at the lazy Federal Government whose head once called our youth “lazy.” Nigeria has long been a fiscally failed state. Why should states in a supposed federation be producing mainly for the Federal Government? Restructuring has already begun, by fire by force. I pity those who think they can stop the wind.”
It should have been obvious by now that the revenue sharing formula involving the three tiers of government – federal, state and local governments and predicated on the pillars of the principle of derivation, population, balanced development and equality of states have not guaranteed equity.
And like it or not, restructuring has come to stay, great thanks to Wike’s winning wedge, that separates the fratricidal federal might from the boldness of the states to take what rightly belongs to them.
• Ayo Oyoze Baje.