1 week Ago By New Telegraph-Admin
Anthony Sani is a former Secretary-General of the Arewa Consultative Forum (ACF). In this interview, he speaks on the Tax Reform Bills currently before the National Assembly, and other issues I see the current conversations on the Tax Reform Bills as part of democracy in action. Democracy is contest of ideas and reasons.
It can also be divisive. I therefore see the conversations as healthy provided it does not become a bull fight. This is because the conversations can make people develop interest and understand the Tax Reforms Bills.
The fundamental issues are to have reforms which can improve fair, equitable and just mechanism for effective and efficient taxation as just, and distribution of the taxes among the tiers of government which are expected to judiciously use the taxes for socio-economic development. The resultant taxes would move in no small measure governments away from over dependence on oil wealth which is not result of hard work. Effective and efficient collection of taxes and just distribution of same among tiers of government would make the people own the government and ensure transparency and accountability.
It would also embolden the electorate to make judicious use of their democratic right and ensure that votes count so the ensuing leaders would be accountable. No buying of votes by plutocrats. It may appear the conversations have taken North-South just because the Northern State Governors Forum and their traditional rulers started the debate.
But when you consider the composition of the National Economic Council (NEC), which includes the 36 governors, the Central Bank of Nigeria (CBN) governor and some other relevant agents, then it is not hard to avoid the conclusion that the debate is not a North/South affair. Consider the submission by Mohammed Nami, who once headed the Federal Inland Revenue Service (FIRS) and who is an authority, saying the bills could still be passed but implemented in phases. He does not see the bills as anti-North as such.
To him, the whole shebang has to do with lack of clarity and understanding. On the other hand, Prof. Monsur Sokoto is concerned about the rush to pass the bills which suggests a sinister motive.
He prefers the bills be subjected to extensive consultations and debates before passage into law. And so, when you consider the composition of NEC, which has advised for the withdrawal of the bills for further consultations, then you cannot say the conversations have taken regional dimensions. The authorities that initiated the bills and the presidency said the motive behind the move is altruistic; that it is aimed at streamlining the process to guarantee a more effective and efficient service delivery.
What are your thoughts on those clarifications and reasons given by the authorities for proposing the holistic tax reform? The reasons for initiating the Tax Reforms Bills are apt and germane. This is because the reforms are capable of moving the government away from dependence on oil wealth which makes the nation a Trust Fund State. Effective taxation and distribution of same, as well as good use of the taxes for development would make taxpayers own the government and help fight corruption that steals our empowerment, our opportunity and our future.
I do not think there is opposition against most of the bills. What is of major concern mostly is collection and distribution of Value Added Tax (VAT), which most states believe the derivation based model of distribution does not favour them. There are some other people who believe there is lack of clarity understanding of the relevant sections of the tax bills yet the debates are making many of us to understand the provisions in the tax bills.
That is also important for the policy The derivation-based model of distribution of the Valued Added Tax (VAT) is what the North regards as meant to short-change the region since VAT is credited to headquarters of companies most of which are located in Lagos and Rivers states, as well as the Federal Capital Territory (FCT). Those oppositions prefer attribution-based distribution. Even at that, there are some people who believe the tax bills promote distribution based on consumption, and not based on derivation from headquarters of companies.
This is a question of their understanding of the provisions in the bills, which they believe promote derivation-based model of distribution of VAT, considering VAT collections are credited to headquarters of companies most of which are not based in the North. The NEC advised the President to withdraw the bills because it is not only the North that is affected. Many states in the South are similarly affected.
The entire funding of our governments at all levels have been from oil revenues which makes the country to be a Trust Fund State that is financed by oil wealth that is not a result of hard work. That informs the excitement any time non-oil revenues increase. I am not sure those opposed to derivation-based model of distributing, VAT can be likened to elbow throwing grievance groups clamouring for Federal Government’s preferment.
I think they are hankering for justice, equity and fairness in distribution of VAT. I overheard the chairman of the Presidential Committee on Fiscal and Tax Reforms say the view in some quarters that the North does not contribute anything is not supported by data, which show very clearly that telecommunications, cement and sugar, which contribute most to VAT are consumed in the North more than in the South. He also said alcohol and cigarettes contribute less than three per cent to the VAT.
There is nothing like true federalism because no two federal systems are the same. Each federal system is a function of circumstance of its emergence. For example, 13 American colonies came together and formed a confederation with weak a centre that lasted only 10 years because it could not hold the country together.
Hence, the confederation was supplanted by a federal system in which the national government was balanced by appropriate state-level power. Nigeria has gone through the same processes. It first formed a confederation of regions with a weak centre, which was jettisoned in favour of a unitary system and later a federal system.
The circumstances of the emergence of the USA and Nigeria are not exactly the same, considering that the 13 independent colonies came together and formed USA; it is not the same with Nigeria where the national government formed the federating units. There is nothing in our federal system that prevents states from sourcing revenues to add to their receipts from FAAC. You have been seeing how states are competing in Internally Generated Revenues (IGR).
You may wish to know that even in USA, the national government supports the states with what they call Categorical Grants which uses are restricted and Block Grants, which are less restrictive in uses. If the national government in America is that weak as bandied about in Nigeria, it would not be able to support the states the way the Federal Government of USA does. In Nigeria, which is diverse with fissiparous tendencies, a weak centre would not be able to hold the country together under the same roof.
That is to say, the Federal Government should be strong enough to hold the country together but not too strong as to tilt the country towards unitary system. My advice is for the presidency to pander to the need for further consultations needed for either correction of the offending provisions of the bills or dispel misconceptions, if any. That way the aims and objectives of the Tax Reform Bills would find expression for common good.
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