Lateef Adams

Following a judgement of the Federal High Court in favour of the River State government that the State government and not the Federal Inland Revenue Service (FIRS), is constitutionally empowered to regulate and collect Value Added Tax (VAT) within its territory, has immediately ensued a tug of war between the State and Federal Government over who is constitutionally mandated to collect VAT.

The issue may go all the way to the Supreme Court and subsequently be resolved by negotiations and concessions.
`Through their state assemblies, some states, like Lagos and Ogun, hurriedly joined Rivers state to enact VAT laws that gave express power over VAT collection to their respective State Inland Revenue Services.

The speed at which they enacted and signed these bills into law showed that lawmakers can accelerate law-making processes if it means increasing the revenue base for the government which ultimately means it avail the ruling elites with more funds for looting, and enriching themselves and their acolytes. However, the wheel of law-making will drag slowly if legislative matters touch on issues of minimum wage, pension or job creation for Nigeria’s teeming number of unemployed.

In the first place, we do not support the increase to the present 7.5% VAT rate, which in no little way has contributed to the hardship of many Nigerian working-class families. Several months after VAT was increased, it has brought no significant improvement to the conditions of the masses, nor has it prevented both federal and state governments from borrowing more debts from international financial institutions.

Most State governments that are championing the fight to collect VAT are privileged ones that host a majority of revenue-generating organisations because of the presence of ports or oil fields in their locations.

These states among which include Lagos for example put forward the argument that it generates 55% of Nigeria’s VAT collection and is being rewarded unjustly from this tax pool, while the Northern states outlaw alcohol consumption, for example, benefits from the VAT on alcohol unjustly too.

Lagos is however what it is not because of any special feature inherent in it but because of the disproportionate and uneven development that capitalism has splattered the country’s other landscape.

This is what is responsible for the vast VAT that comes out of Lagos alone – a reflection of the fact that it is the destined abode for millions of Nigerians who troop daily in their thousands into Lagos to work in the ports and take advantage of its economic opportunities.

It is for a lot of people the heaven to aim, where it is assumed that its street is littered with gold, this is what has made the maxim that Lagos is a melting point for all Nigerians, and its labour pool is vast and diverse, with Nigerians from all background finding a home for themselves in it.

Before the judgment, the federal government, through the FIRS, collected VAT in all states of the federation. The VAT collected is thereafter distributed in percentage among the FG, state and local governments. While the FG gets 15 per cent of the total VAT collected, the state governments received 50 per cent and 35 per cent goes to the local governments.

According to the National Bureau of Statistics (NBS), the FG generated N496.39 billion VAT in the first quarter of 2021, N512.25 billion in the second quarter and N500.49 in the third quarter.

This means that the total sum of N1.5 trillion has been generated between January and September 2021. If this huge amount is judiciously and democratically utilized, it is enough to transform infrastructure in many states for the benefit of the masses. But it has not.

Unfortunately, the state governments collect both the share of the state and local governments and still loot it, with no visible development to justify the new cry for more money. In most cases when these politicians award contracts, it is more for self-enrichment than for the benefits of the people – if the project does not end up being abandoned, it will most likely be implemented with substandard materials.

The level of corruption in the ranks of the ruling elites renders the debate senseless whether VAT is collected by the FG or the state government, and Workers must not bother to argue themselves into supporting any of the sides, given the fact that the management of VAT proceeds in the past has been fraught with no concrete record of what the working masses have benefitted from this huge river of funds that have accrued to the governments.

It follows therefore that irrespective of the increase in revenues to these states, it will only amount to an increase in looting and not an improvement in the conditions of vulnerable people in society.

Some bourgeois commentators in their usual superficial way of dealing with issues have proposed a formula for growth through deprivation of unindustrialised states of their present share of VAT revenues.

According to them, they believe states that are not as big as Lagos, without the same ecological and population advantages as Lagos, would be inspired to be enterprising through deprivation. This is a very fallacious formula; it is like saying a hungry man can be fattened by denying him the little he has to eat.

States that presently do not develop industry or industrialise agriculture with their share of present VAT revenues will now excuse away development if their revenues are depleted. Some of these states do nothing other than pay salaries after their elites must have looted to satisfaction the resources of these states.

The only scientific way to ensure growth in states is through an organised and national plan of development with the whole country taken as a unit, and all of her resources made available for the development of all of the states from the point of view of need. Even this would still be dependent on the development of the means of production, linking states with great agricultural inputs with industrial plants in other states, where such industries are not feasible in those states.

The outline programme can only be executed by the coming into power of a Workers and poor Farmers’ Government.
It is such a Workers and poor Farmers’ Government that would end the plan-less direction of politics of the ruling elites, whose only economic plan is how to appropriate wealth through super profits to their class and acolytes while impoverishing the working masses.

None of the states has ever been actively progressive in the first instance. According to data from the NBS, Sokoto state between January and August generated N4.978billion and received N24.219billion in VAT proceeds.

This means on average that over N3 billion monthly accrued to the state (from VAT apart from other sources of income) but regrettably, according to the NBS data on poverty and inequality report, Sokoto state remains the poorest state in Nigeria with eight in every ten people categorized as poor.

Ebonyi state in turn received N18.768 billion from VAT having generated N7.894 billion has seven in every ten people as poverty struck the noise on who should collect VAT between the states or FG is inconsequential to the working masses. If the point must be made it is an extra tax burden on the working masses, instead of the big capitalist who produce or import these consumer goods into the country.

As it stands the thieving ruling elites will continue to employ all means to shift the burden and the failure of their capitalist system both nationally and internationally onto the working masses, which is the question of organizing the working people to struggle and take power under a working-class political party is an imperative task.