Nigeria's Proposed Tax Reform Bills Pass 2nd Reading + All You Need To Know About It

The four tax reform bills proposed by President Bola Tinubu have passed second reading at the Senate. The bills specifically seek to review the sharing formula of the Value Added Tax (VAT) to accommodate what each state will get for what is consumed within their territory.

This writeup will help you understadn what the bill is all about.....

''Northern States are gradually losing significant portion of their shares of FAAC allocation, which is undoubtedly the biggest source of their revenue. From Local Government Funds, Fiscal Reform Bills, to dividends from the NLNG shares of NNPC and today, the National Lottery. All these were part of the pool that makes up the monthly national cake distribution known as Federal Accounts and Allocation Committee.

These developments are not surprising to any student of development. We all saw it coming.

Early this year, the Supreme Court, in a suit filed by the Federal Government, scrapped the States and Local Government joint account which before then entrusted local government funds in the hands of their respective States.

In another case, the Supreme Court also agreed with the argument of the AGF and held that NNPC's stake (shareholding) in the NLNG, unlike the NNPC itself, actually belongs to the Federal Government alone and not the entire Federation. Those billions of dollars accrued to NNPC from NLNG annually are not to be shared anymore with the States as part of FAAC.

Similarly VAT, a chunk part of the non-oil revenue, currently being shared based on equity, derivation and population formula amongst FG, States and Local Government will, if the Emilokan's Executive Bill succeeds at the National Assembly, now be shared based on derivation or consumption or both. Either way, I don't see how the north can benefit from it. I will get to the reason shortly.

Then came today, another blow in a Suit initiated by Lagos State Government, the Learned Justices of the Supreme Court while granting all the reliefs sought by the AG of Lagos State held that revenues accrued to the Federation through the National Lottery Commission from the regulation and royalties of lottery and other online games is in reality within the Residual Legislative List, exclusive to States to regulate and generate revenues from.

I believe there may be more of these seemingly harsh interpretations of the law in the nearest future. Because that is what the Constitution actually contemplated.

If you put these chain of events together, you would only come to one conclusion: that full federalism is taking a crude shape in the country, against the wish of everyone. Had we, northerners, been thoughtful and proactive, we would have prepared for this time. We would have confronted the issue of restructuring with strategy rather than our usual rejectionist attitude, to achieve it on our terms and put a timeline for gradual implementation in order to minimise it's impact. With our sell-out NASS members, who either do not appreciate where all this is headed or they have been bought to look away, it's only a matter of time. Allah ya ji kan Senator Suke Yaro Gandi and the rest of his contemporary visionaries and patriots.

What should we expect now? Our FAAC reliant States will receive shorter allocation. If VAT is to be shared based on derivation, then most of the Corporate Headquarters of businesses where the remittance of VAT takes place are far away from the north. What if it's to be shared based on consumption? The follow up question is: how do you determine the end users when you don't have the data to prove where it is consumed? Even if this data exists, most of our businesses in the north, including Kano State, are not formal businesses, so their distributors are in Lagos and other Southern States. Our traders are running away from institutionalisation of corporate governance framework in their businesses that will give them the capacity to deal with manufacturers and wholesalers directly in order to properly document their dealerships. We are simply traders.

Lottery is worse, because majority of our states think the whole business is haram. But wait, is it not double standard that you are operating a secular state, collecting VAT revenue generated from breweries and royalties from casinos, including the lottery for all these years while still believing it's haram? At least, it would soon be over, and we shall stick with halal revenues.

Cut long story short, the North must wake up on issues of governance and development. The culture of electing clueless Governors, the dominance of corrupt and soulless political class must end. We must pay more attention to our man power and skills development policies, reform our education systems, because that's what all these boil down to. EDUCATION! 

Our youth must stop social media praise-singing and political psycophancy and embrace education and skill acquisition. Our businesses must also adopt corporate governance, Innovation and be more industrious and forward thinking''.

By Shettima Dan'Azumi