Nyesom Wike, Governor of Rivers, is a human terrier, especially on the job. He comes to his job with a sense of aggression. As minister of state for education, he showed aggression at indolent principals of Unity Schools; at unserious contractors fumbling at education project sites, among others. Now, as governor, he has vented his aggressive spirit against infrastructural decay. He bared his fangs at sloppy contractors; he got bullish with infrastructure development. He built roads, bridges, hospitals, schools, sporting facilities and lot more with militant zeal and earned himself ‘Mr Projects’ as moniker.
This time, Wike has turned the screw elsewhere. The governor who crusades for socio-economic change has stirred the pool and nothing seems the same any more. Wike is pushing for a historic review of what is known as the Value Added Tax (VAT). First, he took the matter to a Federal High Court in Port Harcourt and won. He won because the court took cognisance of the history and propriety of VAT.
Historically, the idea of VAT was mooted by the Ibrahim Babangida military government. It was introduced to replace Sales Tax at that time. Sales tax was poorly and indiscriminately administered in those days in most states. VAT was therefore introduced to make the collection and administration of this special consumer tax more professionally managed. But there was a caveat. The Modified VAT Committee was clear at that time: It recommended that whatever money that was collected in a state as VAT belonged to the state. VAT commissions (administrative offices) were also domiciled in the various states. The VAT Commissions were only allowed to mind only 5% of total VAT collected in their respective states. It follows, therefore, that the idea of VAT was for states to collect it and spend it.
Foremost accountant, auditor and tax expert, Mr. Emmanuel Ijewere, had in an old interview that has suddenly resurfaced in a viral video explained the history and concept of VAT. He said his committee conceived it to be in favour of states. Ijewere should know. He served on the Committee set up by the Babangida government to oversee the birthing of VAT collection, a retooling of the old sales tax. VAT was, therefore, never conceived to be collected by the Federal Government and shared using a strangely contrived formula.
Federal government (military government) would later hijack the collection of VAT, shoved states aside and doled out stipends to the states. Sales tax, the precursor to VAT was a state tax, hence VAT should also be a state tax. Morally, historically and legally, the odds favour the states. The fact that what was originally a state tax changed to a federal tax only indexes the dysfunctional structure of the Nigerian military system and subsequent democratic governments. This systemic dis-junction which in itself is a fraudulent arrangement, is what Wike is fighting to correct. It’s immoral and abhorrently illogical that states that generate more socio-economic activities which translates to more VAT get very little from their labour while those with less VAT receive more at the point of sharing.
Since 2004, the Federal Inland Revenue Service, FIRS, has been collecting VAT on behalf of the Federal Government which pockets a huge chunk and shares the rest among the 36 states and 774 local governments. VATable goods include beer. In the 12 Sharia states in Nigeria, beer (any alcohol) is forbidden. In fact, the sight of a truck ferrying alcohol to sales points and shops (warehouses) in the Sharia states attracts severe penalty from Sharia enforcers. The instant punishment is confiscation and destruction of the alcohol. Yet, every month, these Sharia states share from the VAT proceeds from beer and other alcohol. Nigeria is ranked among top alcohol guzzling nations of the world. This means that alcohol contributes a significant chunk of the VAT pool. Therefore sharing VAT from alcohol with Sharia states does damage to the spirit of Sharia. It desecrates the sacredness of Sharia and impugns the purity of the mind of the average Muslim. Nigeria should not encourage such desecration of the soul.
Without prejudice to the final outcome of the case at the Supreme Court, Wike has stoked the fire of true federalism in a manner nobody has ever dared. Some Nigerians have rightly chanted fiscal federalism without taking the bull by the horns. Wike has just done that. His recourse to legal whims is the most pragmatic and legitimate way to address the thorny issue of fiscal federalism. It’s instructive that some states have joined the train. Even more instructive and refreshingly assuring is the pronouncement by President Muhammadu Buhari to the effect that the federal government would abide by the decision of the court.
It does appear that Nigeria’s journey to true federalism has just begun. Today, it’s about tax; tomorrow, it might be resource control. And it’s not about sentiments as is being expressed in some quarters. Some persons, strangely, are working the anvil of north versus south. Away with that! This is not about north or south. Neither about political affiliations. It’s about doing the right thing; about justice, fairness and recognizing that Nigeria is a federation with states as federating units. It’s about correcting the distortions and incongruities created by the military. Distortions that only promote rental economy syndrome. A syndrome that fancies resource-sharing over resource-making.
These past 22 years of unbroken democracy has offered Nigeria the opportunity to correct the aberrations created by the military. Rather than maximize the opportunity, the political elite who should champion the various causes are sucked into ethno-religious silos. Wike has ruptured that cocoon. Those who lay claim to being democrats should leverage on the current momentum to test certain rules and mores using legal instruments.
Nigerians have craved restructuring via political solution. That seems a mirage. Governor Wike has opened a legal window. Other states should explore it. This is not a time to play partisan politics. It’s not a matter to be subjected to the caprice of ethnicity. This is about the soul of the nation. Is Nigeria truly a federation? If so, why is fiscal federalism difficult to attain? One of the emblems of a federation is fiscal autonomy of the federating units.
Sad that a few governors are kicking against states collecting VAT. But it’s not about these governors. Their time at Government House will soon lapse and the state will remain. It’s therefore not down to an individual. It’s about the well-being of the states and the nation in general. Some states have become too lazy, their governors very uninventive to think beyond the monthly sharing of funds in Abuja. States should collect VAT within their domain, same way they collected sales tax in the days of yore. This is now only a mere wish. The matter is in court. Let the court decide. At least, let our laws be tested. That’s how institutions are built and strengthened.
If tomorrow the court rules that states should collect VAT, it will amount to the proverbial first step in a journey of a thousand miles. But whichever way the pendulum swings, Wike has made history as the lone warrior in the jungle who dared the lion.