More controversies are trailing the opposition of governors from the 19 states in the North to the Tax Reform bills that will make derivation principle as the basis for Valued Added Taxation (VAT) allocation.
The Pan-Niger Delta Forum (PANDEF), the Middle Belt Forum (MBF), as well as a former general secretary of the Yoruba Elders Council (YCE), Dr Kunle Olajide, expressed reservations over the rejection of the bill by governors and other stakeholders in the North, which they made public at the end of a meeting held in Kaduna on Monday.
The bills, aimed at reforming tax collection in Nigeria, include the Nigeria Tax Bill 2024, Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and Joint Revenue Board Establishment Bill.
In the communiqué of the meeting read to journalists by the chairman of the Northern Governors Forum and governor of Gombe State, Alhaji Muhammad Inuwa Yahaya, the leaders also urged members of the National Assembly from the North to reject all bills that are not in the interest of the North.
Part of it read: “Forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly.
“The contents of the bill are against the interests of the North and other sub-nation-als, especially the proposed amendment to the distribution of Value Added Tax (VAT) to Derivation-based Model.
“This is because companies remit VAT using location of their headquarters and tax of fice and not where the services and goods are consumed. In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and calls on members of National Assembly to oppose any bill that can jeopardise the wellbeing of our people.
“For the avoidance of doubt, the Northern Governor’ Forum is not averse to any policies or programmes that will ensure the growth and development of the country.
“However, the Forum calls for equity and farness in the implementation of all national policies and programmes so as to ensure that no geopolitical zone is short-changed or marginalised.”
Reacting to the rejection of the planned amendment of the VAT Act to be based on derivation, the Middle Belt Forum said such reform is necessary for the sake of equity and fairness.
The national publicity secretary of the MBF, Dr Isuwa Dogo, charged the National Assembly to go ahead with the amendment in line with the reality on the ground, coupled with the consumption patterns and capacity of states.
“VAT should be localised; if a group of people, states, or otherwise are not patronising a product or not aligning with the consumption, such people have no right to share in the distribution of VAT.
“In some parts of the North, alcohol is forbidden, and there are several instances where it was openly destroyed
“It would be abnormal for such states to benefit from the sharing of VAT accrued from the consumption of alcohol.
Therefore, it should be on the basis of consumption.
“For example, why should the VAT derived in Lagos not be used for the people of Lagos or should be taken to Sokoto, Katsina, or any place in the North where alcohol is forbidden? So, what is being derived in Lagos should belong to Lagos, likewise any other products. So, the amendment in this regard is necessary,” the MBF spokesman said
Similarly, the former secretary general of YCE, Dr Kunle Olajide expressed disappointment over the opposition of the governors and traditional rulers from the North to the proposed amendment of the VAT distribution, noting that the administration of President Bola Tinubu has been fair to all regions with his programmes and policies.
He explained that the Tax Reform bill before the National Assembly, when passed into law, would serve the interest of the country and not against any of the regions.
According to him, “It is most unfortunate and unbelievable that we still have some people in this country who still believe that this country should be balkanised and keep dividing us between North and South.
“In my humble opinion, the present government under President Bola Tinubu has been fair to all regions and doing things in the best interest of the entire country from the Atlantic Ocean to the Sahara desert.
“It is most unfortunate that the issue of VAT is being rejected by the North; this is a means of generating funds for the government to distribute appropriately for the development of the country.
“It surprises me that the governors and the traditional rulers took such a decision, I don’t know where we are going in this country.
“To me, that decision on the bill by the federal government is in the best interest of the country for the government to attend to basic needs of the citizens.” Another group, the Arewa Civil Rights Movement (ACRM) described the decision of the northern governors as ill-conceived which could set the country back.
Speaking at a press conference on Wednesday in Abuja, the national president of the group, Dr Agabi Emmanuel, said the governor’s rejection of the bills is ill-conceived and would set the country back.
He argued that directing lawmakers to reject the bills due to issues with one is unjustified and oversteps the governors’ authority.
The contentious issue lies in the proposed Value Added Tax (VAT) sharing template, which reduces the Federal Government’s share from 15% to 10%.
However, the allocation among states will consider the derivation principle, encouraging states to attract businesses.
The ACRM views the governors’ claim that the North would be disadvantaged as disingenuous, instead, Emmanuel suggests this is an opportunity for northern states to create a more investment-friendly climate.
The group said the action of the governors paints the North in a beggarly light and contradicts the region’s history of tax compliance.
It urged northern lawmakers to disregard the governors’ directive, emphasising their responsibility to con-stituents. Rejecting the bills would confirm lawmakers’ inability to serve and potentially lead to recalls, he said.
The movement also called on governors to focus on their duties and account for excess earnings from the Federation Account since assuming office.
“Our Movement is concerned with the far-reaching consequences of the ill-conceived directive to northern lawmakers to reject the bills.
First, it is wrong to direct lawmakers to reject the four bills because they have issues with just one.
“This will set the country back as it is creating needless drama and distraction that is unnecessary at this point. Secondly, we are of the view that the governors overstepped their remit by directing federal lawmakers to reject the bills.
“These are not state law-makers, and even if they were it would amount to validating the allegation of rubber-stamp parliaments that states are known for because of the overbearing attitude of these governors. But we are talking about federal lawmakers who are employees of their constituents and sworn to protect the interests of the constituents.
“Additionally, the claim by the governors that the North would be disadvantaged by the VAT sharing formula on account of major companies being headquartered in southern states where their taxes would be captured is totally disingenuous.
“What we expect is that this is a wake-up call for us in the north to create a more investment-friendly climate.
The governors cannot exploit sectarian extremism that discourages investments and expect profit-oriented organisations to site their headquarters in their states.
“Furthermore, we disagree with the Northern Governors Forum because their rejection of the proposed tax reforms paints the North in a beggarly light making it appear as if those of us from there are unwilling to be tax compliant.
“This is especially true when their opposition to the Tax Bills creates the impression that northerners are so impoverished that they cannot pay the associated taxes when the North has a rich history and tradition of being tax compliant.
“The Arewa Civil Rights Movement urges the northern lawmakers to disregard the directive from the state governors as they had no basis to issue such a directive.
The lawmakers’ responsibility is to their constituents.
“Should the northern lawmakers reject the Bills based on the interference from the governors they would have confirmed to those who voted them into office that they are incapable of serving. Such disrespect for the wishes of their constituents will definitely result in a wave of recall as the people will not accept rubber-stamp lawmakers.
“We urge the Northern Governors to get back to work while also preparing to account for what they did with the excess earnings that came into their states’ coffers from the Federation Account since they assumed office on May 29, 2023.
“They should also begin to explore how to walk back the sectarian extremism they adopted for their states that is now proving injurious to revenue generation.”
Contributing, the Pan Niger Delta Forum (PANDEF), expressed frustrations over the treatment of the Niger Delta region by successive federal administrations.
Spokesperson for PANDEF, Chief Dr Obiuwevbi Christopher Ominimini, called for a fundamental reform of VAT distribution system.
“Proceeds from VAT should be shared based on contribution “States that generate more should receive more.
Fairness demands it,” he said.
He condemned the lack of accountability for the environmental degradation and impoverishment of Niger Delta communities due to oil and gas exploitation.
“Our people can no longer fish or farm because the ecosystem has been ruined,” said Chief Ominimini.
“We have nothing to show for the billions extracted from our land. The Niger Delta, despite its wealth of resources, remains the poorest region in Nigeria. This is economic in-justice,” Ominimini said.
He noted that while Niger Deltans have limited access to their own resources, citizens from other regions freely exploit gold and other minerals for personal gain.
“Gold miners in other states enrich themselves, while we’re barred from accessing our oil. This disparity is unacceptable,” he asserted.
Ominimini questioned the government’s transparency regarding oil and gas revenues, suggesting that the supposed 13% derivation fund is a mere illusion.
“What we actually receive is less than 8%,” he claimed.
“The rest is misappropriated, and those in power aren’t held accountable for what they take from our land.” He further raised concerns about ongoing gas flaring, describing its impact on the health and well-being of local communities.
“Every day, we suffer the hazards of gas flaring. The government’s inaction on this matter is nothing short of wickedness towards the Niger Delta people,” he declared.
Ominimini pointed to the dominance of non-indigenous executives in the Nigerian National Petroleum Corporation (NNPC) as evidence of systemic exclusion.
“How many traditional rulers from the Niger Delta hold oil blocks?” he asked. “The answer is few to none, while traditional rulers from other regions hold multiple. They ignore our suffering, as it has no impact on their lives.”
CPPE Director/CEO, Dr Muda Yusuf, on his part, called for caution on the issue concerning the tax reform because of the seeming political undertone.
“In my view, this is more political than economic. I think it’s a natural reaction or natural response. They are having an amendment that will put you in a disadvantage. It is natural for you to reject it. I am not surprised by this because the bulk of the VAT is generated from the southern part of the country.
“The percentage contribution from the northern part is not so significant. So naturally, if you weigh the allocation heavily in favour of derivation, it will favour the South.
“That is why I said it’s more political which we need to manage very carefully. As for me, I will just say we should allow the sleeping dog to lie and leave the situation as it is. I think this is the way I will look at it,” Dr Yusuf added.
A finance expert, Biyi Adesuyi, described the northern governors’ action as an indication that the proposed bill may not see the light of the day.
He hinged his pessimism on the fact that those opposed to the bill, are from a section of the country with the largest number of representatives on the floor of the National Assembly.
He, however, said bills such as this are needed if the country is really desirous of practising true federalism.
The Wealthigate Advisors boss attributed the action of the governors to their inability to think out of the box, regarding the issue of internally generated revenue in their states.
Adesuyi argued that the intention of the proposed bill, which is fiscal federalism is not alien to the country, since that was the practice before the military introduced unitary system of government.
“For instance, when Pa Obafemi Awolowo was running the Western Region, the region was generating the largest revenue out of all the regions, and what obtained then was to remit a fraction of such revenue to the centre. But it is the exact opposite that we are seeing now.
“Some of these Northern states produce nothing, but rely solely on disbursements from Abuja. They don’t bring anything to the table, yet they are the largest partakers of what comes to the table.
“Look at the statistics, based on IGR per state, you will see the performance of the North in terms of IGR. And, unfortunately, because these governors cannot think out of the box, they believe such law would cripple their states, if passed,” Adesuyi stated.
Also, the senator representing Borno South in the National Assembly, Ali Ndume, has joined forces with Northern elders to reject the Federal Government’s move to increase the tax regime of the country.
While aligning himself with the stance of the Northern elders, Senator Ndume suggested to the President Bola Tinubu-led administration to expand sources of income for Nigerians and ensure that Nigerians are not merely existing but living.
The former Leader of the Senate lamented what he called the elimination of the middle class occasioned by high inflationary rate demanded that positive steps be taken to bring succor to Nigerians.
“This tax they’re talking about, we are almost losing the middle class in Nigeria.
It is either you have it or you do not have it. Those that are in the middle are being squeezed out. If Nigerians can pay for those taxes, it is okay.
“But in the current situation, increasing taxes is not an alternative at all. I will not support any increase in tax.
“Let us get things right first. Let people start living and not survive. Let people have extra income, and then you can tax them. I like to use an example of common sense. Allow Nigerians to have enough blood in their body before you start asking for donation,” Ndume stated.
The lawmaker accused the Minister of Finance, Wale Edun and Chairman of the Federal Inland Revenue Service (FIRS), Zach Adedeji for instigating what he described as anti-people economic reforms.
“The poverty is too much is in the North. Let us be frank about that. So, you want to increase taxes again?
Tax those people who can afford it. Those who can afford the taxes in Nigeria, I do not want to be particular about it, are not even paying the taxes.
These big companies do not even declare their income, not to talk of getting the appropriate taxes.
“I am one of those opposing that tax bill in the National Assembly. I am not going to support it. In fact, I am going to start campaigning against the increase in tax for now because it does not only affect the North but the average Nigerian.
“I am not saying people should not pay tax, but do not go and tax people that are barely struggling to survive.
You are paying somebody N70,000 as a minimum wage, and all of a sudden, the price of fuel went up to N1,000.
It means that if you put the arithmetic together, you see that you would have continued paying me the N30,000 and allow the litre of fuel to be N100.
“It is like giving you with one hand and taking it with the other hand. Let the tax authority focus on those who are supposed to pay tax.
For example, in Abuja, if you go round, there are a lot of properties in there that are not paying taxes. Fortunately, you have Nyesom Wike who stands up to do something about it.
“People are not paying property taxes. These banks, for example, are making tons and tons of money, and they are not paying taxes. And they are collecting taxes. If you transfer money, they are collecting taxes. If you receive money, they are collecting taxes. And they declare profits. Go and check their taxes.
Now you want to squeeze somebody who is barely trying to survive because they are many.
“You need to start from somewhere that is acceptable. I, at one time, proposed a bill for communication and phone owners to pay tax. It didn’t see the light of the day.
“You are talking about Abuja here. Many people do not have access to mobile phones. Anybody who can access a phone should be able to pay tax.”
Culled from Tribune
