The landmark judgment by the Federal High Court sitting in Port Harcourt giving Rivers State government the right to collect Value Added Tax (VAT) in the state has polarized the country with some people accusing the financially buoyant states of insensitivity about the plight of their less fortunate counterparts, especially since Lagos State House of Assembly set about enacting a law that would confer on the state the power for VAT collections.
Apart from individuals who see the judgment as a coup against some states in the country, Gombe State government has also come out to declare that the implementation of the judgment would impair the economy of many states. The state Commissioner for Finance and Economic Development, Muhammad Mogaji, in his reaction to the development, appealed to both Lagos and Rivers states to be ‘their brothers’ keepers’ by their continuous contribution of VAT to the centre.
According to him, “The VAT issue will have adverse effects not only on Gombe State but almost all the states of the federation. I was part of the discussion a few weeks ago by all commissioners of finance across the country.
“The realisation was that only Lagos, Rivers and probably Delta states would be able to pull through without this VAT being administered centrally, and it is our appeal that we all put sentiments behind and work towards a federation that is one, by being our brothers’ keepers and ensuring that what is pulled together at the centre is distributed to be able to balance resources across the country.
“Don’t forget that the oil-producing states collect only 13 per cent derivation, so if you say every state will take whatever resources it has, then it means we are starting a very dangerous trajectory that will not augur well for the federation called Nigeria.”
While Mogaji’s homily is music to those whose economy and financial status would be worsted by the new order, it also appeals to the sentiments of brotherliness, though it is at variance with the principle of federalism.
On paper, Nigeria is a federal state, which means that each of the component part is allowed to grow at its own pace. But in deed over the years, Nigeria has run as a unitary state, with the government at the centre controlling the fate of each component part rather than each member of the union being allowed to determine its destiny. This has foisted injustice on the nation and lethargy as well as indocility on the people.
According to Governor Nyesom Wike, while reacting to the failure of the Federal Inland Revenue Service to get an order restraining Rivers State from executing the Federal High Court judgment, in June this year, Rivers State generated N15bn VAT revenue, but got N4.7bn in return, Lagos generated N46.4bn in the same month but got N9.3bn from the Federal Government, while Kano generated N2.8bn in the same month and got the same N2.8bn back. Now, if this is not injustice, what is? If a country blatantly practices injustice, how can it experience peace? How can a country grow without peace? So, is it any wonder that Nigeria’s progress seems to have been arrested?
Why do some states work hard to increase their internally generated revenue while others stay back and do little or nothing to improve their own IGR? Why do some states labour hard to ensure ease of doing business in their domain while others emplace legislations that deter investment? It is just because there is a guaranteed monthly allocation from the federal government for every state. This has robbed governance of creativity in Nigeria. It has entrenched a culture of laziness and has tethered the nation’s greatness. If each state realizes that what is generated internally is what determines its solvency, the managers of each state will strive to improve their revenue generation ability because they know that it is only then that their own lifestyles can improve. When revenue earning is not hinged on industry, indolence becomes inevitable.
The system we currently run in the country is such that holds down the strong to reduce the weakness of the weak. It is a system that deprives financially strong states of their hard earned revenue so that the weak ones would not feel forlorn. Such system will end up weakening everyone because it is whatever is encouraged that grows. Unfortunately, the situation will get so bad that even those who are strong financially would not be able to help the weak because the system forces insufficiency on them. The poor cannot help the poor, only the rich can help the poor. What the country should work towards is a system that allows every state to realize its full potential by allowing each of them to grow at its own pace. It is then that the country can experience greatness.
It has been said that the Rivers State VAT judgment is the first step to restructuring the country. While that is unarguable, there is more to the judgment than that. The judgment is not about some states being selfish and insensitive; it is more about connecting the country with its future. By the time the judgment enjoys nationwide implementation, the states would be weaned from the federal allocation feeding bottle syndrome and would be forced to look inwards and grow their various capacities at revenue generation. Then, natural resources that have been neglected for ages would be tapped, agriculture would be given better attention, employment opportunities would be created, state resources would be better managed, the local currency would be strengthened, inflation would climb down and Nigeria would be better generally.
Now, this is a difficult route to travel but it is the best way to go.
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