With VAT dispute, 11 issues on federalism resurface

RAGING controversy over the rights to collect Value Added Tax (VAT) in the country has further fueled the renaissance of what most stakeholders called a National Question. Dating back to precolonial Nigeria, the demand for appropriate answers to the phenomenal riddle has cut across generations and time frames.

 

National Question

A retired military officer, Colonel Tony Nyiam (retd) and the general secretary of the Yoruba Council Elders (YCE), Dr Kunle Olajide, captures some of defects, pervasive inadequacies and injustices inherent in the Nigerian federal structure. These lapses include skewed geopolitical structure, lopsided state structure, manipulated fiscal system, and overwhelming domination of power cum curtailed access to political power and rights infringement of citizenship on the ground of geographical and linguistic roots. The incongruity to the principle of federalism are amply evident in inequitable federal allocations, appointments, number of states across regions, representation in the National Assembly, cabinet, security architecture, project location and revenue generation and distribution.

The overall consequence has been the sustained threats to the oneness of the country and progress more than 100 years after the amalgamation of the northern and southern protectorate of Nigeria, and 61 years after it freed itself from the shackles of colonialism. Out of the fistic hold of the British colonial masters that exploited both the human and natural resources, the country soon sunk into the firm grip of local imperialism and hegemony.  As the acts of injustices subsisted, the agitation for convoking of a Sovereign National Conference (SNC) gained ground necessitating the setting up of commissions to address affecting the Minority ethnic nationalities spread across the country.

 

Legislature

At the dusk of colonialism, Nigeria embraced a bicameral legislature, with the 1960 Independence Constitution granting full legislative power to the Senate comprising just 44 members and the House of Representatives. All the senators were nominated with each of the three regions producing 12 each and four selected by the Governor-General on the advice of the Prime Minister. However, all the House members emerged through direct elections conducted in their constituencies.  Though the 1963 Republican Constitution that conferred full political independence on the country contained a few amendment to the 1960 one, it did not alter the legislative framework fundamentally. For example, the parliamentary system remained but with more power to the parliament to elect the President of the country. From 44, the number of the Senators rose to 56 members, while that of the House increased by six to become 312 members. The 1979 Constitution discarded the parliamentary arrangement for a presidential system, but allowed the bicameral legislature renamed the National Assembly. Section 44 – 45 of the constitution provided for the election of senators from each state, coupled with 450 members representing the whole country on the basis of population.

The 1999 Constitution in section 48 provides that the Senate shall consist of three Senators from each of the 36 states and one from the FCT, Abuja; making a total of 109 members. Section 49 stipulates that the House comprise 360 members representing federal constituencies of nearly equal population. This bloated legislative structure has been a drain pipe on governance.

The members draw humongous salaries, and allowances, as well as severance packages at the end of a four-year tenure. This does not include estacode, tour duty allowances and others that accrue from self-appropriation. So, the position of people clamouring for a complete overhaul of the National Assembly is the high cost of running the institution. The National Assembly gulps between N115 billion to N120 billion yearly as budgetary allocation, to take care of just 469 members and legislative aides, civil servants, and other support staff of less than 1, 600 persons. According to some experts, the annual budget of the National Assembly is bigger than the budgets of 19 states, therefore, Nigerians have suggested that the legislature become part-time with members paid on the number of days of working.

 

Strong centre

Through self-serving actions, the federal structure has been turned into a unitary arrangement, with the centre acquiring awesome powers against the grains and spirit of federalism. States are pawns in the hands of the Federal Government, when they ought to exist under a coordinate arrangement with the centre. The awkward and convoluted federal system is a sharp contrast to ethnic diversity or  heterogeneity of the country, and constitutes the fundamental basis for  sustained campaign for restructuring; devolution of powers; weakening of the centre and  calls to reduce the functions of the Federal Government to external affairs, currency regulation, communication and defence of the federation from external aggression and internal insurrection.

 

Revenue Allocation formula

Before 1959, regional governments had 100 percent right over mining rents and royalties. But oil production and exploration in 1958 altered the arrangement. The sharing ratio for revenue from mining rents and royalties became: mineral regions, 50 percent; federal, 20 percent; and prospecting firms 30 percent. Another change was made in 1994 on sales tax that states (or regions) used to be 100 percent right before it was changed to the Value Added Tax (VAT) and to be collected by the centre. The centre has the right to 35 percent of the revenue.

Under the current revenue sharing formula, the Federal Government takes 52.68 percent, the states 26.72 percent and the local governments, 20.60 percent with 13 percent derivation revenue going to the oil-producing states.  States own the land under the law, but the exploration of the resources therein (in terms of mineral deposits) falls within the purview of the centre. Strident agitations for a return to fiscal federalism has not changed the status quo, casting doubts on the possibility of the ongoing moves by the Revenue Mobilisation Allocation and Fiscal Commission to effect a paradigm shift in the policy of robbing Peter to pay Paul.

 

Mutual suspicion and mistrust

The alterations in the federal structure after Nigeria’s independence and the dumping of the constitutional structure orchestrated anger and frustration of stakeholders in the Nigerian project. The consequent imbalance in the structure has continued to breed discontent, mistrust, ethnic and religious crises, diminishing the status of the country in the global arena. It equally promotes suspicion and bigotry among the ethnic nationalities, thus the agitation to address the National Question, a return to political and economic autonomy to the federating units so as to whittle down the unjustifiable enormous powers of the centre. It also underscores the agitation for true fiscal federalism and regional control of the natural resources as opposed to Federal Government ownership and control.

 

Political power

The National Question also relates to issues surrounding the domination of political power. Since Nigeria’s independence 61 years ago, the North has produced nine out of the country’s 12 leaders. Apart from Chief Olusegun Obasanjo and Dr Goodluck Jonathan, all the other leaders came from the three zones in the North. The political divide cleverly influenced the process that threw up Obasanjo and Jonathan as leaders at different times, space and circumstances. The skewed power structure was equally evident in the composition of the Federal Executive Council, which under the military combined both the executive and the legislative duties. For instance, during the regime of former military president, General Ibrahim Babangida, a 19-member Armed Forces Ruling Council comprised 13 northerners and six southerners.  Under the regime of the late General Sani Abacha, the Provisional Ruling Council in 1984 consisted of 15 northerners as against 10 persons from the South. The marginalisation cut across major Federal Government ministries, corporations, departments and agencies, eliciting outcry from other ethnic nationalities over the years. The strong grip of the elite frustrated two eminent persons from the South from becoming civilian presidents at different occasions.

 

Security

Worsening security challenges confronting the country informed the persistent clamour for a holistic restructuring of the security architecture of the country for maximum, optimal result and impact. There is an apparent loss of confidence in the subsisting system, thus the clamour for state police, balance of power and representation in the top hierarchy of the nation’s security architecture. The disequilibrium in the composition of the structures is regarded as a drawback to the letters to the spirit of federalism. Also of great concern to the advocates of the National Question is the location of critical military institutions and formations in parts of the country. According to them, most of the structures  are located in the North without due regard for the underlying factors of federalism.

 

 2023 presidency

There are subterranean moves by an influential section of the ruling elite to perpetuate itself in power. It is working to frustrate or truncate a mutual agreement on power rotation between the North and the South. Such display of insensitivity and arrogance tends to pose constant threat and danger to the corporate existence of the country. Having been in power since 2015, the thinking is that North should be willing and ready to collaborate with the South towards producing a president of southern extraction with pedigree, clout, vision and discipline to lead the country from 2023. This, according to concerned individuals and groups, will be in tandem with the principle of rotational presidency as part of the safety valves, evolved against political combustion in the country, and meant to assuage agitators against ethnic marginalisation.

 

Citizenship

The constitution stipulates conditions of a non-indigene to rights and privileges after living in a state for a number of years or plying his trade. But what obtains are dichotomy and segregation and discrimination against those referred as non-indigenes even though they fulfill all obligations as citizens, including payment of taxes and other levies and charges. They are used and dumped after elections or offered nonsensical appointments in the name of ethnic inclusion. Their access to education, appointments and elective officer are curtailed through discriminatory policies on residency, religion and ethnicity.

 

NASS budget

As far back as 2010, Nigerian lawmakers were regarded as the highest paid in the world, with each earning more than any American president. This assertion was corroborated by a former governor of the Central Bank of Nigeria (CBN), Alhaji Lamido Sanusi, once decried that that one quarter of Nigeria’s overhead expenditure was being spent on members of the National Assembly. This is in spite of the rising unemployment rate, low life expectancy, and 70 percent of the people living below the poverty line, worsening economic indices on human capital development.

 

State creation

There is a structural imbalance arising from the inequitable creation of states in the country. The lack of transparency and sincerity of purpose was evident in favouritism, patronage, cronyism and ethnic cleavages, hence state creation has failed to assuage those genuine agitators who felt cheated and abandoned in the first instance. The goal of achieving national integration and local autonomy is defeated. So, many of the states in dire financial straits are aggravated by inept and visionless leaderships. Sadly, the number of states remains a major variable for resource allocation, distribution, access to major government facilities, membership of the parliament, recruitment into critical government agencies, including the armed forces, and para-military agencies. The lopsidedness exists not just in the number of states in the North (19) and the South (17), but also in the number of local government areas recognised and listed in the constitution. Whereas Jigawa State was created out of Kano, both states have 33 and 44 local government areas respectively, while Lagos has just 20 LGAs despite its dripping human population. Its consistent cry for a special status flies in the wind.

 

Nyiam, Olajide Lijoka speak

Like many other personalities, Col. Nyiam is on the same page with southern governors in solidarity with Rivers and Lagos states for standing firm and resolute on the rights of states to collect VAT. The former military officer added: “It is the symbol of all the struggles we started, especially states in the South, so many years ago. VAT is a reflection of all our problems. VAT is called sales tax all over the world because anything you consume has a good or side effects as the tax is meant to remedy the effect, for example, alcohol consumption.” He declared that Lagos and Rivers were more than justified to take their current steps in order to protect the inalienable human rights of the people they govern.   He opined that the ‘short-changed states’ mumu (docility) has gone on for too long. The collection of VAT, sales tax, stamp duties, and others should be the responsibility of the federating units. “This would serve as a means by which a geo-political economic region invests in human capital and infrastructure development to attract investment,” Nyiam said. According to him, Lagos State has been grossly cheated, and that a former national chairman of the Peoples Democratic Party (PDP) cautioned governors from the North against provoking the South when they began to adopt Sharia but they failed to heed the warning. He concluded: “Lagos State needs the money (VAT) to beef up security and provide much-needed infrastructure for the people. So, the action on VAT is justified and justiciable. I admire the courage being exhibited by Lagos and Rivers State on VAT. It is a part of the jaw-jaw towards getting things right.”

In his own reflection, Dr Olajide said the VAT imbroglio represents a metaphor for the National Question many talk about concerning the ills in the existing federal structure. He noted: “Based on the Independence Constitution, every region was allowed to do things in their own ways and remit a little percentage of their revenue to the centre in Lagos; that each region will manage its resource and contribute a certain percentage for the upkeep of the centre.  So, the VAT issue now is indeed a metaphor for the National Question. Some states have also raised issue relating to stamp duty. It is a metaphor for us to find a solution to the National Question. It is clear to everybody that for this country to stabilise and move forward, we must answer the national question by facing the reality that we are not one people but can collaborate through a true federal system that guarantees equity. There is no part of the country with resources. However, this idea of a centralised government in Abuja is most unacceptable to us in Yorubaland.”

Dr Akinboyede Lijoka of the Department of Political Science and International Studies, Ahmadu Bello University, Zaria, said Nigeria currently operated a skewed federal system owing to the long years of military rule and the inability of the National Assembly to amend the constitution to reflect on genuine federal arrangements since 1999.

“As advanced by the doyen of federalism, K. C Wheare, if the component units (state and local governments) lack fiscal autonomy and would have to go cap in hands for financial bailouts from the federal or central government, any talk of the federal system is misleading. The essence of this is that the component units should have the financial capability to function as autonomous entities and to discharge their functions. The 1999 Constitution (as amended) encourages the commonwealth of revenues collection and allocation.

“This wittingly places the federal government at a competitive edge. To be sure, VAT is centrally collected in most federal states and allocated in line with the formula made for that purpose. However, I am particularly impressed with the decision of Governors Wike and Sanwo-Olu of Rivers and Lagos states respectively, to challenge the status quo. It is an attempt to strengthen our federal arrangement. Because as a means of struggle, the essence of true federalism, as Shivji (1989: 71) observed, is ‘not a standard granted as charity from above but a standard-bearer around which people rally for struggle from below,” Lijoka said.

In providing answers to the national question, some pundits say related teasers should include, who owns the land; is it a commonwealth or otherwise? Should a section hold the knife while others bake the proverbial cake? Why must a section decide the date of others if all have an equal stake in the Nigerian project?

 

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