We are being treated to so much arrogance by the Lagos crowd. They are threatening the entire country that their plan to hijack 60% of the vat revenue of Nigeria, as pay back for decades of Nigeria pouring oil money into Lagos to grow it to what it is today, cannot be stopped. I do not know where they derive the confidence to threaten Nigeria from. However, this is finance. They will see more than they bargained for legally at the end of the day. This plan to hijack Nigeria will cost them dearly. This is not about Yoruba and Hausa or Igbo. It is about the arrogant Lagos crowd and the rest of Nigeria, including other States in the South West Zone who are equally going to be deprived of much needed revenue to feed the greed and arrogance of the Lagos crowd. Lagos, as the investment of Nigeria, ought reasonably at this time to be accountable to the rest of Nigeria for the proceeds of that investment. They are instead, talking of further depriving other States.
Anyway, the proposal is UNCONSTITUTIONAL. Section 162(2) is the constitutional provision for distribution of the revenue of the Federal Government, whether from vat or any other source. This is what is says:
“The President, upon the receipt of advice from the Revenue Mobilisation Allocation and Fiscal Commission, shall table before
the National Assembly proposals for revenue allocation from the Federation Account, and in determining the formula, the National
Assembly shall take into account, the allocation principles especially those of population, equality of States, internal revenue
generation, land mass, terrain as well as population density;
Provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than thirteen percent of the revenue accruing to the Federation Account directly from any natural resources. ”
I. Any proposal about how to share or distribute any revenue of the Federal Government must proceed from the Revenue Mobilization Allocation and Fiscal Commission as advice to the President.
2. The proposal must proceed from the President to the National Assembly as a comprehensive proposal on revenue allocation. That is to say that it must be under a revenue allocation bill not any putative tax reform bill.
3. The factor of derivation as a component of any formula is restricted to revenue from natural resources and it must not be more than 10%.
4. Internal revenue generation is a factor. It means that States that have less capacity for internal revenue generation should get more than States with higher capacity. This is what our fathers in their wisdom decided but which the arrogant Lagos crowd wish to apply in the reverse. Lagos already generates over 50% revenue more than any other State in Nigeria from different taxes for the reason that it is the commercial capital of Nigeria, which status derived from decades, if not a century, of national investment in the State. Indeed, Lagos does not need revenue from vat to still be ahead of other States in revenue generation. Vat should be used to compensate States that have suffered comparative disadvantage in Federal Government investments over the years.
We must not be unaware of the what the Lagos crowd is trying to turn our county into. If you give 60% derivation for vat, it means that the politics about location of Federal Government projects and infrastructure and even giving approvals for location of projects and industries generally will become more deadly. These are the things that attract commerce and result in vat revenues. Online trade will be threatened because no one could be certain who should claim derivation. Nigeria will descend into unprecedented levels of rancour and acrimony.
Nigeria should watch the Lagos crowd keenly for Nigeria’s own good.
Published by Chuks Nwachuku
