By Ezeocha Nzeh
Director General of the Progressive Governors Forum(PGF) Salihu Moh. Lukman, has described the attention many Nigerian state governors have given to the Valued Added Tax (VAT) as an indication that the ruling All Progressives Congress administration has made the tax more attractive than it used to be before it came to power in 2015.
Lukman in a statement he issued Friday, titled, “Retrogressive Politics and Valued Added Tax in Nigeria,” argued that the ruling party should be given accolades for its improvement in the generation of VAT, which he noted has risen so much to the extent that states are now battling to have control of it.
The Southern Governors had at their meeting Thursday in Enugu joined Rivers and Lagos states to demand for state control of Valued Added Tax, VAT, which case you n now at the Supreme Court against the Federal Government inland Revenue Service (FIRS).
The PGF boss noted that public debate about increased access to resources by state governments, otherwise known as resource control has been on since the nation return to democratic rule in 1999, adding that, it was however limited to revenue from petroleum, which was largely, promoted by the oil producing states from the South-South geopolitical zone of the country.
“That Nigerians are debating whether it is states or federal government that should collect VAT signify some progress, which has to do with the fact that there is an increase in what is being generated from VAT. For instance, in 2015, the total amount collected was N759.43 billion. Between 2016 to 2020, there was consistently increase in the amount collected respectively to N777.51 billion, N972.35 billion, N1.11 trillion, N1.17 trillion and N1.531 trillion. Everything considered, under the APC led federal government of President Muhammadu Buhari, VAT collection increased from N759.43 billion in 2015 to N1.531 trillion in 2020, an increase of more than hundred percent.
“Nigerians can conveniently dismiss the role of APC led federal government in making it possible for the remarkable improvement in VAT collection in the country such that today, it has become an attractive variable in the struggle for resource control by state governments.
The reality however is that credit must go to the APC led federal government of President Buhari. Whether it would have been possible if PDP is still in control of the federal government can only be wishful thoughts. If that were to be the case, why wasn’t it the case at any point between 1999 and 2015? No matter what anyone want to say, the reality is that the significant increase in VAT in the country between 2015 and 2020 confirmed improved efficiency and reduced corruption in the process of collection and management of Nigeria’s public finances.”
The APC chieftain argued further that “in terms of the politics of the debate, improved efficiency and management of Nigeria’s public finances are not the focus of the debate. In some ways, even those who are supposed to recognise this fact and promote the achievements of the APC and its federal government, instead have become so defensive, may be because the public noise in the country is all about demonstrating how the APC led federal government of President Buhari is the driver of inequality, injustice and unfair practices against state governments.
Sponsor of the debate, Governor Nyesom Wike of Rivers States, had argued that monies belonging to state governments are collected by the federal government and shared to states.
According to Governor Wike, State money is taken by the federal government, even as he expressed ‘surprise at the level of injustice in the country’, arguing that ‘Rivers State generated about N15 billion as VAT in June 2021 but received only N4.7 billion, Lagos State generated over N46 billion as VAT in June, but got just over N9 billion, whereas Kano State generated N2.8 billion and also got N2.8 billion as allocation.’
Lukman said, “Governor Wike can audaciously and shamelessly talk about VAT today because, its value has significantly increased which made it attractive for a rich state like Rivers to be interested in controlling it. If Governor Wike has any morality, he should look back and acknowledge how small Rivers must have received as its VAT share before 2015.
Being a leading member of PDP, what was responsible for the low VAT records in the country between 1999 and 2015? And since, according to him and almost every leader of PDP, Nigerians are looking up to the PDP to rescue the nation from ‘bad governance’ in the hands of APC, does PDP’s brand of good governance come with low capacity to manage the nation’s public finances?
“it is important that Governor Wike is reminded that the current increased record of VAT collection in the country is made possible only because the PDP is no longer in power. If PDP were to be in power the fact of inefficiency and corruption in the process of collection and management of VAT would have continued and the amount collected would have remained relatively low. It is not by accident that VAT collection in the country significantly increased under APC led federal government.
This is because one of the specific commitment of APC since 2015 as outlined in the section of the party’s manifesto Funding a New Nigeria was that ‘APC government will set about the urgent task of getting Nigeria’s public finances in order, by tackling the massive waste, duplication and corruption in the system, diversifying the economy and expanding our tax base to increase non-oil revenues, and reprioritising public spending away from bureaucracy towards investment in infrastructure and improved frontline services.’
“With respect to the specific issue of VAT, if the federal government can record increase of more than hundred percent between 2015 and 2020, is the current figure representative of the total expected collection from VAT?
Simple reading of all the federal government revenue projections as contained in every year’s budget estimate will indicate a wide gap in expectation. Although there is remarkable increase in collection, it should be recognised that a lot more can be done to generate more revenue from VAT. Can transferring collection to state governments achieve that? May be and maybe not. But beyond the question of what is collected and what states get, what is even the economic implications VAT?
“Overall, APC leaders, must take advantage of the current VAT debate to take ownership of its achievements, which the fact of improved VAT collections in the country represent. In doing, APC leaders must go beyond the narrow debate about access to what is currently available. If at all APC leaders and members are to make any claim to progressive political credentials, generating large scale financial resources at both federal and state levels, which should be deployed to expand the productive base of the nation’s economy, should be the aspiration. There is no reason why any state in the country, including Zamfara, Yobe, Osun, Ekiti, Abia, Ebonye, should not aspire to generate at least N10 – 15 billion monthly as Internally Generated Revenue.
To be caught in the backward debate about whether they should have the little they currently receive from the federation account is retrogressive. As a nation, our politics and democracy must be refocused towards nurturing the productive potentials of every state
“The VAT debate in the country also poses a significant challenge to political parties in terms of developing capacity to coordinate policy debate within the structures of parties as well as ensuring that policies of governments produced by the party reflects any emerging consensus. Somehow, the current VAT debate in the country is completely removed from the structures of the main political parties – PDP and APC. If the debate is to take place within the structures of PDP, for instance, even the sectarian outburst of Governor Wike will be moderated. On the other hand, if the debate is to take place in any of the organs of APC, the question of the role of APC federal government in achieving improved collections will be well emphasised. In addition, the potential to mobilise more revenue from VAT and the expected role of state governments cannot be avoided.” He stated.
