Why States That Are Angry Over VAT Collection Can’t Be Blamed – Sagay

Sagay

Prof. Itsejuwa Esanjumi Sagay (SAN), Chairman of the Presidential Advisory Committee Against Corruption (PACAC), in this interview with TEMIDAYO AKINSUYI, shares his thoughts on the controversy trailing the collection of Value Added Tax (VAT) between the states and the federal government. He also speaks on the brouhaha over zoning ahead of the 2023 general elections. Excerpts: 

 Sir, there is conflict between some states and the Federal Inland Revenue Service (FIRS) over the collection of Value Added Tax (VAT). Also, the Attorneys-General of the 36 states have sued the Attorney-General of the Federation (AGF), Abubakar Malami, over alleged failure of the Federal Government to remit funds generated from stamp duties into states’ account. Their argument is that they are the sole authority to collect stamp duties and not the Federal Government. As a senior legal expert, what is your take on this? 

I’m a very strong federalist. Anything that seems to take away from the capacity of the federating units, that is the states, always disturbs me. Any arrangement that looks unfair to one part of the country also disturbs me too. The way the VAT issue has been dealt seems unfair to some states which have high VAT turnover. What they get in return from what they produce is too small. So, there is justification for their displeasure on this matter. Luckily for them, there is no provision in the constitution which places VAT in the jurisdictional exclusivity of the federal government. That is why they are able to go to court to argue their own rights on the VAT issue. So, I appreciate the pain that made them do so, particularly Lagos State for whom I have been complaining for a long time, including Rivers state and a few others. To me, it is either of two things. It is either states should collect their VAT and keep it and then the Federal VAT that people are now talking about could then be shared under the usual provisions of the federation account. States should collect what they keep as VAT and perhaps, where the quantity of collection is very high. Let me add that the size of collection is always related to punishment and cost the states suffer which include the size of the population, construction of roads, building hospitals and various other facilities as a result of the high population that is producing your VAT. But I still feel that such states that have high VAT could still transfer a portion of it to an account that can be distributed round those states that have difficulty, not as high as it is now but clearly stated as it was in the First Republic where the regions were transferring 30 percent of what they made from their resources to a distribution account, which was in turn distributed in accordance with poverty. In other words, the poorer states who are facing more hardship got more. We can do so now but in doing so, that recognises that this is what you are transferring to the distribution account and therefore contributing to the welfare of your brothers and sisters in the less endowed areas. That was acknowledged. So, in essence, what I am saying is that this should be recognised or, if the federal government is going to collect it out of convenience, then it should be done in a manner that recognises in a much larger way, the entitlements of those on whose territories the highest number of VAT is collected. 

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Do you think this is the beginning of Nigeria’s restructuring as some people have claimed? 

Yes, I have heard a lot of people say that this is the beginning of restructuring, True Federalism and so on. It is a very small part of restructuring because we still have other things that have not been mentioned. We have the issue of resource control, state police. We also have the issue of local government which did not feature in any constitution. That is an area which is totally exclusively within state command and the state can create as many local governments as it wants but must fund it itself. What we are having now is federal type of unconstitution;ally created local governments, which is being paid for by the resources of all the country, including those states that have very few local governments created for them. Take for instance, Bayelsa state that has eight local governments, getting very little there and it is a major contributor to the funds of local governments. That to me, is not fair. Those are some of the things that are wrong which are currently going on. So, we should simply remove local governments from the constitution and allow states to create the numbers of local governments in the areas they want and fully fund it exclusively themselves. 

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Rivers state governor, Nyesom Wike has said states that have a penchant for destroying alcoholic beverages can no longer enjoy the dividends of Rivers state VAT. Do you agree with him? 

No, I don’t share that view. When you go to that level, it is a kind of petty level. Doing so can affect the major case that one has and then this petty issue then becomes the major issue , leaving the major and important issues undiscussed. What is the quantity of VAT on beer? Very little and insignificant when compared to the overall quantity. So, I don’t think we should waste our time on that issue. 

The Southern Governors Forum at their meeting in Enugu last week reiterated their earlier position that thy will not support any Northern presidential candidate in the 2023 general elections. How realistic is this given the fact the Northern Governors Forum may not align with their position? 

I have been saying it in the last two years that the next presidential should be from the Southern part of the country. I agree with the Southern Governors absolutely. We have to commit to fairness and inclusivity if this country is to remain as one. We are so diverse. It is a country where two large parts are amalgamated. They were not the same country before and that is still clear. So, the two sides must be involved in the governance of Nigeria. That issue of presidency must be conceded to the South now and then later to the North. The North is enjoying the period of presidency under Muhammadu Buhari which will end in two years from now in May 2023. After that, I think it will be very reckless for anybody who insists that the North should continue to have it. It is like behaving as if the other part of the country is irrelevant and can be ignored, insulted and not considered in the issue of governance. That to me is a dangerous. We should just agree that the next president should be from the South. 

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The spokesman of the Northern Elders’ Forum (NEF), Dr Hakeem Baba-Ahmed last weekend said heaven will not fall if a northerner is elected the next Nigerian President. What is your reaction to that? 

Hakeem Baba-Ahmed has been speaking in tongues for the last two years, everybody is always wondering, where is this man going? I think he was so angered by the resolution of the Southern Governors that he now came clear in the open and spilled the beans that he has been hiding in his heart all along. He is a northern irredentist and he has exposed himself. From now, nobody will take him seriously again because he is a lost case. He should just be ignored. 

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