Rivers State govt has taken FIRS to court and obtained a favorable judgment that it is states and not the federal govt that should collect VAT.

FIRS has tried to apply for stay of execution of that judgment but their effort has hit a brick wall and going by Nyesom Wike’s antecedents in the courts, I do not see anything changing about the judgment even till the Supreme Court except of course through some obvious political influence.

Rivers State for instance has enacted a law to that effect with Lagos state own law having passed Second Reading in the State Assembly. Now these are the two highest VAT generating entities.

In the event that Rivers and Lagos succeed with these laws and the courts fail to overturn the judgment of the Rivers High Court, we know that it is ite missa est as other states will naturally queue in.

Now, the question is, what are the likely implications that might arise from such scenario?

1) Resource Control: If there’s anything that is pronounced in the agitation for restructuring, it is the question of resource control more technically referred to as ‘fiscal federalism’. Should this judgment stand, it will be the springboard for similar judgments that will likely lead to complete resource control by the federating units. But until then, this is a start and step towards resource control.

2) More Sincerity in the Fight against Insecurity: One thing that we all have agreed is that there seems to be sabotage of the war against insecurity/insurgency by those in the high places in the north. But one thing is clear, northern governors, by virtue of the security reports at their desk, know these saboteurs but give excuses or feign ignorance because even if every business activity grounds to a halt in the north due to insecurity, Lagos, Rivers, Ogun and other southern states, will generate VAT that will be handed to them at every month end. Now add that to oil money and you see why they don’t care.

But should it be to your tents oh Israel, and every state of the federation is meant to survive on what it internally generates, you’d see more sincerity towards the fight against insecurity. Because they would see that there are no businesses that would pay VAT due to the activities of Bandits, ISWAP and Boko Haram. By the time the northern states, especially the worst hit states, see no businesses to tax, they will be forced to go after the sponsors of these monsters and make the monsters are defeated so that businesses can thrive.

3) More Liberalism from the North: A nairalander made a funny comment that “by the time Wike is done, northerners would beg Nigerian Breweries to build a beer tank at the back of the Sultan’s palace”. Well the comment simply captures the grievances of the south against northerners who, through Hisbah, destroy thousands of crates of beer on daily basis because it is haram but would always share from the VAT generated from the sale of alcohol in the south.

It is worthy to note here that aside Oil and Gas, pharmaceuticals and Construction, Alcohol is likely the next highest generator of VAT( this is a personal projection that might be wrong). So by shutting out one of the highest generator of VAT, it is already disadvantaged as oil and gas, pharmaceuticals and construction does not seem to boom in those states either.

Now, when come comes to become, the north would be forced to relax some of “ethically restrictive religious principles”(as Wike chose to put it) and become more receptive and liberal to diverse businesses that could boost IGR.

4) More Ingenuity by Governors and State Governments: When states begin to generate what they consume and this feeding bottle kind of federation is finally murdered and interned, elected governors and states govts would become more ingenious towards revenue generation. They would see to expansion of tax net and that govt revenues are adequately accounted for instead of being pilfered into the pockets of rogue officials in cahoot with governors sometimes.

And do you know what happens when citizens pay more taxes? Demand for accountability would rise. Every citizen would want to know what his/her tax was used for. And with increased demand for accountability comes increased govt responsibility.

Again, governors will start thinking about investing in things that would yield revenue for the states aside tax instead of just sharing what has been generated through tax.

Trust me, a lot would change with the implementation of this new phase of our fiscal existence if political influence can allow it succeed.

Now what’s yours?
Do you disagree with any point above or you have more to add?

Penguin is a bird of reason!

Seun
Lalasticlala
Mynd44

Let the north collect revenues from cow rearers,bitterkola sellers,tomatoes,pepper and onion sellers.

Afteral,southern governors generates revenues from alcohol and ashawo houses,which is not allowed in the north.but,the same north will want to share from revenues generated from them through federal inland revenue.

Nice write up.
This is one move, if totally successful, that would put more money in the coffers of the states- the serious ones. It would lead to states being more serious about creating a conducive environment for business to thrive.

It would kill laziness in the stvpid state governors and make people hold their governors more accountable.
This is one of the things that can save the unity of Nigeria. Although, left to me, I would like to see Nigeria divide instead of continuing to be at the mercy of the North.

More businesses will spring up from individuals that have been depending on salary alone for livelihood.
States and FG will certainly renegotiate their minimum wages.

donbachi:
Let the north collect revenues from cow rearers,bitterkola sellers,tomatoes,pepper and onion sellers.

Afteral,southern governors generates revenues from alcohol and ashawo houses,which is not allowed in the north.but,the same north will want to share from revenues generated from them through federal inland revenue.

In Nigeria, you can't collect VATs on Agricultural produce like tomato, onion, pepper etc

I don't see the FIRS winning at the appeal or supreme court.

The reason the FG was collecting the VATs on behalf of the states was because the states were not capable, now some of the states are capable to collect the VATs.

The FIRS can keep on collecting the VATs on behalf of states that are not yet ready, the states that feel they are now capable should be exempted.

DubaiLandLord:
In Nigeria, you can't collect VATs on Agricultural produce like tomato, onion, pepper etc

but, they eats revenues from our oil and gas.

North go unBan alcohol sharperly. They will rather impose high tax on it

Las las Islam na strong evil demon the entire North need an urgent deliverance from

This will be a libration for any serious governor's from dictate of the federal government. This is the beginning of Resource control ,the monthly allocation for each state from Big elephant will reduce .this will reflect and rebranding our politics in nigeria from state level. but states Governors need more leadership orientation not to Turn themselves to small God in their states bcs many of them are greedy.eike try on this.

That is The Real IGR. All other IGR practices are frauds and exploitations of the poors.

That is The Real IGR. All other IGR practices are frauds and exploitations of the people.

obaaderemi:
Nice write up.
This is one move, if totally successful, that would put more money in the coffers of the states- the serious ones. It would lead to states being more serious about creating a conducive environment for business to thrive.

It would kill laziness in the stvpid state governors and make people hold their governors more accountable.
This is one of the things that can save the unity of Nigeria. Although, left to me, I would like to see Nigeria divide instead of continuing to be at the mercy of the North.

That is it.

More money to the regions that can generate it. It’s now left for them to use it judiciously.

This would make states who make decisions just to witch hunt their political opponents despite the economic benefits to seat up.

Only in Nigeria that a governor will enter and start destroying profit generating business of his predecessors. Cause they know business or north end of month they are sure of money.

Even North East Development Commission, since Oil allocations to states are based on derivation from oil produced in the state, y then is NEDC being financed by VAT from other states, y not the FG give them a portion of the VAT or tax from the north east so it will me sense

Every southern state would benefit from this unless the state governors are lazy

If imo state tax clubs , hotels and Bar's 7.5% VAT I'm very sure 30 billion a year is guranteed

States would begin to see n help develop industries

The states that think that they generate high VAT revenue should not be quick to celebrate yet.

VAT is a sales Tax. Companies will pay VAT to states in proportion with the value of their goods and services consumed in such states.

Under FIRS, the major MNCs paid their VATs at their corporate head offices which were mainly located at Lagos and PHC. The value of sales of their products in different states was inconsequential since the VAT proceeds was shared across all states.

But with this new regime, Enugu state will charge NBL for all beers distributed in Enugu.
Ekiti state will demand VAT from MTN and DSTV on all sales made in Ekiti.

No state will accept input VAT from other states.

Again I forsee a situation whereby some companies may relicate their head offices to the owner's state of origin as a solidarity move.

Nice write up.

But some people still think it's only the North that would suffer if States starts collecting VAT.
Apart from Lagos State, all other states would suffer. So both Northern and Southern governors should put on their thinking cap. Including Wike the wicked.

The north will suffer

orisa37:
That is The Real IGR. All other IGR practices are frauds and exploitations of the poors.

What of oil money?

OIL MONEY IS THE MAIN DMAIN IGR. VATS SHOULD BE PAID TO THE STATE GOVERNMENTS WHERE THE OIL IS EXPLOITED.

SINCE THE FEDERAL GOVERNMENT IS NOT READY TO DO THINGS RIGHT, THE JUDICIARY IS NOW IN TO STOP CORRUPTION AND PUT THINGS THE WAYS THEY SHOULD BE.

LET THE FEDERAL GOVERNMENT COLLAPSE BECAUSE OF GREED IGNORANCE AND DISBELIEF.

“by the time Wike is done, northerners would beg Nigerian Breweries to build a beer tank at the back of the Sultan’s palace”

As comic as the quote is, it is the major reason why the North is in panic mode.
I still don't understand why anyone will want to eat his cake and still have it.

Some states want to be eating big food from a small pot,this is an eye opener.