IsraeliAIRFORCE:


Read the propaganda. Why are they resisting? The South supports decentralised VAT collection at the detriment of most Southern States.

The North should stop resisting the obvious or better still rewrite the whole constitution from scratch.

That facts that he used in supporting his narrative is from Vanguard Newspaper. Is Vanguard Newspaper a propaganda outlet for the north now?
If you don't read, how can you honestly refute his claims?

palsenator:
It does not still solve it all. Most states are lazy to attract investors because they know that the sharing formula does not require them to do much whereas other states like Lagos and Rivers are busy attracting foreign investors..

Obviously South West alone generates the most of the VAT being share. More reason why regional government should be considered. Apart from Kano and Kaduna from the North, others are nowhere to be found and ain't doing much to bring investments.

you are talking absolute rubbish, leave Biafra with our 1million naira VAT and see what we do with it in 5 years....................multiplying meager resources is a gift that God has given us .....so park well !!! when MTN and co come over to Biafra they will pay their Vat to us.........una think say una get sense!

bilms:
THE WAR OVER VALUE ADDED TAX: THE FACTS AND THE FICTIONS
By Olawepo Hashim


https://www.facebook.com/100050227010971/posts/392987769052120/

A country is not run successfully through share and share.
Let every state use its VAT, that should enable other states compete.

What’s is the pretentious ShophistiWretched
talking about?

mfm04622:


That facts that he used in supporting his narrative is from Vanguard Newspaper. Is Vanguard Newspaper a propaganda outlet for the north now?
If you don't read, how can you honestly refute his claims?

What's the meaning of Nnamdi Kalu's Abia State when the States with VAT laws are Rivers and Lagos States?

The man is stupid to have said that nonsense.

FalseProphet1:
I see vat reaching 80% in the coming months, I see government officials being chased out of their homes, I see the youths burning down the country, I see smoke and ashes everywhere.

This I have seen.

You’ll probably end up blind�.

emae009:
to each his own is what we are saying.. Not East � North that the writer is portraying. If Abia generates N2B, let them enjoy their N2B, when it's not enough, their leaders will leave partisan politics and blame game and come up with solutions to boost the state revenue. That will in turn make people think twice before killing others all in the name of getting political posts because you'll have to have something upstairs to eat fat in the new dispensation

I agree with you

afube:




you are talking absolute rubbish, leave Biafra with our 1million naira VAT and see what we do with it in 5 years....................multiplying meager resources is a gift that God has given us .....so park well !!! when MTN and co come over to Biafra they will pay their Vat to us.........una think say una get sense!

Honest it is you that lack sense.. Please read again... Or you don't know the meaning of regional government?

You really need to grow up... What u are saying is the same thing I spelled out.

bilms:
THE WAR OVER VALUE ADDED TAX: THE FACTS AND THE FICTIONS
By Olawepo Hashim


https://www.facebook.com/100050227010971/posts/392987769052120/

Though your article comes with data and their sources, the fact that you resorted to calling names and sounding biased, one can see that this write-up is politically motivated, hence will no longer make sense.

If you had taken a neutral posture, one would have seen fairness and transparency in your views then your content would have made a lot of sense.

[code][/code][i][/i]

palsenator:
It does not still solve it all. Most states are lazy to attract investors because they know that the sharing formula does not require them to do much whereas other states like Lagos and Rivers are busy attracting foreign investors..

Obviously South West alone generates the most of the VAT being share. More reason why regional government should be considered. Apart from Kano and Kaduna from the North, others are nowhere to be found and ain't doing much to bring investments.

blamingthedevil:




South West-2 States
North West- 2 States
South South- 1 State...
North East- Parasites(Honorable mention(Yobe)
North Central-FCT
South East- All Parasites

South west : 3 Lagos, Ogun and Oyo !

Please is laptop business a good business?

These people will just be writing nonsense without saying the whole truth.

VAT is filed and remitted centrally by companies based on their Head office locations. A company that has its headquarters in Lagos and many branches scattered all over Nigeria will pay the whole VAT collected from all their branches in Lagos. That is why Lagos is a pole distance from the other states in terms of VAT remittances.

How many of these companies have their headquarters in the southeast? Do you think a state like Abia will allow for VAT to be collected from the banks in Abia and paid from Lagos where the banks have their headquarters if state governments take control of VAT administration?

emae009:
to each his own is what we are saying.. Not East � North that the writer is portraying. If Abia generates N2B, let them enjoy their N2B, when it's not enough, their leaders will leave partisan politics and blame game and come up with solutions to boost the state revenue. That will in turn make people think twice before killing others all in the name of getting political posts because you'll have to have something upstairs to eat fat in the new dispensation

I don't know who you are but God bless you.... You're the one that says the truth.

Marvins009:
Rubbish so oyo is ranked above Ogun state this man just open mouth say shits

You no Sabi read data, Oyo na big boy o.
Oyo! Oyo! Oyo!, The state has a lot of potentials.

fkj950ax:
IGR and VAT are different.
The fact that he lumped IGR figures to explain his VAT theories is him muddying the water.

The call for VAT domiciliation by respective states is the crux. Rivers State that initiated this isn't looking at it as Northern vs Southern states performances as he has done here.

Check the heading of that table (which he sourced from Vanguard), the data he is using here is for VAT, not IGR.

Mind-blowing revelation is that, Kano state generate more than the entire 5 south eastern states

GboyegaD:
This bros needs a gag in his mouth ASAP. I understand his political ambition however, it will be nice to meddle into things more objectively. He should address the reasons why those who are against VAT being centrally collected for redistribution are complaining.

In addition, I would have wanted him to challenge the governors of our various states to work harder to increase their IGR than encouraging the ongoing laziness.

Listen bro, the only states which have ground and good reason to complain about VAT collection and distribution are Lagos, Lagos, lagos, Lagos, Lagos and then Rivers

EmmanuelEvicted:
Northern states are nothing but leeches

Who expect different ranting from dogmatic people like u?
You always believe the hoax ur bigotic ppl feed u on pulpits, very sad!

huptin:
To be frank, at the point of break up, the south east may eventually come to the realization that Nigeria was the best gift they ever had!

There is an economic blockage against the east since after the war

And only breaking away can lift that blockage

Give them international Airport and give them just one seaport , you will see wonders

FalseProphet1 [s:
post=106249256]I see vat reaching 80% in the coming months, I see government officials being chased out of their homes, I see the youths burning down the country, I see smoke and ashes everywhere[/s].

]

False is what you have seen

Why do you say so?

Jerryherd:



Fulanis and Ibos share so much similarities in Nigeria than people admit..

SouthEast. And North.. just look at the figures



..

FalseProphet1:
I see vat reaching 80% in the coming months, I see government officials being chased out of their homes, I see the youths burning down the country, I see smoke and ashes everywhere.

This I have seen.

]

False is what you have seen

FalseProphet1:
I see vat reaching 80% in the coming months, I see government officials being chased out of their homes, I see the youths burning down the country, I see smoke and ashes everywhere.

This I have seen.

Wale up from bad dream.

Playing political correctness all because he wants to be president.

This your write up is bias even when u claim the opposite, your commentary is so skewed and its general for most Nigerians, why be ur Brothers keeper? This is part of whats made our political and economic structures deviate far from true federalism

Amodi470:
COPIED FROM : PwC (Price Waterhouse Coopers) website

Nigeria’s VAT facts and figures
1.VAT was introduced in Nigeria via Decree 102 of 1993 and implementation began in 1994. It replaced the sales tax introduced via Decree 7 of 1986. Since introduction almost 3 decades ago, VAT has become the fastest growing tax revenue head in Nigeria displacing PPT (N1.52 trillion) and CIT (N1.41 trillion) in 2020 to claim the top spot at N1.53 trillion.

2.The 1999 Constitution does not mention VAT, Sales or Consumption Tax even though the VAT law predates the 1999 constitution. The omission means it is considered a residual item which falls within the remit of state to legislate on based on S.4(7) of the 1999 Constitution.

3.The VAT act has been amended several times with key changes such as clear definition of exempt items, exemption threshold for small businesses with annual turnover not exceeding N25m, requirement for foreign suppliers to charge VAT, self-charging of VAT, exclusion of rent, land and building from the scope of VAT, etc

4.Over 500 food items are exempted from the national VAT including bread, cereal, fish, milk, fruits, yam and water. In addition, education books and materials, tuition, medical services, shared passenger transport, commercial air travel, and rent are exempted.

5.VAT collection in 2020 was N1.53 trillion out of which about 51% represented import VAT and international services. The top contributing sectors are professional services & telecoms 10.6%, other manufacturing 10.07%, commercial & trading 5.06%, breweries, bottling & beverages 3.90%, transport & haulage 2.84%.

6.Alcohol which is banned in some states contributed less than 3% of total VAT collection

7.Some big sectors contribute very little to VAT revenue due to the nature of their operations e.g. banks & financial institutions contributed 1.62% (because VAT is only charged on a small component of their income such as fees & commission but not on interest or premium), oil marketing contributed only 0.63% given that VAT is not charged on petroleum products.

8.In line with S.40 of the VAT Act, revenue is shared 15% to Federal Government, 50% to States & FCT, and 35% to Local Governments. The principle of derivation of not less than 20% is reflected in the distribution to states and LGs. Although not stated in the VAT Act, other factors used in the distribution are equality 50% and population 30%. There is a 4% cost of collection for FIRS and 2% for NCS in the case of import VAT.

9.States with the highest derivation are Lagos (50.5%), FCT (13.2%), Oyo (2.9%), Rivers (2.7%), and Kano (1.4%). The bottom 32 states contributed only 7% with the bottom 3 being Abia (0.08%), Osun (0.07%), and Zamfara (0.06%). On the other hand, amounts shared by the top states & their LGs are Lagos (14.7%), Kano (3.8%), Oyo (3.2%), Rivers (2.7%) and FCT (2.5%). The bottom 3 states shared Osun (2%), Abia (1.6%), and Zamfara (1.6%).

10.In the early years of VAT introduction, filing and payments were made based on branch locations. This practice was complicated especially with respect to offsetting of input against output VAT. A central system of filing was therefore introduced about a decade ago. This means VAT is currently filed and remitted centrally by companies based on their head office locations. This gives rise to what I call the “Headquarters Effect”. For instance, all the Telcos, Banks, big manufacturing companies, top professional firms etc with head offices in Lagos remit their VAT to FIRS offices in Lagos. This artificially inflates the VAT attributed to Lagos while reducing the VAT revenue attributed to other states. Other major states may suffer the HQ effect to some extent e.g. PH Electricity Disco based in Rivers but serving other states.

 Implications of a States’ VAT regime
1.If states enact their VAT or Sales tax laws, the guaranteed winners will be the federal government in respect of import VAT and international transactions (whether retained by FG only or paid into the Federation account and shared), and the FCT. States that may either lose or gain are Lagos and Rivers due to HQ effect and subject to collection efficiency. Lagos also has to deal with granting input VAT at 7.5% on items sourced by businesses outside the state against the lower output VAT rate of 6%. All other states and 774 local governments will be worse-off, all things being equal.

2.The positions of all states will be negatively impacted by lack of capacity to collect, difficulty in auditing compliance, and higher cost of collection which may be up to 15% especially in states where consultants and other forms of agency structures are used for tax collection.

3.States that have existing consumption tax such as Lagos, Edo and others would have to repeal those laws when introducing VAT or sales tax as to do otherwise would amount to legislating double taxation.

4.Small businesses with turnover not more than N25m that are exempt under the national VAT would have to comply with VAT under the states VAT laws.

5.Penalties for failure to register is as high as N50,000 for the first month and N100,000 for each subsequent month while the fine for failure to keep records to ascertain the correct VAT is up to N250,000. This penalty regime will weigh heavily on businesses especially SMEs such as barbers, hairdressers, tailors, shoemakers, plumbers, bus and taxi drivers, makeup artists, restaurant owners, etc. This further increases the risk of such businesses being harassed and extorted in many states especially those employing tugs to enforce tax compliance.

6.People will pay more, but government will collect less due to inefficiency of collection and leakages. There will be higher cost of goods and services arising from input VAT claim and refund complications in addition to items which are not exempted under the states VAT law such as rent, tuition, processed foods such as amala, suya, jollof rice, and ogbono soup. In addition, there will be incidence of double taxation due to likely conflicts between origination and destination principle in different states. Worse still when the reality of inability to implement VAT hits home many states will inevitably introduce sales tax with its cascading effect.

7.Nigeria’s ease of doing business and paying taxes will deteriorate in view of the multiple VAT compliance and Nigeria’s tax to GDP ratio will decline.

8.Tax practitioners including lawyers and accountants will benefit as the states VAT regime will create multiple fee opportunities to assist taxpayers comply.

9.Local governments will be worse off. Effectively between states and LGs, the VAT revenue split under the national VAT is 59% to 41%. However, states are prescribing lower rates for LGs e.g. Rivers 30%, Lagos 25%.

10.FIRS will lose cost of collection on VAT revenue within states and may have to improve its operational efficiency to sustain current capacity or seek additional funding from the National Assembly which will reduce revenue accruing for sharing to all level of government.

 Conclusions and recommendations
​The connotation that the current VAT controversy will improve fiscal federalism is superficial. Out of the top 7 taxes in Nigeria, 3 accrue entirely to states & local governments (personal income tax, property taxes, and stamp duties) while the remaining 4 (companies income tax, petroleum profits tax, VAT, import & excise duties) are shared to states & LGs at rates ranging from 43.32% from the federation account to 85% from the VAT pool. This is equivalent to 5 of the top 7 taxes accounting for over 95% of tax revenue in Nigeria accruing to states & local governments.

In the US, both the federal and state governments collect personal income tax while sales tax is only collected by states. Land which is a country’s most valuable natural resource is about one-third federally owned in the US while states own less than 10%, the rest are owned by private landowners, tribal authorities and counties. In Nigeria, land is owned almost entirely by states while personal income tax, the top revenue yielding tax head in the world, accounting for about 38% of tax revenue in South Africa, up to 41% in the US and over 30% global average, is entirely collectible by Nigerian states on their residents.

So, efforts aimed at addressing the current challenges need to be redirected. It is not a clash between states and federal government (amending the constitution is squarely within the purview of the National and States Assemblies). *It is also not a North vs South context, the 32 states that will suffer financially cut across all regions. And the impact of certain states sharing VAT from alcohol and spirits which are prohibited within their territories is exaggerated given that such products account for less than 3% of VAT revenue.*

Below are my thoughts on the way forward::
1.Put people first – any outcome that negatively impacts the majority of Nigerians is not the right solution just as we cannot claim to empower the subnational by weakening at least 32 states and all 774 local governments.

2.Address inequity - the current VAT revenue sharing formula among states is not equitable. This inequity should be addressed by allocating any domestic VAT collected from each state entirely to the respective state. Only VAT collected on imports, international services and inter-state transactions should be paid into the VAT pool and shared based on derivation. This will address the current controversy without creating new problems.

3.Give accelerated hearing – this is an issue of utmost national importance and should be accorded the urgency that it deserves by the judiciary and all key stakeholders. The uncertainty created is counter productive for business and tax revenue generation.

4.Redesign the VAT structure - regardless of the outcome of the ongoing court case, a more suitable VAT regime should be developed for Nigeria and clearly spelt out in the constitution. By extension, the tax system is overdue for a holistic review.

5.Avoid reversing progress – even if states are to collect consumption tax going forward, adopting the very old VAT law as we have seen with Rivers and Lagos state is a setback especially with respect to lack of exemption for small businesses, limited scope of exempt items, not addressing the digital economy and business reorganisation. The fact that a state has the legal right to enact a VAT law does not mean it should do so in a hurry. Sufficient time should be dedicated to consultation, stakeholder engagement, capacity building and administrative readiness before enacting the law with a minimum commencement of 3 months after enactment in line with the 2017 National Tax Policy. A model legislation may in fact be developed by the Joint Tax Board.

6.Grow the pie and optimise existing taxes – beyond ensuring equity in sharing the cake, everybody wins when we grow the pie. Creating a conducive business environment to stimulate the economy and creating employment will inevitably lead to more tax revenue for all levels of government. Examples include land reforms, unlocking dead assets and removing impediments to the ease of doing business.

Nigeria’s tax system is in a bad shape, which is set to get worse with the recent developments. To find the right solutions we must correctly define and properly situate the underlying issues to avoid misdirected prescriptions or “cobra effect” where the solution designed to solve a problem ends up making it worse.

Sources of data: FIRS & NBS.

Great write up... Better than the crap that imbecilic op posted.

fkj950ax:
IGR and VAT are different.
The fact that he lumped IGR figures to explain his VAT theories is him muddying the water.

The call for VAT domiciliation by respective states is the crux. Rivers State that initiated this isn't looking at it as Northern vs Southern states performances as he has done here.

VAT data and IGR data are different
He gave VAT data not IGR data to back his claims....what is so hard to understand....rather it is you muddying the water because of ignorance

Supreme court will shut you ignoramus up once and for all....all this your grandstanding is based on ignorance

BafanaBafana:
Northerners are parasites, that's all they want to hear.
Even though they themselves are more parasitic.

They are parasite, this is why the population of people living in south from the north is far greater than the population of people living in north from the south abey?
Guy look at matter currently in hand most of the southerners can't living in south.