Vat Jamboree the collective wayout

VAT JAMBOREE, THE COLLECTIVE WATOUT 

Since the increment of VAT from 5% to 7.5% in early January 2020, some wings across the spheres of Southern Nigeria had frowned at some states with low IGRs, tagging them as saints-in-the-disguised-attires.

The rise in the nosegate began when states like Sokoto, Kano, Zamfara and the likes banned the opened drink of beers in some selected places; and the market advantage the beer has is seen in the IGR in states like Port Harcourt, Lagos and other Southern states. This raised the voices as to why would they appear saints when they can conveniently consume the VAT generated from the beer ?

The total percent generated from the beer nationwide is not up to 15% of the total VAT generated, accusing the state of not allowing open beer drinking does not hold water. And the notion that north entirely is a saint from beer drinking is a far-fetched myopic claim.   However, those states can be molested if the population cannot be engaged to generate IGRs.

Every Nigerian in effect, pays tax in one way or the other, either directly or indirectly. The voices emerging from Lagos and Port Harcourt to decentralise the VAT collection has a direct marriage between the large scale of economic prosperity and the oil the region has, the region which is the largest Nigerian source of revenue which literally translates to 70% of the Nigerian economy, with the port in Lagos and Port Harcourt.

VAT as widely practiced in the world is centrally collected. To ensure no grudges, there should be a fair share of tax allocation based on the derivation principle of a VAT generated or increment in it. Say, Lagos generates 30bn in a months, the derivation principle must be allotted in a lion share after allocating the whole tax across the states, this will give other low income states to take the cue so as to assess their domestic income and diversify by finding possible solution to their IGRs. 

The oil boom in the late 60s attracted a lot of individuals with capital at hand, thereby turning the sector into a (Red Ocean), to use entrepreneurial terms. Everywhere today across the country is a filling station. The influx in the market competition castrated the industry, leaving filling stations deep inside bushes at bay, periling at the mercy of God, wasting resources.

With abundance land mass in the North, mechanise farming must be adopted alongside processing factories, this will accommodate the large proportion of youths that are derogatory labelled as Almajiries into factories and industries, with the factories in a place, poverty will never resurface.

A filling station maximum accommodates say 10 peoples, with the nature of the structure, plus four head pumps, one manager, watchman and other attendants inside mart. Imagine if such capital is used to establish a rice processing mill or tomato paste or any other factory that has a byproduct and is a multiplier effect.

We should not shift the goalpost to another field, as some people are calling for scrapping and merging some states into another. This of course will strengthen the revenue when for instance the NorthEast is merged to become a single state. Notwithstanding, each state should channel its resources borrowed within or outside the state, or by international donors to harness their natural resources ranging from coal, oil, and invest heavily in technology so that all the capital projects should be income generating infrastructures.

When VAT is decentralised, the relinquishment that awaits virtually all the states is a threat to the Nigerian existence, as no tangible efforts on the ground to resurrect every sector that has died three decades ago. The ensuing atmosphere would be, governors going helter-skelter in attracting foreign investors to exploit the abundant natural resources, or a mayhem and chaos when salaries cannot be paid. God forbid !

A target should be set for each state to ensure within that timespan, they stabilise their IGRs. Alloting certain amounts every month for establishment of factories, a condusive and secured enviroment that will guarantee the take off of any investemnet, so that in the next decade no state will rest its neck on the shoulder of other states. 

As Gombe state governor would put it, this is a wake up call to ensure each state depends on itself, drafting realistic economic policies that give waiver on levy on SMEs to flourish which is the backbone of every economy in the world. 

Ahmad Murtala

Writes From Gombe State, The Heart Of NorthEast Of Nigeria.

Ahmadmurtala43@gmail.com

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