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Politics

The Politics Of VAT And Stamp Duty

 

The ongoing drama between the Federal Government and some States on the VAT Court Order in Rivers State Federal High Court has generated both good and bad ripples within a very short timeframe.


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There are so many inconsistencies that have been going on in the administration of VAT for years.

There is no doubt the country has been struggling with revenue generation since the world crude price crash and the onset of the COVID-19 pandemic. This development was definitely part of what necessitated the tax tussles between the levels of government.

Likewise, the unfair distribution of tax proceeds, especially ones collected by state governments and remitted to the Federal Government has caused bad blood between the states.

Zamfara State, the birthplace of Sharia in Nigeria, has zero alcohol sales yet received N122 million Alcohol VAT from Federal Government in 2019. Meanwhile, Bayelsa state, with N8.1 billion worth of alcohol consumed was only got N93 million in VAT proceeds from the Federal Government in 2019.

For additional comparison, Kano vs. Anambra Alcohol VAT figures in 2019 show that while Anambra state consumed N13.5 billion of alcohol, Kano’s consumption was a meagre N134 million. However, Anambra Alcohol VAT allocation within the same period stood at N153 million while Kano Alcohol VAT allocation was N280 million.

Estimates show that if Anambra received VAT directly it would receive N678 million instead of the N153 million it got while Kano received only N6.7 million directly instead of the N280 million.


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The imbalance in the VAT/Consumption ratio of states across Nigeria is so obvious that it yearns for an urgent remodelling.

Another scoop currently in the media domain is that the battle has even devolved into another one of States cooperating to sue the Federal Government for discrepancies in Stamp Duty remittances allegedly due to the states.

The plaintiffs represented by the 36 state governors filed the suit against the Attorney General of the Federation, Abubakar Malami, who is representing the federal government.

The suit aims to compel the Federal Government to refund over N176billion collected as stamp duties between 2015 and 2020 on individual persons’ transactions within their respective states. States are also yearning to have the fiat as collectors of stamp duty taxes.

The implication of such battles currently being fought indicates that there is going to be a major shift in how the resources of the Nigerian nation at large will be allocated going forward. It is also a sign that the approach of politicians to governance will change drastically as there will no longer be free meals from the ‘National Cake’ any longer.

That something as minute as administration of taxes could set in motion major forces of restructuring resource administration is a thing very few prophets or forecasters could have foreseen.

And whatever the direction these tax politics swings; it is good for the polity and better for the people.

Featured Image Source: Daily Trust


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Macaddy is mostly a farmer in the day who also dabbles into technology at night, in search of other cutting edge intersections. He's on Twitter @i_fix_you

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