ON THE SPOT MANAGER
The Danger Of Tinubu’s Tax Reform To South-South And South-East
Tax Reform Bill: The Danger Alert for South-South and South-East Legislators And Governors
Among the proposed reforms of the tax reform bill submitted by President Bola Tinubu to the National Assembly, the VAT sharing formula introduced into the bill is here to rob the entire Nigeria in favour of Lagos. Sadly, the SE/SS legislators don’t even understand what it is all about and sadly have done nothing about it. The SE/SS governors are also yet to set up a study group to ascertain the likely effect on the survival of their states and respective regions.
Let me explain further. VAT is the tax on goods and services. In Nigeria the remittance of VAT is based on head office syndrome. Thus, NBC, NBL, Shell, Agip, Mobil, Chevron, even Chicken Republic and all other companies that operate nationally but with head office in Lagos remit their VAT collections nationwide to Lagos as if all the consumptions and services were done in Lagos only. So when you hear that Lagos contributes 50 percent of the tax revenue of the country, you need to understand the fraud going on.
As the matter is currently, after collection, the VAT is re-allocated to the states using a number of formulas. But now, the tax reform bill wants to amend the re-allocation of tax revenues on derivative principles whereby Lagos will take about 80% of VAT realized from the entire country because the head office of the companies are in Lagos while the economic activities are spread across the entire country. Another economic emasculation of SE and SS is ongoing but our leaders have refused to look at the dangers of the economic robbery being hatched.
The North has set up a study group that had studied the tax reform bill and has reported to the Governors’ Forum. The northern Governors’ Forum has issued directives to their legislators to vote against the reform. In all these, what is the position of SS and SE?
This is calling on the SE and SS governors to set up a team of tax lawyers and accountants to analyze the bill line by line and take a stand. Just to let you know that those who drafted the tax reform bill are 90% Tinubuist and its sympathizers. They were teleguided in their work and they went in one direction: more revenue to Lagos and perhaps Ogun state, less contribution from them.
The SS states lost oil companies to Lagos through militancy proudly sponsored from Lagos. They are about to lose tax revenues too. The SE governors are about to loose investments through agitation which is being encouraged further from Lagos through Finland, they are about to lose tax revenues too. Think about it, who are the traders and sellers of services?