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VAT Debates And The Future of Nigeria’s Federalism

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By Muhammad Jibrin Barde

The ongoing Value Added Tax (VAT) debate in Nigeria exposes deeper issues about governance, fiscal responsibility, and the structure of federalism.

This debate isn’t just about revenue; it goes to the heart of how we understand and apply federal principles in the Nigerian context.

The push for a derivation-based VAT system raises critical questions about constitutional integrity, equity, and the economic realities of interdependence among states.

Amidst this discourse, Mr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has added a layer of inconsistency and hypocrisy to the debate.

While Oyedele acknowledges the importance of constitutional reforms, his stance on revenue-sharing mechanisms appears contradictory, prioritizing political expediency over sustainable federal principles.

Mr. Oyedele, in his capacity as a tax expert and reform advocate, has publicly emphasized the need for equity and fairness in tax administration.

However, his position on VAT appears to undermine these principles. His advocacy for a derivation-based sharing formula, particularly benefitting economically advanced states, disregards the constitutional framework and federal values of redistribution.

1.Contradictions in Equity Arguments:

Oyedele often stresses the importance of supporting less-developed regions through equitable tax policies.

Yet, his support for derivation in VAT allocation contradicts this stance, as it would disproportionately benefit wealthier states like Lagos and Rivers while marginalizing less-developed states that rely heavily on VAT allocations for public services and infrastructure.

2.Ignoring Interdependence:

VAT is a consumption tax that thrives on the interconnectedness of Nigeria’s economy.

Wealthier states benefit significantly from goods and services supplied by less-developed regions.

By advocating for derivation, Oyedele fails to acknowledge the contributions of these regions to the broader economic ecosystem.

3.Political Expediency Over Principles:

Oyedele’s position appears to align with powerful political interests rather than sound fiscal principles.

This inconsistency weakens the integrity of his broader reform agenda and raises doubts about the credibility of the committee he leads.

At the Heart of the Debate: Federalism and Revenue Allocation

The VAT debate transcends Oyedele’s inconsistencies, touching on fundamental questions about Nigeria’s federal structure:

1. Current VAT Collection and Allocation

VAT is centrally administered by the Federal Inland Revenue Service (FIRS) and distributed as follows:

•15% to the Federal Government,

•50% to State Governments,

•35% to Local Governments.

Allocation to states is based on population, equality, and landmass—not derivation.

This structure aligns with the revenue-sharing principles enshrined in the 1999 Constitution (as amended), ensuring redistribution to promote equitable development.

2. The Push for Derivation-Based Sharing States like Lagos and Rivers argue for a derivation-based VAT model, claiming that states generating the most VAT should retain a higher share.

However, this argument overlooks the unique nature of VAT as a consumption tax that reflects economic interdependence.

Extending the derivation principle to VAT would require a constitutional amendment.

The principle currently applies only to resource revenues, such as oil, where 13 percent is allocated to resource-producing states.

Attempting to apply it to VAT without constitutional reform undermines the legal framework of the federation.

3. Risks of a Derivation Model Introducing derivation-based VAT sharing raises serious economic and equity concerns:

•Widening Inequalities: Wealthier states would benefit disproportionately, exacerbating regional disparities and leaving less-developed states unable to meet basic developmental needs.

•Undermining Interdependence:

The interconnected nature of Nigeria’s economy means that VAT generated in one state often relies on contributions from others. A derivation model ignores this synergy.

•Threatening National Cohesion:

A derivation-based model could deepen divisions among states, fostering resentment and undermining the unity of the federation.

The Way Forward: Constitutional Reform

The VAT debate highlights the need for a comprehensive review of Nigeria’s fiscal and constitutional framework. Key steps include:

1.Clarifying Revenue Allocation Principles:

The Constitution must explicitly define how VAT revenues should be allocated, balancing fiscal autonomy with redistribution.

2.Addressing Regional Disparities:

Fiscal reforms should prioritize reducing inequalities, ensuring that all states, regardless of their economic capacity, have access to resources for development.

3.Strengthening Federalism:

The debate underscores the importance of cooperative federalism, where states recognize their interdependence and work towards shared goals.

Conclusion: Building a Fair and Sustainable Federal System

The VAT debate is not merely about tax revenue; it is a question of how we interpret and apply federal principles within our governance framework.

Changes to revenue-sharing mechanisms like VAT must emerge from a broader constitutional review that reflects the realities of Nigeria’s federal structure.

Anything short of this risks undermining the legal and institutional foundation of the federation. Mr. Oyedele’s position exemplifies the dangers of politicizing critical fiscal debates.

For Nigeria to move forward, leaders must prioritize principles over expediency, ensuring that fiscal policies promote equity, sustainability, and national cohesion.

The proper course of action is constitutional reform—not short-sighted adjustments—that uphold the integrity of our federal system and ensure equitable development for all regions.

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Opinions

Christmas Eve Explosion: One Too Many

We commiserate with the families of those who have lost their loved ones in this senseless attack. No one should lose their life while worshipping God.

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By Ini Ememobong
 

The news of an explosion in a mosque in Gamboru Market, Maiduguri is another sad reminder of the rising insecurity that has become the unfortunate contemporary reality that Nigerians face.

This is totally unacceptable; the irreducible minimum the government should offer its people is the protection of lives and property.

This administration has failed woefully in this respect and should rise to the occasion rather than resort to rhetoric and playing politics with security.
 
We commiserate with the families of those who have lost their loved ones in this senseless attack. No one should lose their life while worshipping God.

If these attacks on places of worship continue unchecked, they will not only violate the constitutional right of Nigerians to freely worship but will also create an atmosphere of fear that threatens the very fabric of our religious society.


We call on the Federal and State Governments to take immediate and practical steps to protect our citizens throughout this yuletide season and beyond.

Nigerians deserve more than empty promises and political rhetoric. We need concrete, actionable security strategies deployed on the ground.

This escalating insecurity has become unbearable and must be confronted with the urgency and seriousness it deserves
 
• Comrade Ini Ememobong is the
National Publicity Secretary,
People’s Democratic Party

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In Praise of Nigeria’s Quiet Heroes

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By Adebayo Ilupeju

I woke up this morning still carrying yesterday in my body. After covering about 320km on Lagos roads, mixed with the familiar December traffic that stretches patience to its limits, my nerves were clearly protesting.

That moment of exhaustion slowed my pace but quickened my thoughts.

It set my mind wandering toward the people who give their all so that others can live with a little more ease. Across Nigeria, there are men and women who show up every day, against all odds, to deliver the services they are employed to provide, and then some. They do not merely clock in and out.

They pour themselves into their work, often unseen, often uncelebrated.One such person is a hijabi sister at the LSETF Kosofe liaison office. She is the very picture of dedication.

Calm, patient, and relentless in her pursuit of solutions, she works tirelessly to ensure people are attended to and guided rightly. Speak to anyone who has crossed her path and the verdict is the same. She has a heart of gold and a rare sense of responsibility.

Then there is the charming LASTMA official of Radio Bus Stop fame. He has somehow mastered the art of turning chaos into calm.

While directing traffic, he dances, smiles, and exchanges courtesies with commuters, easing tension and restoring a sense of order. I have encountered him in other parts of the city as well, always consistent, always human, always reminding us that service does not have to be cold or harsh.

These are just two examples among thousands scattered across the country. From offices to roadsides, from hospitals to classrooms, there are countless golden hearts holding the system together with sheer commitment and goodwill. They are the quiet backbone of daily life.

They are unsung heroes.As a society, we may not always have grand rewards to offer, but recognition goes a long way. A sincere thank you. Public acknowledgment. Commendation letters. Small incentives. Structured reward systems that spotlight integrity, kindness, and excellence in service.

These gestures matter more than we often realize.When good work is seen, it grows. When dedication is appreciated, it spreads.

If we truly desire a better Nigeria, we must learn to celebrate those who are already doing right, especially those who continue to serve with grace when no one seems to be watching.

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Opinions

When Public Outcry Actually Works: The Aide-de-Camp’s Promotion U-Turn

In a real democracy, it’s not just about making the right call the first time. It’s about having the guts to fix things when you get them wrong.

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•President Bola Tinubu

President Bola Tinubu just walked back the much-criticised promotion of his Aide-de-Camp (ADC) to Brigadier -General after Nigerians made a lot of noise about it.

For once, people’s voices cut through the usual government static. It’s proof that, at least sometimes, public outrage can actually change things in Nigeria.

This promotion wasn’t just a small slip-up. Inside the army and among civilians, folks were angry because the whole thing seemed to break the military’s own rules.

Normally, if you’re a Colonel, you sit tight for several years before anyone even thinks about making you a Brigadier General.

In this case, the ADC barely had a year in that seat. Plus, ADCs don’t usually get picked from such high ranks in the first place.

For once, people’s voices cut through the usual government static. It’s proof that, at least sometimes, public outrage can actually change things in Nigeria.

So, the whole thing looked fishy from the start. It’s not just about skipping a step—it points to a bigger issue: the president’s advisers dropped the ball.

And honestly, you can’t really separate Tinubu from the problem.

The ADC is glued to the president’s side, and a move like this would never fly without his say-so. Still, let’s be fair. Tinubu actually paid attention to the outcry.

He listened, changed his mind, and reversed a decision that most leaders would’ve stubbornly stuck with.

In a real democracy, it’s not just about making the right call the first time. It’s about having the guts to fix things when you get them wrong.

Strangely, though, some of the same people who slammed the promotion are now upset about the reversal, too. What do they want? Real accountability, or just something new to complain about?

In the end, this whole episode is a reminder to those in power: follow the rules, pick advisers who know what they’re doing, and take public criticism seriously—without flipping and flopping.

That’s how you rebuild trust, little by little, between leaders and the people they’re supposed to serve.

Adebayo Ilupeju, Lagos.

Caveat: The opinion expressed in this article is solely that of the author, and not that of Ohibaba.com

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