The North is angry and they showed it.
This time around the anger of the North is as a result of the introduction of four new Bills by President Bola Ahmed Tinubu for consideration of the National Assembly.
The Four new Bill aimed at streamlining Nigerian Tax Administrative processes; enhancing efficiency and eliminating redundancies across the national Tax operations.
According to Bayo Onanuga, the Special adviser to the President on Information and strategy, the proposed reforms emerged after an extensive review of existing Tax laws.
The NASS is considering the four new Bill designed to transform and modernise Nigeria’s Tax landscape, eliminate unintended multiple taxation and make Nigeria economy more competitive by supplying Tax obligations for business and individuals among others.
It will be recalled that not long ago President Bola Ahmed Tinubu made a declaration that the government would take steps towards ensuring the practise of Fiscal federalism which was the vogue during the first republic and which accounted for why the region develop at their own pace and engage in healthy rivalry.
Fiscal federalism entails the components state’s and regions to depend on what they bring to the table for sharing by all.
This is where derivation principle propounded by late Chief Obafemi Awolowo came from as different from todays ‘feeding bottle’ federalism where states proceed to Abuja every month to share form the federation account not minding or contributing to where the money comes from.
However, this time around the North-both established political class represented by elected Governors and the Traditional institutions rose against the Fourth Bill which is the proposed Derivation-based Value Added Tax
This is the beginning of the fight to resist Tinubu’s move to enthrone Fiscal federalism.
Mines are already laid in the National Assembly, state Governors and established Traditional rulers from the North Who are beneficiaries of the Status quo.
The current model for distributing VAT is based on where the Tax is remitted rather than where goods and services are supplied or consumed.
The ongoing Tax reform Bill seeks to correct the inherent inequity in the current model and also seeks to use derivation model as a basis for distributing VAT revenue.
Also in the current model, VAT is shared in the ratio of FG-15%,States 50 and local government 35%.This system according to the government, lacks consideration for the principle of derivation leading to perceived inequities where regions contributing more to VAT might not receive proportional benefits since the proceed is shared on population basis.
This explains why a new system of FG-10,State’s -55 and LGs 35% is being suggested under the new VAT sharing regime.
I presume the increase in shares for state’s to 55% is to care for state’s With little or no contribution to the VAT National pool.
The issue of adopting population for sharing national wealth has been the most contentious issue in Nigeria since independence.
Under the new VAT proposals, the distribution model would shift to FG 10%, states 55% and 35% for Local government. Also 60% would be distributed based on derivation.
In this new dispensation if approved, where VAT is collected becomes as crucial as the amount collected potentially favouring states and region whether consumption activities are concentrated.
This is the crux of the matter for the North and this is why they are angry because collecting money from other peoples toil and resources will become impossible.
It also considers the place of supply or consumption for relevant goods and services. In essence, if a region or state does not consume, they cannot get VAT.
The introduction of the new VAT sharing model seems aimed at dissuading states that contribute more to the VAT pool from pushing for a situation where they will push for collection of VAT to be collected by states.
It is also not impossible that the increment of the percentage of VAT to be distributed to the states from 50% to 55% is aimed at compensating the states that will be prevented from fighting to collect the VAT as per the Supreme Court judgement which favours Rivers state last year.
It was however settled politically by then President Muhammadu Buhari.
Thus the new move is to institutionalise the court judgement.
This is a marked different from what obtains in the past and the Nineteen Northern governors and Traditional rulers in a communiqué issued last week registered their opposition to the new Bill and instructed their members in the national assembly to reject it.
The National Economic Council headed by Vice President Kashim Shettima also met and ask the Bill to be withdrawn from the National Assembly.
The Bill are.1.. Nigeria Tax Bill which aims to eliminate unintended multiple taxation and make the economy more competitive; the Nigeria Tax Administration Bill proposes a new rules governing the administration of all taxes in the country is intended to harmonise tax administrative processes across federal state and local jurisdiction for ease of compliance of tax payers while the Third is the Nigeria Revenue Service{Establishment} Bill which seeks to name the Federal Inland Revenue Service{FIRS} as the Nigeria Revenue Service.
However, it is in the Fourth Bill which proposes to establish Joint Revenue Board Establishment Bill proposes the creation of a Joint Revenue Board to replace the Joint TAX Board covering federal and all states tax authorities.
That has been the situation for ages and like a sucking baby, would resist the mother taking away the breast from him/her, the Northern states which contributes less or nothing but receive much from the VAT because of the population which has been the indices for distributing national resources since 1960 without consideration for the goose that lays the Golden egg wants the Status quo to remain.
How on earth you ask could Lagos state which last year contributed 55% of the total VAT collected in the country receive less than Kano which contributed far less on account of population.
This to me is the real issue with Nigeria and which successive governments shied away from correcting for lack of political will to do so.
To me, another unwritten grouse and stand-point of the North is that they supplied the food that the South needs and hence should be given consideration to compensate for being the food basket of the nation.
But then you ask, if they produce more than what is needed, are they not supposed to sell to others so they could get what is needed to satisfy the law of inter-dependence among nations?
This they have been doing for ages and reaping the benefits, and since food is not on VAT list, shouldn’t they make effort to also turn the North into an industrial zone to get more benefits rather than expecting and taking from the toil of the Southern states which produce the goods and services.
Another point worthy of note is that the North ruling class have not only dominated the mining of solid minerals in the Northern parts of the country but have refused to remit same to the national coffers in the past until recently.
Since mining is on the exclusive list, until recently, the Northern established ruling class have over the Years used their being in control of the federal government to undermine and deprive the other regions from benefiting from the mining proceeds which is expected to be ploughed into the Federation account to be shared as the same is with Oil from the Southern part of the country. Where is injustice if not from the North?
Allowing the present VAT regime to continue to is to continue in inequity in the distribution of the nation’s wealth.
What is more the North which has always considered itself the senior partner in the Nigerian arrangement wants the inequity to continue.
The grouse of the nineteen Northern Governors was more specific on one of the four Bill which contains a proposed an amendment in derivation-based model for Value -Added Tax(VAT) Distribution in the new Tax reforms Bill before the National assembly .
Their contention was that the plan to adopt Derivation as against population is against the interest of the Northern region as a block.
The governors also contended that the companies remit VAT using location of their headquarters and tax office and not where the services and goods were consumed.
To the North, this proposal is against the interest of the North and other sub- nationals especially the proposed amendment to the distribution of VAT to Derivation-based Model.
Their grouse is that because companies remit their VAT using location of their headquarters and tax office and not where the services and goods are consumed, the Forum unanimously rejects the proposed Tax Amendments and calls on members of the National Assembly to oppose any Bill that jeopardise ‘the well being of our people’.
That they ask their members in the national assembly to vote against the Bill and throw it out means they are prepared to use the population to achieve what they could not get through fair means.
In other words, they prefer using the population of where the goods are consumed to determine the distribution as being done now.
It is instructive that at the Meeting where the decision was taken were the Traditional rulers from the nineteen Northern states. This underscores the fact we all know that the North, as a bloc, still sees itself as one when the interest and question of Nigeria is being considered.
That the traditional rulers joined the political elite across the divide in the North is an indication that the issue of North/South dichotomy is still as fresh as when discussion were on in the 50s on the type of constitution the country should adopt in her journey toward self rule.
Another point worthy of note is that the decision of the gathering to instruct their members in the National Assembly to shut down the Bill is also instructive.
Also instructive is that of the National Economic Council, NEC, comprising the thirty-six states of which the Vice President Senator Kashim Shettima is head recommended the withdrawal of same from the National Assembly.
Since the North with nineteen states has more members in the National assembly with 195 and 57 Members in the House of Representatives and Senate respectively while the Seventeen states from the South also has 169 and 51 members in the House of Representatives and 51 Senate respectively.
This is an indication that a tough battle lies ahead of the nation on this issue of economic survival.
Except a political consensus is arrived at the Tax/VAT issues poses a direct threat to stability of the country for economic motives far outweigh other reasons for Nigeria’s unity.
This means in effect that both the ruling political class across all parties and the Traditional Institutions in the North are united in fighting the reversion of a lopsided, unjust and unfair Distribution of the VAT sharing formula which makes them rich at the expense of the toiling states.
They have over the years enjoyed reaping where they did not sew and are ready to do everything in their power to continue the obnoxious system.
This is also in spite of the fact that Northern states like Kano, Zamfara, Sokoto and others which objected to consumption of alcoholic drinks still want to retain the hypocritical share of the proceeds from the products consumed in other states.
For instance, in year 2021 hundreds of Islamic police officers known as Hisbah unloaded 3,873,163 bottles of alcohol in the village of Tudun Kalebawa.
They had seized in recent months from trucks coming from the Christian-majority South of the country, where Islamic law does not apply.
The crowd including senior Hisbah and local government officials shouted ‘Allahu Akbar’{God is the greatest} as Bulldozers smashed the bottles to smithereens.
The police set fire to the debris and alcohol, which burned throughout the night, according to reports.
According to Hisbah Chief Haruna Ibn Sina,’ Kano is a state where Islamic law applies and the sale, consumption and possession of alcoholic substances is prohibited’.
Kano is one of the northern states with a Muslim majority that have reintroduced a strict version of Islamic laws since the return of democracy to Nigeria in 1999.
The sale and consumption of alcohol are banned and those who break the law face 80 lashes.
This is not the first of its kind.
In2020, Kano state Hisbah Board destroyed 1,975,000 bottles of beer worth over 200 million confisticated within the Kano metropolis. Prior to this exercise, another had taken place in 2019.
The ban on alcohol has recently been a source of tension in the states capital.
In December of same year, young people in one of Kano’s Christtian neighbourhoods clashed with religious police when officials raided drinking spots in the area.
From the above, it is strange why states in the North which has carried out such economic destruction of millions of bottles of alcohol, still want to continue to be beneficiary of the VAT collected in spite of the destruction.
It is outright hypocrisy for the North to still want the rest of Nigeria to set aside economic reasons but use population to benefit from where they did not sow.
Except the Southern state’s also rise up in unison, the North will definitely continue to not only reap where it did not sow but deny Others sweat of their exploits in a hypocritical manner fit only for the stone age.
This also takes us back to the unscientific and illogical assertion of the arid North having more population than the state’s in the coastal region.
It is only Nigeria that defies all known demographic logic of more people in the coastal region anywhere in the world.
Allocating more population to the North during the pre- independence and post -independent head counts laid the foundation for Northern hegemonic domination of the South and emboldened the Northern political and Traditional Institutions to ask their members in the 10th National assembly to oppose the new VAT Bill.
Today, the nineteen Northern states of the country have drawn the battle line over Tinubu’s sponsor of Four Bill intended to reposition the nation’s tax system.
The unfair Tax Laws and other Unitary laws that has been in existence for decades are direct results of the May 1966 promulgation of Decree 34 by the late Major General Aguiyi-Ironsi which destroyed Federalism as the basis of Nigeria’s existence. It was a reversal of the basis of which independence was granted by the British colonial overlords in 1960.
But then, the decision of President Tinubu last Thursday to ask that the Bill be returned to the national assembly and probably be made a public discourse is introducing another dimension to the issue .
He has by that directives own his resolve and a commitment to enthrone the principle of fiscal federalism which only laws like the Tax Bill can make possible.
It is quite apparent that this issue which may not be settled until compromise is reached between the North and the South which is the beneficiary of the new VAT irrespective of what the North which has benefited unjustly might feel or say.
That he has jettisoned the NEC but ask the NASS to call for public contribution is akin to starting a national debate on his agenda towards returning the country to fiscal federalism.
This is coming at a time that the Southern governors forum has been re-ignited and their co-operation across the board will show whether the South as a geo political block wants a continuation of the system which has made them slave masters to the North that has always use population and the unfair revenue sharing system to rule the country both during various military regimes and the advent of the nascent democracy.
Since the issue has become a subject of public debate, interesting times lie ahead for Nigeria.
