VAT, vassal states and restructuring (2), by Ugo Onuoha

November 28, 2024
21 views
The 'reform' kinsmen...President BOLA AHMED TINUBU; Finance Minister and Coordinating Minister of the Economy, Mr. WALE EDU and CBN Governor, FEMI CARDOSO
  • The Age of Lies: Claims are making the rounds that the economy is turning the bend. Alhaji Tinubu, his finance minister Edun and the central bank gov Cardoso, whose names sound alike, are in the forefront of this chorus. Even the national security adviser has joined them. And there are certain things common to these choristers: they and their cohorts are the only people seeing the recovery; they all binge on the public treasury: none of them goes to the gas station to buy either petrol for the armour-plated and bomb resistant government-procured SUVs that they are driven in, or to purchase diesel to run their government-funded electricity generators in their residences which also are built and tastefully furnished at the expense of ordinary folks. They have mist in their eyes and so suffer from acute poor vision.

UGO ONUOHA

There are too many things wrong with the regime of Nigeria’s president, Alhaji Bola Ahmed Tinubu. For 18 months since the advent of the administration, it has been a case of stumbling from one problem to the other. The tragedy is that almost all the challenges that this regime has been grappling with were self-inflicted. It started off with an ill-conceived petrol subsidy removal, and it followed that almost immediately with allowing the national currency, the Naira, to be floated.

Both policies turned out to be disastrous because the so-called petrol subsidy payment persisted in an opaque manner, and subsidizing the Naira did abate. Recently, the state oil corporation, the Nigerian National Petroleum Company Limited (NNPCL) insisted that it will continue to import petroleum products in spite of the existence of a domestic producer, Dangote Refinery and Petrochemical Company, Lagos, which said that it has the capacity to satisfy domestic consumption for petroleum products. Dangote’s 650,000 barrels of crude oil per day production should on full stream produce 50 million litres of petrol and 15 million litres of diesel per day.

Experts estimate that petrol consumption in Nigeria should not exceed 35 million litres per day. But corruption puts it much higher, sometimes for as high as 70 million litres per day. This outrageous figure is not strange because Nigeria is widely acknowledged as a crime scene – a country hurting in the hands of its supposed care-givers. Private importers who work at the behest of collaborators inside the government have been known to ‘import’ shiploads of petroleum products without the ships being sited anywhere near the country’s territorial waters, not to talk of discharging any products. But such ‘importers’ file claims with excellent shipping documents, and collect hundreds of millions of dollars from the public treasury. NNPCL does the same.

Then a cartel hijacks the little litres of petrol that were in truth brought in, ferrying such to neighbouring countries in 33000-litre trucks and in broad daylight where they make a kill. Nigeria has clearly delineated borders with its neighbours. We have all manner of tax-payer paid government officials at those borders. But the trade booms. Currently, an investigative reporter has been reporting on the daily massive smuggling of 50kg bags of rice into the country with the active involvement of immigration top shots. He has been doing so with video evidence. Last week the journalist reported that the leader of the smugglers was accorded a red carpet reception at the Abuja headquarters of the Nigeria Immigration Service. His reports have not been disputed and nothing has happened to the economic saboteurs.

Back to the issue at hand. Alhaji Tinubu takes responsibility for his misadventures on petrol and Naira. Almost two years since his hare-brained twin policies, market forces are yet to fully determine the prices of petroleum products and the price of the Naira. Whilst the NNPCL moderates the prices of petroleum products especially petrol by importing and fixing different pump head prices for different parts of the country, the Central Bank defends the Naira through regular sales of the United States dollars to the bureaux de change, and through the aggressive mopping up of  Naira in circulation. The policies are obviously not working. The price of petrol at over N1000/litre is not sustainable. It has ruined the economy and will inflict more damage with the regime’s insistence that it will stay the course. Nigerian families are worse off. Bloomberg, an American news organization reported last week that about two -third of Nigerian households can barely manage to feed once a day. And the quality of the meal is suspect. Their report was drawn from the latest statistics from the Nigeria’s National Bureau of Statistics (NBS).

The irony right now is that there are claims that the country is turning the corner, and that good days are on the horizon. Tinubu says so. The central bank governor says the same. Finance minister who is also the coordinating minister for the economy sees the same signs of economic recovery. Even the national security adviser, yes the NSA, who should have his hands full with widespread insecurity pervading the land, parrots the same message of visible economic turn around. But they are the only people who see economic recovery on the horizon. And they all share one thing in common – they all binge on the public treasury. I wager that none of them had been to a gas station to buy either petrol for the government SUVs (armour- plated and bomb-resistant brands) that they are driven in or to purchase diesel to fire government – owned electricity generators in their residences which also are built and tastefully furnished with taxpayers money.

It is not strange, therefore, that they are separated from reality and the daily grind of the majority of Nigerians. The case of the NSA is particularly painful and pathetic. Daily, he joins the security agencies including the secret police otherwise called the Directorate of State Services (DSS), the regular Police, the Civil Defence Corps, the Armed Forces, among others, to run political commentaries on the state of the country. In place of combating insecurity, what the NSA does is to warn non-state agents terrorizing Nigeria to know that Tinubu is not known to lose any battle. Is he for real? The man cannot be, and should not be, a national security adviser even in a banana republic. What our rulers are doing is beyond talking up the economy, they are deliberately deceiving Nigerians. Any sign of economic recovery must show in the living standards and living conditions of the people. Today’s reality is that about 20 million children are out of school and about 150 million Nigerians are grappling with dimensional poverty. Of course, our country has been the poverty capital of the world since 2019.

If nothing good is happening in the country, and nothing good has really happened in Nigeria in the last 18 months, it is down to the fact that the majority of Nigerians do not trust the regime headed by Tinubu. He assumed office about two years ago with a fractured mandate. And since then he has proceeded to surround himself with people like himself (people with real and perceived blemishes), and those who speak and dress like him. He is enmeshed in policy somersaults. At every turn he puts the cart before the horse. His regime is wobbly, fumbling and floundering. And because the regime perceives itself as fragile and unstable and unsure in spite of its attempt at blustering, it now sees treason in every spoken word by non-regime supporters, in every action and inaction, and in every news story and editorial opinions of some publications. The point is that the more this regime sees enemies everywhere, the more it will retreat to itself, and the more eventually it will begin to crack down on imaginary detractors. Already, for the diminishing clan of regime choristers, anybody who opposes where Tinubu is taking the country is treated as not being patriotic. To their warped minds they equate patriotism with love for a serially bungling administration. They are not capable of putting country before party or ethnic affiliations or fleeting benefits from the rulers.

Related News
Politics and governance in Nigeria: A tale of woes!
Helpful botanicals for constant tiredness!
Insecurity as Nigerias evil baggage
Expectedly, the gulf between the people and the regime is widening and it is beginning to play out. It’s manifesting in the new tax bills before our supine national assembly. For a start, the tax bills are one year late in coming. It is the style of the regime – to make policy statements without even a draft of the working papers. It did the same thing with the student loans scheme and conditional cash transfer to the poor of the poor in the country, to mention but two. Often its pronouncements bear no relationship with reality. The administration at Inception said it would reduce dependence on loans to run the government. That avowal may have informed what was thought to be the urgency it would attach to the tax bills. It failed. Now that the regime has roused itself from slumber, ‘enemies’ have laid ambush for the bills.

Except for a segment of the Yoruba nation, every other nation in Nigeria is now increasingly inclined to live like “onye ndiro gbara ugburu gburu n’eche ndu ya nche mgbenile” or eternal vigilance is the price for liberty. With the antecedents of Tinubu other component-nations of the country will only treat his tax bills with levity to their eternal damnation. The first thing that should set the alarm bells ringing is the composition of the team that crafted and superintended the making of the bills. They look like Tinubu. They bear similar names like his. They dress and speak like him. So why should he and his parochial team be trusted to be altruistic in the work they have done? Other nations within Nigeria have a right to suspect these tax bills because, so far, Tinubu has demonstrated that he is an ethnic bigot.

It came as  no surprise, therefore, that a section of the north of Nigeria was the first to scream that the tax bills were not the ‘Hail Mary’ that the regime claimed that they were. Senator Ali Ndume cried foul and vowed that the bills would be killed in the national assembly. Though a member, Ndume must be mistaken if he believes that the country still has a parliament worthy of that name. This assembly is an extension of the Executive arm. I didn’t say so, the leadership of the assembly said so from the get-go. And they have not disappointed. Indeed the national assembly members commenced consideration of the money bills last year by first singing the personal anthem of Tinubu “On your mandate we shall stand…” Anybody who expected any better from such buffoons who masquerade as lawmakers must be living in a fool’s paradise. Then the national economic council (NEC) composed of the vice president  and governors advised Tinubu to withdraw the bills to allow further stakeholders’ consultations. Tinubu promptly and derisively dismissed them. The controversy and the insistence of the president to forge ahead have alerted the other nations. The south east governors forum, for instance, was reported to have set up an expert team to review the bills for possible boobytraps.

The one bill in the basket of bills that has attracted much attention was the value added tax (VAT). Some experts and indeed non-experts are concerned that the president and his kinsmen tax team are up to some mischief. They have honed in on two words concerning the VAT bill – Attribution and Derivation – which of them should enjoy preeminence. Among other people, one writer attempted to highlight where the bodies were buried in the VAT bill. We will reproduce part of his exertion. The person who identified himself as Chris Okafor on WhatsApp wrote: “.. the truth is (that) tax experts filled with Tinubu’s apologists (and 90% of Nigerians of Yoruba extraction) worked on the bill and hid so much into the bill which will put Lagos and Ogun (states) into economic advantage slightly short of extortion of other states” of Nigeria. He argued that from the present structure of the VAT bill, 60% of the takings will go to the state of collection. His grouse was that a disproportionate amount of VAT proceeds will go to the states hosting the head offices of companies that produce ‘vatable’ goods and services even when the same goods and services were patronized in other states of the country. He illustrated with some companies saying, for instance, that if VAT of N500 million was collected from a branch of a company in one state, 60% of the collection under the proposed principle of derivation would go to the state hosting the headquarters of that company and not in the state where the product/service was consumed.

There’s little doubt that an arrangement such as illustrated above will make some areas of the country vassal states. It will sow seeds of discord and discontent. VAT is a sales tax and so components of the federating units of the country should be legally empowered to collect and use consumption tax. Another allegation that should be concerning is the yet to be verified claim that there’s a provision in one of the tax bills that would empower the federal government to take a certain percentage of funds that drop into personal and corporate bank accounts. We align with the national economic council that more time should be allowed for further scrutiny of these tax bills. We do not presently have a national assembly, and the claim by the Executive that the assembly should be allowed to scrutinize the bills on our behalf is gratuitous. Our so-called representatives and senators are preoccupied looking out for themselves.

It’s accepted that we operate an ugly and difficult to decipher federal system of government, but 25 years and counting, we must summon the will to begin to put processes and structures in place to approximate a federation. The ruling elite has a bounden duty to work harder to smoothen the rough edges which combined forces could lead to the implosion of Nigeria. They should see the Nigerian project as bigger than their personal and/or regional interests. And if this perceived skewed VAT distribution is part of the ongoing restructuring in the image and likeness of Tinubu, it may not bode well for this country that for all intents and purposes is tottering on the edge of the cliff. The allegation that bank deposits may be taxed by the government could just prove to be the trigger for national cataclysm. Who wants this?

  • Concluded.
  • ONUOHA is a former Managing Director of Champion Newspapers. He wrote this piece originally for The Sun

  • You can also reach us on all social media platforms @dailyquery for more news, information and analyses.

Don't Miss