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The controversy surrounding the proposed adjustment to the formula for sharing the states’ portion of the Value Added Tax (VAT), especially the derivation component, in the tax reform bills submitted to the National Assembly by President Bola Tinubu is yet to abate. What I find interesting is that many readers are asking for my take on the issue. When I respond with ‘Tinubu, Wike and the Politics of VAT’ published on this page on 16 September 2021, everyone to whom I have forwarded the column replied that it is worth publishing again because it addresses many of the issues that are currently in the public domain. As I wrote in the column almost two years before he became president, the VAT battle was ignited by Tinubu as Lagos State governor. But is he handling the issue well now that he is president of Nigeria?

Before I draw my conclusions on this vexatious issue, let me also state for the benefit of those who do not know me and may not be familiar with my writing that I am not the author of a piece being circulated on WhatsApp credited to one Olusegun S. Adeniyi. Aside the fact that Kwara State, from where I hail, is in the northern part of Nigeria, I don’t subscribe to unhelpful and divisive rhetoric. Now to the slightly abridged column of September 2021, before I conclude with my take on the current logjam.

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In September 2018, there was an interesting exchange in Premium Times between Vice President Yemi Osinbajo and his ‘illustrious predecessor’ (as he described him), Alhaji Atiku Abubakar. The issue in contention was restructuring of the country. The latter had taken on the former on his postulation that what Nigeria required was “managing resources properly and providing for the people properly.” To Atiku, Osinbajo failed “to appreciate the connection between Nigeria’s defective structure and its underperformance.” Defending his stance, Osinbajo argued that “good governance involves, inter alia, transparency and prudence in public finance,” before throwing this punchline: “Surprisingly, Alhaji Atiku leaves out the elephant in the room – corruption. And how grand corruption, fueled by a rentier economic structure benefits those who can use political positions or access to either loot the treasury or get favorable concessions to enrich themselves.”

 However, the bit that is relevant here is where Osinbajo explained “the issue of deeper fiscal federalism or restructuring” and “how the then Lagos State Government, led by Asiwaju Bola Ahmed Tinubu, decided to fight for greater autonomy of states.” Osinbajo then listed sundry issues on which he, as Attorney General of the state, took the federal government to court, before concluding: “Years later, we also filed an action at the Supreme Court arguing that the Value Added Tax, being a consumption tax, should exclusively belong to the States.”

I have spent considerable time in the past week investigating the VAT case under reference and my findings are quite revealing. In the statement of claim filed at the Supreme Court, the LASG under Tinubu had stated: “The House of Assembly of Lagos State of Nigeria is the body entitled, to the exclusion of any other legislative body, to enact laws with regard to the imposition and collection of tax on the supply of all goods and services within Lagos State of Nigeria and that Lagos State of Nigeria, or any agency of the State, is the body entitled, to the exclusion of any other body, to assess and collect such tax, and that the revenue of the Lagos State Government has been and continues to be affected by the enforcement of provisions of the Value Added Tax Act.”

Based on this claim, Lagos then urged the Supreme Court to determine “Whether upon the coming into effect of the Constitution of the Federal Republic of Nigeria, 1999, the said Value Added Tax Act is an existing law within the meaning of Section 315 of the said Constitution, being a federal legislation, which is deemed to be an Act of the National Assembly.”

Apparently mindful of the implications of the case against the background of some earlier rulings, the Supreme Court counselled Lagos to seek a political solution on the issue. That was understandable. A few years earlier, when the state challenged the powers of the federal government to grant licenses and permits to erect structures in Lagos without prior knowledge or consent, the Supreme Court ruled in favour of the state. The apex court held that any item “not expressly mentioned in the Exclusive Legislative List or Concurrent Legislative List is Residual and within the legislative competence of the state government.”

Knowing it had a solid case on VAT, Lagos refused to toe the suggested line of political solution. Eventually, the federal government filed a preliminary objection on technical point, asking the supreme court to strike out the case on grounds that there was no dispute between it and Lagos. The authority being challenged by Lagos, according to the federal government, was that of the Federal Inland Revenue Services (FIRS) hence the suit ought to have been filed at the Federal High Court (FHC). The federal government averred: “The Plaintiff’s cause of action relates to acts of a federal organ and cannot form the basis of invoking this Honourable Court’s Original Jurisdiction to entertain this suit; and the entire suit constitutes an abuse of court processes.”

In determining the case, the Supreme Court held that based on the affidavits filed, the grouse in question was about “…a dispute pertaining to the operation of an agency of the federal government.” With that, the Supreme Court concluded that it was the FHC “that was imbued with jurisdiction to the exclusion of any other court in civil causes and matters relating to the revenue of the government; connected with or pertaining to taxation of companies and other bodies; the operation and interpretation of the constitution in so far as it affected the federal government or any of its agencies.”

There were arguments at the time that the Supreme Court deliberately chose a clever route since Lagos was challenging the VAT Act enacted by the National Assembly and not FIRS as claimed by the federal government. But Lagos was left with the option to take the matter up at the FHC. Somewhere along the line, the state that had for 16 years been in opposition suddenly found itself in the ruling All Progressives Congress (APC) in 2015 and decided not to pursue the matter any further.

However, apparently taking a cue from Lagos, Rivers State under Governor Nyesom Wike filed a case against the FIRS at the FHC. And in his judgement, Justice Stephen Pam declared that FIRS “has no constitutional authority to enforce and administer taxes not expressly stipulated under Items 58 and 59, Part I, Second Schedule to the 1999 Constitution of the Federal Republic of Nigeria.” Following that decision, the Rivers State House of Assembly quickly enacted VAT Law No. 4 of 2021 to end the authority of the FIRS to administer, collect and enforce the VAT Act, 2007 in Rivers State. Lagos State that had pretended to be sleeping on the issue also jumped in with the accelerated passage of the VAT bill “in line with fiscal federalism that we have been talking about.”

I have always suspected that the VAT law would unravel one day. In a 2016 interview, former president of the Institute of Chartered Accountants of Nigeria (ICAN) and respected tax consultant, Mr Emmanuel Ijewere (he passed away last December), explained the mandate General Ibrahim Babangida gave the committee (which he chaired) that came up with the VAT law in 1993. “What was happening at that time was that there was a sales tax in several states, and there was no particular rule as to what they were charging. It was being used as a source of creating confusion, so the government now said let us standardize it.” Ijewere said his committee was told that “whatever money was collected in a state belongs to that state” while the VAT tax commission would retain 5% for administration. “Somewhere along the line, the federal government took it over, pushed the states aside, and that defeated the whole thing. It now turns out that the states that are generating a lot more VAT are not getting the commensurate amount of money from their economic activities and that was the unfair part of it.”

While the intention behind the 1993 VAT decree may have been altruistic, it has created more problems than it attempted to solve. But we cannot blame Babangida for that. Although he enacted the VAT decree before leaving office, implementation started on 1st December 1993 by which time General Sani Abacha was in power. Now, what is the issue? VAT, in a nutshell, is a consumption tax imposed on the supply of all goods and services, except those specifically exempted in a Schedule to the Act. The main challenge is that there is a near unanimity of opinion that the unjust sharing formula in VAT Act creates an impression of ‘robbing Peter to pay Paul’. That has always been the problem.

It is difficult to fault Wike’s argument that it makes no sense that Rivers State generated N15 billion VAT revenue in June this year but got N4.7 billion (about 30%) in return, while Kano generated N2.8 billion in the same month and got the same N2.8 billion back (100%). Meanwhile, Lagos State that generated N46.4 billion in the same month, was allocated N9.3 billion (about 20%). “Sometimes, you don’t want to believe these things exist,” Wike said. But while the Rivers Governor may have championed the recent fight, Tinubu was in the forefront before the APC came to the centre.

Meanwhile, the FHC judgement in favour of the Rivers State Government has thrown up issues about the nature of our system. If we were running a proper federation, the federal government would have jumped at it; being the biggest beneficiary if we disaggregate the VAT components. But many of the states would suffer and that is where the interest of the federal government comes in. With Wike talking tough against the background of the mismanagement of our diversity by the current administration, the VAT issue has provoked another North-South brouhaha. I want to deal with a few of them before I conclude.

Since everybody is talking about alcohol, including those who don’t drink, let us start from the VAT derived from it. In addressing the unholy wedlock between religious pulpit and political podium in Nigeria in my September 2019 column, I referenced the issue, following the destruction by the Kano State Hisbah Board of 196,400 bottles of beer in its effort to ensure a “sane, peaceful and sharia-compliant society.” I wrote: “this is the sort of hypocritical decisions that makes many to question the viability of our federal structure. The issue of VAT revenue is one of the strongest points being canvassed by proponents of restructuring the country. It is also one of the arguments made by Atiku before the last general election. ‘If a state is opposed to cattle tax or bicycle tax or alcohol tax, or pollution tax, for instance, it should not expect to share in the tax proceeds from those items,’ Atiku said in 2017.”

So, I align myself with those who say states that ban alcohol cannot benefit from VAT derived therefrom. But the notion of a ‘Parasitic North’ and ‘Productive South’ that forms the basis of most narratives when discussing the contradictions of Nigeria is not supported by any empirical evidence. While we cannot discount the argument of the Niger Delta whose people have for decades borne the brunt of oil exploration without much to show for the resource, the oil money for which some people deride others is rent rather than “any rigorous productive activity,” as Alhaji Bashir Ibrahim Yusuf reminded some of us in a chat group during the week. “The most hardworking Nigerians are the farmers who feed the nation with iron age tools without a fair reward for their labour.” And you find this class of Nigerians everywhere in the country.

As I have consistently argued on this page, the saber-rattling about North and South is a distraction from the real issue which is that Nigeria is not working for majority of its citizens. Now that the system is creaking beneath all of us, we must begin to fix it by bringing to the table the productive capacities of every citizen which means we need to wean ourselves of this distributive mentality that oil has foisted on our collective psyche. When the federal government argues for the retention of the status quo on VAT, it is to protect at least 30 of the 36 states which are both in the north and south. But it is also now clear that the market is over for these states that must begin to generate their own economic activities. The days of taking begging bowls to Abuja that is neck deep in foreign debts is gradually but surely coming to an end.

This VAT crisis therefore comes with a huge opportunity to address fundamental issues in an economy that is already in dire straits and perfect our skewed federal structure. As I argued in my ‘Platform Nigeria’ presentation with the theme, ‘Is Devolution of Powers the solution to Nigeria’s Problem?’ in May this year (2021), the fiscal imbalance in which the federal government controls disproportionate power and wealth has become a huge problem. The current regime of ‘sharing the national cake’ is also unsustainable. “We should actually be thinking in terms of getting the people to directly fund their government, not gathering to share oil money, and the laziness, lack of accountability and tension associated with it. We should be moving from an extract and share economy to one funded by taxpayers.”

In practical terms, there is value in a centrally collected tax and the current VAT regime has its own merit. We may need to change the name, increase derivation components, reduce the cost of collection by FIRS and allow states to retain 100% taxes on certain items (like alcohol) that some may have issues with. We may also need to tweak the sharing formula such that only a certain percentage will go to the central pool for sharing. But asking each state to keep all the VAT it generates will be difficult to implement under the current circumstance.

If, for instance, the court upholds the current ruling, each state will have to create its own VAT law to plug the hole that the centrally collected and distributed VAT will create in their already troubled finances. Different rates in different states will make it difficult to do business across the country. Things exempted from VAT could also be brought under such law (like food and agricultural products, for states that don’t have other things they can immediately tax.) The implication will be higher prices and inflation. Besides, since most states don’t have the capacity that FIRS has, they may deploy commissioned consultants and motor park touts to do the job of tax collection. We all know that would result in an open invitation to anarchy.

At the end of the day, we have two major problems. One, we have a revenue problem across the board. Without necessarily raising rates or creating new taxes, we need to bring more people into the tax net and be more efficient in collection. Two, we need to spend the accrued revenues more prudently. No point taking taxes from the people and expending such proceeds on frivolities or having some mummy and son fight over millions of Naira after daddy had ‘disappeared’ the dollar component into his Babariga!

ENDNOTE: From the foregoing, it is clear that I saw this problem coming more than three years ago. I also suggested the way forward. “From my reading of the whole situation and given the experience of Lagos on this issue, a political solution appears the surest bet to the VAT imbroglio,” I wrote at the time. “For that to happen, President Muhammadu Buhari must show leadership. He can delegate Vice President Yemi Osinbajo to use the instrumentality of the National Economic Council (NEC) which he chairs to negotiate with the states.”

Not surprisingly, Buhari did nothing. And in dealing with the issue, his successor has compounded the problem. Not only did President Tinubu discard the NEC recommendation to withdraw the bills before the National Assembly to pave the way for more comprehensive consultation with key stakeholders in the country, he also dismissively told the council, headed by Vice President Kashim Shettima and comprising all the 36 governors, to direct their reservations to the National Assembly. That statement was in bad taste.

Considering recent Supreme Court rulings which suggest a stance to uphold the federal nature of our constitution, presidential handlers may feel that the law is on their side on this matter. But that will be a myopic reading of the situation in a country like ours. The Waziri Adio-led Agora Policy, a think tank focused on development and governance, has done extensive work on the tax bills and their implications in practical terms. The main takeaway from their interventions is that there will be losers and winners on the VAT issue, and it will impact revenue in many states. You don’t handle a policy like that the way this administration has gone about it.  

For instance, Agora Policy’s disaggregation of the ‘percentage gains and losses on actual and proposed VAT for states for October 2024’, indicates that no fewer than 14 states will suffer revenue deficit with ten of them from the North if the proposed VAT formula scales through with adjustment. But that does not even tell the whole story. Of the 22 states that will ‘gain’, only nine are from the North, and if you remove Kano (42.32%) and Kaduna (35.24%), the accruing benefits for the other northern states are marginal. In fact, my state (Kwara) would gain only 1.16%. Meanwhile, 13 of the 17 Southern states are projected to witness a massive revenue jump with an additional VAT revenue of 86.17% going to Delta, 62.43% to Ogun, 53.58% to Imo and 50.09% to Anambra. Such fundamental changes in fiscal outlook in each of the 36 states (for better or worse) cannot be treated in such a cavalier manner.

When the stakeholders (federal government, 36 states and 774 local governments) gather each month to share the proverbial ‘national cake’ at the meeting of the Federation Account Allocation Committee (FAAC), the main source used to be from Statutory Revenue: oil and gas plus solid minerals and all other taxes/levies from the Federal Inland Revenue Service (FIRS) and Nigeria Customs Service (NCS). Not anymore. On 24 November when they last met to share accrued revenues for the month of October, for instance, only N206.32 billion came from that source (after sundry deductions, which is another story by itself). Meanwhile, that N206.32 billion from Statutory Revenue is about 15 percent of the net sum shared, raising questions about the management of the Federation Account. In contrast, of the N1.411 trillion shared at FAAC for the month, the VAT component was N622.3 billion!

Like the two policies of the current administration on fuel subsidy and Naira exchange rate, the motivations behind them may have been good but their reckless implementation has negatively impacted the people, to put the situation mildly. The same could happen with the tax bills, which ordinarily are not a bad idea. Because most states rely on money shared at FAAC to fund their budgets, it is no surprise that we now have a political crisis that has divided the country along sectional lines. I continue to urge President Tinubu to dialogue with the governors on this issue. If he bullies his way to get the laws passed by the National Assembly without the buy-in of critical stakeholders across board, the consequences may be too difficult to manage in a fragile country like Nigeria.

Ghana’s President Nana Akufo-Addo, who completes his mandatory two terms by 7 January 2025, has promised to leave office through peaceful and credible general elections on 7 December 2024.

“I came (to the office) as a result of a peaceful and credible election, and I want to go out through the same process,” to entrench the democratic tradition in Ghana, the Ghanaian leader told visiting ECOWAS Election Observation Mission led by former Nigerian Vice-President Mohammed Namadi Sambo during an audience at Jubilee House, Accra on Tuesday 3rd December.

President Akufo-Addo said that ECOWAS as a community has been facing “challenges and negative developments”, including violent extremism and military incursions in politics, especially the decision of three member States to quit the regional economic bloc.

“The responsibility is on us to respond to these challenges with the conduct of free, fair and credible elections,” he said, adding that the upcoming presidential and parliamentary elections in Ghana, a founding and active member of ECOWAS, would be of particular resonance.

He assured that Ghana has institutions with experience in conducting credible elections under its fourth Republic from 1992, noting that the country values the contributions of ECOWAS, chairing its Authority of Heads of State and Government in the past.

In his remarks, Dr Sambo commended Ghana’s democratic tradition, which included the unbroken ninth cycle of regular elections and peaceful transfer of political power.

He urged the president to galvanise the nation to pull together for peaceful, transparent and credible elections and the consolidation of democracy in Ghana and the region.

The ECOWAS delegation included the Deputy Head of Mission, Baboucarr Blaise Jagne, Gambia’s former Foreign Minister, Ambassador Abdel-Fatau Musah, ECOWAS Commissioner for Political Affairs, Peace and Security, who is leading an Electoral Technical Support Team and Ambassador Mohamed Lawan Gana, ECOWAS Resident Representative in Ghana.

Accompanying President Akufo-Addo at the meeting were Ghana’s Foreign Minister Shirley Botchwey, recently appointed Commonwealth Secretary-General, Interior Minister Henry Quartey, Kow Essuma, Secretary to the President and Michael Afori-Attah, Director Regional Integration, Office of the President.

At a separate meeting with Mrs Jean Mensa, Chairperson of Ghana’s Electoral Commission, Dr Sambo called on the electoral umpire and other stakeholders, including the security agencies, to demonstrate high-level professionalism and neutrality in carrying out their duties.

The EC Chairperson briefed the ECOWAS Mission on the activities of the Commission, saying preparations were on course for a peaceful and credible presidential and parliamentary elections on 7 December.

 

The National Information Technology Development Agency (NITDA) has revealed that foreign digital companies operating in the country, including Google, Microsoft, and TikTok, among others, paid a total of N2.55 trillion in taxes in the first half of this year.

Hadiza Umar, director of corporate communications & media relations,
disclosed this in a statement on Tuesday quoting data from the Federal Inland Revenue Service (FIRS) and the National Bureau of Statistics (NBS).

NITDA commended Google, Microsoft, X, and TikTok for their compliance with the Code of Practice for Interactive Computer Service Platforms/Internet Intermediaries.

The code, which was issued jointly by the Nigerian Communications Commission (NCC), National Broadcasting Commission (NBC), and NITDA outlines clear guidelines for promoting online safety and managing harmful content.

While highlighting the impacts of the regulatory framework, NITDA noted that this has also boosted the government’s revenue through the payment of taxes by digital companies.

“Data from the Federal Inland Revenue Service (FIRS) and the National Bureau of Statistics (NBS) reveal that foreign digital companies, including interactive computer service platforms and internet intermediaries (such as social media platforms) operating in Nigeria, contributed over N2.55 trillion (approximately $1.5 billion) in taxes in H1 2024.

 

“This significant increase in revenue underscores the role of robust regulatory frameworks in shaping compliance and driving revenue growth in the digital economy,” NITDA stated.

Providing an update on the level of compliance with the Code of Practice for Interactive Computer Service Platforms/Internet Intermediaries, NITDA said all the digital platforms have been making efforts to address user safety concerns in line with the Code and the platforms’ community guidelines.

The highlight of the overall statistics across all the platforms shows that there were 4,125,283 registered complaints in 2023.

About 65.8 million contents were taken down, 379,433 were removed and re-uploaded after appeal by users and 12.09 million users closed and deactivated their accounts.

While commending the progress made, NITDA emphasised the need for continued collaboration and innovation to address emerging challenges and ensure a safer and more responsible digital space.

[Businessday]

Rivers State Governor, Siminalayi Fubara, has debunked claims of his administration engaging in excessive borrowing to fund governance.

Naija News reports that Fubara made the clarification on Wednesday at the inauguration of the 11.8km Okehi-Umuola-Eberi road, a vital link between two sister local government areas of Etche and Omuma.

 

The Governor noted that the only loan obtained by his administration was a ₦200 billion facility earmarked for the construction of the ring road project, an over 50km dual carriageway connecting six local government areas in the state.

Fubara further challenged those speculating reports of purported borrowing by his administration to verify his clarification with the Debt Management Office (DMO).

He reiterated his administration’s commitment to ensuring the happiness and development of Rivers State residents despite attempts to undermine his efforts.

Fubara also pledged to finish more roads and medical facilities for the residents of Etche and Omuma, adding that vengeance should not be the driving force behind governance, citing the previous administration’s decision to suspend a road via Etche that connected Rivers State to Imo State because it led to the home of an opposition figure.

Fubara Vows To End Unreasonable Violence In Rivers State

In related news, Fubara has vowed to put an end to what he described as unreasonable violence in Rivers State.

The Governor disclosed plans to implement the report of the State Commission of Inquiry on the destruction of local government secretariats.

Fubara stated this at the presentation of the Commission’s report by its chairman, Justice Ibiwengi Minakiri, a serving judge of the State High Court, at the Government House in Port Harcourt.

Fubara argued that politics should not be synonymous with violence but a contest of ideas without permanent enemies or friends.

The governor applauded the Commission for its resilience in completing the task despite attempts to derail the work, including legal challenges and other forms of obstruction.

He wondered why anyone would oppose a Commission dedicated to uncovering the truth and expressed disbelief that individuals who invested in building council complexes could later destroy their own legacies.

[NaijaNews]

Nigerian lawyers have shared their views on the proposed derivation of Value Added Tax (VAT) based on consumption.

The Tax Reform Bills draft was framed by a team led by Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee.

Oyedele had criticized the injustice in the current mode of VAT distribution, which considers the location where VAT is remitted, rather than where goods are supplied or consumed.

 

The federal government maintains that the fiscal reform agenda will devolve more resources to Nigeria’s state and local governments, ultimately benefiting the Nigerian people and fostering a democracy that works for them.

In an exclusive interview with Nairametrics, prominent legal practitioners shared their views on the bills and made recommendations to relevant stakeholders.

Contentions Surrounding VAT 

A key issue associated with the Tax Reform Bills is how VAT will be applied.

  • At a recent event with tax consultants, Oyedele stated that it is inappropriate for multiple consumption taxes to exist across states, emphasizing that states should discontinue their consumption taxes.

“Why don’t we just eliminate these other consumption taxes? Let’s focus solely on VAT. Make it an incentive for them. Tell the federal government, ‘Please, cede 5% of your VAT revenue to states.’ So, the federal government collects 15%, and states begin collecting 10%,” he suggested.

“Let’s give the extra 5% to states. Based on the VAT collection trend for 2024, that 5% will be close to N350 billion, which is more than five times what states are currently collecting from consumption taxes,” he added.

  • However, Governors of the 19 Northern states, along with traditional rulers and stakeholders from the region, have expressed opposition to the bill, particularly concerning the draft for VAT distribution based on derivation. Most lawmakers from the Northern bloc have aligned with their position.

 What Nigerian lawyers are saying 

Ahmed Raji, SAN, in an exclusive interview with Nairametrics, advised that a potential solution would be to acknowledge that VAT is a consumption tax.

  • He noted that VAT, as a consumption tax not covered by the exclusive list and not expressly mentioned in the 1999 Constitution, should be regulated by each state.
  • Raji explained that the federal government should handle VAT related to imports
  • and exports, while each state should manage its own VAT, with exceptions for imports, exports, and free trade zones (assuming VAT applies there).

For example, if banks in Kano are doing daily transactions, the tax authority in Kano should be able to inspect their books and collect VAT from them. They don’t have to remit everything to the Headquarters. By devolving VAT powers to the states, this issue would be resolved, akin to the sales tax system in the U.S., where each state manages its own tax laws. There is no central tax law in America,” he said.

  • Raji believes that allowing states to manage their own VAT would foster healthy competition, encouraging more aggressive tax regimes and the pursuit of optimal systems.
  • He also emphasized the need for collaboration and public sensitization to ensure the public understands the benefits of the proposed tax bills.
  • Raji advised the federal government to engage state governors and other stakeholders constructively so that they understand the benefits of the proposed tax reforms.
  • He also advocated for more Town Hall meetings across Nigeria’s six geopolitical zones to clarify any grey areas of the bills.

“I’m not saying FIRS is right, or the Governors’ Forum is wrong. There should be collaboration, sensitization, and the exchange of ideas between both parties. However, they should not just dismiss the bill outright,” he said.

  • Chief Rafiu Oyeyemi Balogun, SAN, in an exclusive interview, explained that the contentions surrounding the new Tax Reform Bills, which have passed their second reading in the National Assembly, are not unexpected given Nigeria’s diverse tribes and religious differences.
  • He cautioned that rejecting the bill entirely could be counterproductive, potentially hindering the growth of tax administration and governance in Nigeria.
  • He advised that the rule of law should prevail, allowing stakeholders to present their positions on the bills to the National Assembly for consideration.

“The Northern Governors’ Forum should assemble a team of tax practitioners, administrators, and legal experts to comprehensively study the bills, identify sections that should be amended or removed, and present well-reasoned arguments for their position. These findings should be presented to the National Assembly and defended during the public hearing,” he said.

  • If the derivation principles in VAT revenue distribution are the core issue in some quarters, Balogun suggested that this concern could be singled out and addressed separately.
  • In a statement shared with Nairametrics, Dr. Olisa Agbakoba, SAN, expressed support for the tax reform bill from a revenue generation perspective, particularly as it targets corporate entities and the wealthier classes.

“Northern Nigeria may have a valid concern. We’ve always distributed revenue based on clear principles. So, the North is asking why the revenue-sharing formula in the proposed Tax Reform bill isn’t aligned with how we share oil revenue. This is a significant issue,” he said.

Agbakoba stressed that Nigeria will continue to struggle with equitable revenue distribution until it devolves revenue collection to the states, which would require a significant decentralization of power.

“My honest opinion is that it’s long overdue for political and economic power to be devolved from the Federal Government to states, and from states to local governments. This is the only way the economy can shift from relying on shared revenue to generating its own,” he concluded, adding that consumption tax should go to the states where the revenue is generated.

[Nairametrics]

Former Vice President Atiku Abubakar has has condemned the arrest of a civil rights activist, Dele Farotimi, describing it as a reminder of “the dark days of military dictatorship.”

Farotimi was arrested on Monday over his book titled, ‘Nigeria and its criminal justice system’ said to have allegedly defamed a Senior Advocate of Nigeria, Afe Babalola.

In a statement personally signed by him on Wednesday, the Peoples Democratic Party (PDP) Presidential Candidate in the last election, noted that there is no need for police involvement in his case since it is said to border on defamation.

He alleged that Farotimi’s arrest is a symbol of the President Bola Tinubu-led administration’s desire to suffocate the fundamental right to free expression.

 

Atiku counselled that if anyone feels wronged by defamatory words, the person can approach the court, noting that freedom of expression is a fundamental right guaranteed by the constitution

He said: “The arrest and detention of lawyer and human rights advocate, Dele Farotimi, is unequivocally condemned. It serves as a grim reminder of the dark days of military dictatorship when the iron fist of tyranny sought to crush all dissent.

“I am made aware that Dele is being accused of defamation — an offense that, under normal circumstances, should not warrant the involvement of law enforcement.

“The Police’s intervention in such matters is nothing less than the use of a sledgehammer to swat a fly, an overreach of unimaginable proportions.

“This alarming trend, particularly the recent abduction — or rather, the arrest — of Dele Farotimi, is emblematic of this administration’s insidious agenda to suffocate the fundamental right to free expression. The aim is clear: to intimidate and harass citizens, particularly those who oppose the regime and the press, thus paving the way for the establishment of a one-party state.

“It is imperative to remind the Tinubu administration that these repeated acts of arrest stand in direct contradiction to the principles of democracy.

“Freedom of speech and association are not privileges but constitutionally enshrined rights. If anyone feels wronged by defamatory words, they are free to seek redress in the courts, not at the hands of the state’s enforcers.

“It is an appalling abuse of power to use the Police as a tool for personal vendettas. In 2019, I was defamed. I did not involve the Police to flex muscles and intimidate the defaming citizen, but I took the case to court where I am currently seeking reliefs for the injuries to my name and integrity. Therefore, I call for the immediate and unconditional release of Dele Farotimi.”

[DailyTrust]

Human rights lawyer, Femi Falana, SAN, has called for caution on the part of the Nigeria Police Force, saying the arrest and detention of an activist, Dele Farotimi, is illegal.

In a statement made available to journalists, Falana stated: “Without any fear of contradiction, Lagos State is among the two states in Nigeria that have decriminalised defamation in its entirety.”

He called for Farotimi’s release.

“I have confirmed that Mr. Dele Farotimi was arrested in Lagos on Tuesday for alleged criminal libel.

“In demanding for Mr. Farotimi’s unconditionally release from illegal custody, I wish to state, without any fear of contradiction, that Lagos State is among the two states in Nigeria that have decriminalised defamation in its entirety.”

[DailyPost]

The Senate has suspended action on the tax reform bills currently before it.

It further instructed the Committee on Finance to stay action on the public hearing pending the time the agitation in the public space is addressed.

The Senate further constituted a special committee to meet with the executive branch and work with the Federal Government to resolve the issues surrounding the tax reform bills.

This was made known by the Deputy Senate President, Jibrin Barau, who presided during the plenary on Wednesday.

 

There have been a lot of controversies surrounding the Tax Reform Bills since its introduction to the National Assembly.

The bills are the Joint Revenue Board of Nigeria (Establishment) Bill, 2024; Nigeria Revenue Service (Establishment) Bill, 2024; Nigeria Revenue Service (Establishment) Bill, 2024 and Nigeria Tax Bill, 2024.

Northern governors have rejected the bills, describing them as anti-democracy.

Following this, the National Economic Council requested that the tax reforms bill be withdrawn from the NASS for more consultations.

Amidst the controversy, Senator Shehu Buba (APC, Bauchi South) in an interview with British Broadcasting Service, Hausa Service said Northern Senators agreed to recall the Tax Reforms Bills.

He said, “These bills are complex and require thorough review by tax policy experts.”

He claimed that northern lawmakers strongly oppose the proposed “derivation” formula in the value-added tax (VAT) distribution system, arguing that northern states would be unfairly impacted.

Also, on Tuesday, the president instructed the Ministry of Justice to liaise with the judiciary.

Speaking about these controversies, the Deputy Senate president noted that the delegation will meet on Thursday at the National Assembly to resolve all the issues that have been the cause of the uproar.

 

Barau said, “On the tax reform bills currently before us, we acknowledge that the Senate remains the highest legislative assembly in this country.

“The Senate comprises men and women of wisdom and experience, entrusted to legislate for the peace, stability, and development of the nation.

“The Senate of the Federal Republic of Nigeria, like similar bodies globally, serves as a stabilising force in times of difficulty or disagreement. Through dialogue and consensus, the Senate has consistently provided solutions to national challenges since 1999.”

He added, “In this regard, we have decided to set aside politics, ethnicity, and regionalism to work together on resolving the issues surrounding the tax reform bills.

“In collaboration with the Executive Arm of Government, we agreed to establish a forum to identify and address contentious areas to ensure national unity and progress.

“Before the introduction of these bills, we faced numerous challenges, including insecurity and economic issues.

“The President has been working to address these problems, and we are committed to supporting these efforts while tackling global economic challenges. We also agreed that no other issues should aggravate the country’s current difficulties.

“It has been mutually decided between the Executive and the Senate to engage the Judiciary to sort out these matters.

“the Attorney General of the Federation will be involved in discussions to identify and resolve areas of disagreement for the nation’s benefit.

“Tomorrow, the committee established by the Senate, along with its leadership, will meet with the Attorney General to address these issues.”

Barau further instructed, “Consequently, the Senate Committee on Finance has been directed to pause further actions on public hearings and other matters related to the tax reform bills until the issues are resolved.”

Members of the committee are all the leadership of the Senate including other members,  Adamu Ailero (PDP, Kebbi Central), Orji Kalu (APC, Abia North), Seriake Dickson (PDP, Bayelsa  West) Titus Zam (Benue South), Abdullahi Yahaya (Kebbi), Adeola Olamilekan (APC, Ogun West), Sani Musa (APC, Niger East) and Adetokunbo Abiru (APC, Lagos East).

[Punch]

An Ado-Ekiti Magistrate court on Wednesday remanded a Lagos based human rights lawyer, Dele Farotimi over an alleged case of defamation against Aare Afe Babalola SAN the founder of Afe Babalola University.

Farotimi, who was arrested at his chamber in Lagos on Tuesday by officers from Ekiti State Police Command, was arraigned for allegedly publishing a book “Nigeria and it’s Criminal Justice System where he alleged that Aare Afe Babalola corrupted the Judiciary and procured judgements in the supreme court there by exposing him to hatred, contempt, ridicule and damage his hard earn career.

The suspect Dele Farotimi pleaded not guilty to all the sixteen count charge.

Police prosecutor, Samson Osun called for the remand of the suspect in prison custody pending further investigation and it’s outcome for the maintenance of security in the country.

Counsel to the defendant, Dayo Akeredolu opposed the remand call and pleaded with the court to admit the defendant to bail on very liberal terms and on self recognisance because the case at hand is bailable and the suspect is a known figure who is not constituting any threat .

He said the defendant is presumed innocent until proven guilty.

In his ruling, the presiding Magistrate, Abayomi Adeosun remanded the suspect in prison custody and adjourned hearing till December 10.

[Vaguard]

Six months ago a friend I go on daily runs with took ill on a Monday evening. It was sudden and by the time I saw him hours later at the hospital, he was lying there very sick, very frail and hooked up to machines.

The diagnosis was sepsis and we were all surprised. The morning before he took ill, we had gone on a 6km run. That was 2km more than our usual but there was a reason. We had gone to a party on Saturday and some damage” had been done. So that Monday morning we had agreed to run the “foolishness” out of our system.

Sepsis is a major killer in the UK and is described as “a life-threatening condition by  The UK Sepsis Trust which says it “can lead to shock, multiple organ failure and even death if not recognised and treated promptly.”

Statistics from the NHS are more sobering. Sepsiskills five people every hour and accounts for about 50,000 deaths per year in the UK alone.”

 

So, my friend was lucky to have listened to his body and gone to the A&E where he wasprescribed a cocktail of drugs that included powerful antibiotics as well as hydrocortisone, vitamin C, thiamine and lots of intravenous fluids.

That incident came to mind as I read the Keynote Address delivered by Olayemi Cardoso, Governorof the Central Bank of Nigeria at the 59th Annual Dinner of the Chartered Institute of Bankers of Nigeria (CIBN) on November 29, 2024.

Nineteen pages long, it was expansive, insightful, comprehensive, wide-ranging, bold and visionary in acknowledging the myriad of issues they met on ground, the challenges encountered so far in fixing them and strategy for the future. It was like a Job Description and a set of Key Performance Indicator(KPIs) rolled into one.

 


Reading through, the image that loomed before me was 
of my friend on that hospital bed. When we met in the morning, he was bubbly and rearing to go with none of us the wiser about the bacteria ravaging his system. By evening the bacteria had won and it would have been a different story if doctors had not given him that cocktail of medicines.

The financial system Yemi Cardoso and team met on ground was being ravaged by an unseen bacteria and leading to a system collapse. The prognosis was bad – high inflation, multiple exchange rates, unchecked subsidy and rampant arbitrage, lack of access to international capital markets, poor investor confidence, waning foreign portfolio inflows, declining exchange reserves and decreasing diaspora remittances, huge FX backlog, excessive money supply growth at 13% annually, fiscal crisis from unprecedented Ways and Means advances to the FG of N22.7 trillion and many more.

Yemi Cardoso was like a doctor who came to the quick realization that urgent action was required to stem the tide and steer the financial ship to a safe port.

What he did, he told the CIBN, was attack with a cocktail of “targeted policies, transparent market operations, effective coordination between monetary and fiscal authorities, and a commitment to rebuild trust.”

 

What did he think success would look like after this cocktail of policies has been implemented? Cardoso told his audience that what the CBNexpects in 2025 and beyond is a regime that will see the CBN “stabilize the exchange rate, curb inflation, strengthen banks’ capital buffers, and foster an environment conducive to the success of both businesses and individuals.”

These are already happening and OlayemiCardoso was not shy in pointing out areas where progress has been made.

External reserves which fell to $33.22bn in December 2023 have grown back to $40bn the highest level in 3 years and “the equivalent of eight months’ import cover.”

That is a reflection of rising investor confidence evident in the 72% growth in foreign portfolio inflows and increase in diaspora remittances from a monthly average of $300m to $600m with a monthly target of $1bn set by the CBN.

 

This is being buoyed by the integration of the Nigerian diaspora into our financial system by initiatives like the introduction of the non-resident BVN registration. At the time of writingthis piece, news of an oversubscribed Eurobond issue of $2.2bn filtered out from the Debt Management Office (DMO).

The fiscal crisis from excessive Ways and Means which was the equivalent of almost 11% of our GDP in 2023 before Cardoso and team took over at the CBN has been ended with the backlog of over $7 billion in unfulfilled commitments cleared.

 

The FX market has been stabilized with a tightening contraction in the gap between the official and parallel markets and more sanity is expected with the take-off on December 2, 2024 of the electronic FX matching system. Analysts are already forecasting that the naira will end the year low.

A regime of transparency has led to regular andimproved financial stability reports, balance of payments data, and FX market updates, datasharing, the launch of a new website and technology driven innovations intended to “strengthen the CBN’s credibility and public trust in our policies.”

 

Speaking at that dinner, Cardoso summarized his ultimate destination as “price and exchange rate stability, catalyze sustainable economic growth, and protect the livelihoods of millions of Nigerians.”

While all these are cause for cheer, challenges remain. The naira is still taking a beating something Cardoso has attributed to buyer’s desperation and a distorted view of the value of the naira relative to the greenback. This will hopefully be solved in 2025 and beyond by “the introduction of the electronic matching system” which will correct these distortions by enhancing the price discovery process.”

 

Inflation remains a thorny issue at 33.88% despite efforts to “contain inflation and restore stability” by “raising the Monetary Policy Rate by 875 basis points to 27.5%”. The inflation target of 21.4% is yet to be achieved.

But Cardoso is upbeat: “Our tight monetary policy stance has altered the previous dire trajectory, and we expect a downward trend in 2025. Inflation remains unacceptably high, but the signs are encouraging, particularly given that the full effects of monetary policy typically take 6-9 months to impact the consumer sector.”

To conclude one must ask whether Cardoso and his team have factored in the coming of Donald Trump into their plans for 2025As Cardoso noted in his keynote, the pandemic, global geopolitical tensions and inflation have had a deleterious effect on emerging markets in the form of “withdrawal of capital flows” thus creating new challenges for economies like ours.”

Speaking further he noted that “Major central banks are gradually easing their monetary conditions and this shift is slowly reopening access to international capital markets for emerging economies.”

But for how long? Recent comments from Donald Trump in reaction to plans for dedollarisation by the BRICS nations deserve attention from the CBN as the apex bank looks to the future.

This is important because in October this year, Nigeria formalized its romance with the BRICS bloc by becoming a partner as reported by The PunchBRICS has officially expanded its alliance, adding 13 new nations as partner countries, though not as full members…The countries are Algeria, Belarus, Bolivia, Cuba, Indonesia, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Uzbekistan, and Vietnam.

High on the agenda of the BRICS nations and their partners is to establish “a unified currency or bolster bilateral trade agreements that bypass the dollar. These efforts aim to reduce reliance on the U.S. dollars” reports Global Financial Digest

Trump has reacted to this by threatening 100% tariffs on imports from the BRICS nations. As President, Donald Trump’s plans to entrench his America First doctrine and the dollar’s hegemony will hobble plans for de-dollarisation of economies in the BRIC bloc as well as the emerging markets of the global south which remain vulnerable to tectonic shifts in the larger global economy.

This is something that could have repercussions for the Nigerian economy described by Cardoso as a “resource-intensive” country.

Kan is a PR/crisis management expert and financial analyst.