Daniel Bwala, the Special Adviser on Public Communications and Media to President Bola Ahmed Tinubu, has stated that his principal is qualified to contest elections in 2027.

Bwala insisted that Tinubu would not be distracted by people’s comments about the 2027 poll.

He stated this in Abuja on Wednesday at the national secretariat of the All Progressives Congress (APC).

“So, the time for politicking is not yet, and when that time comes, we are going to be ready for everyone.

“The president’s agenda, which is working well, is what will naturally endear Nigerians to vote for him for the second term.

“He is more than eminently qualified constitutionally to contest for the second term in office, and God willing, if God gives him life and health, we do hope that he will run his cause as provided by the Constitution,” he said.

Bwala said the APC is not bothered by the victory recorded by the opposition National Democratic Congress (NDC) in Ghana’s presidential election.

The presidential spokesperson said Tinubu’s administration has gained public trust, noting that Nigerians are witnessing its impactful efforts, “focusing on everyday realities beyond political affiliations”.

“They don’t actually care whether you are white or black-skinned or whatever, as long as what matters to them on their dinner table is dealt with,” he said.

The Presidential Fiscal Policy and Tax Reforms Committee and the Revenue Mobilisation Allocation and Fiscal Commission are locked in a dispute over the constitutional rights to administer and allocate Value Added Tax revenues in the country, The PUNCH has learnt.

While both entities support the need for tax reforms, their positions differ sharply on the constitutional interpretation and implications for revenue sharing.

The RMAFC has maintained that VAT allocation should strictly adhere to the principles of fairness and equity outlined in the 1999 Constitution.

In a memo to the National Assembly, which was seen by The PUNCH, the commission emphasised its constitutional mandate to determine revenue-sharing formula and cautioned against any arbitrary changes that could disrupt the VAT allocation system.

A part of the memo read, “Section 162 (2) of the 1999 Constitution of the Federal Republic of Nigeria (as amended) empowers the Revenue Mobilisation Allocation and Fiscal Commission to determine the formula for the equitable sharing of revenue among the three tiers of government. Ensure that such formula reflects the principles of fairness and justice.  The Constitution therefore made RMAFC the empire arbiter in matters of revenue allocation for the three tiers of government.

“The Constitution, being supreme, does not envisage that any other Act of Parliament such as the VAT Act could assume this responsibility. Any such attempt would contravene the Constitution. Therefore, the RMAFC remains the sole arbiter in producing allocation formulae that are fair, just, and equitable for the three tiers of government; any deviation from a formula crafted by the RMAFC risks violating constitutional provisions and undermining the Commission’s role as the impartial arbiter of revenue allocation in Nigeria.”

It further argued that VAT, as a consumption tax, must be distributed in a way that supports less economically developed states to ensure national cohesion and stability.

In contrast, Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, contended that VAT predated the 1999 Constitution and was fundamentally a state tax.

This is according to a statement he shared on his X (formerly Twitter) page on Wednesday.

In the statement, he argued that VAT’s design as a consumption tax meant its administration and allocation should reflect its nature.

Oyedele also pointed out that the existing system, which allocated 85 per cent of VAT revenue to states and local governments, already reinforced its classification as a state tax.

His statement read, “The tax predates the 1999 Constitution and despite having been in operation for over five years, the tax is not mentioned in the 1999 Constitution, making it a residual matter within the purview of the states.

“As a result of the above, VAT is paid into a special pool account and not treated along with the other revenues accruable to the federation for which the RMAFC is expected to play an advisory role regarding the sharing formula as contained in section 162 of the 1999 Constitution.

“A similar revenue item is stamp duties which also belong to states and it is meant to be shared among them based on 100 per cent derivation without any requirement for the RMAFC to be involved in determining the sharing formula.”

VAT was introduced in 1993 to replace the state-administered sales tax system, with the goal of broadening Nigeria’s tax base and modernising its revenue framework.

Initially set at five per cent, the VAT rate was raised to 7.5 per cent in 2020 as part of measures to boost non-oil revenue.

Over the years, VAT has grown to become a critical revenue source, managed centrally by the Federal Inland Revenue Service.

Under the current revenue-sharing formula, 15 per cent of VAT is allocated to the Federal Government, 50 per cent to states, and 35 per cent to local governments.

However, states like Rivers and Lagos have criticised the existing system and called for a derivation-based model that allocates revenues based on consumption within their jurisdictions.

In its memo to the National Assembly, RMAFC expressed its support for the proposed tax reform bills but highlighted significant concerns over the application of the derivation principle to VAT.

It argued that VAT revenues should be shared equitably to provide financial support to weaker states, warning that arbitrary changes could undermine the country’s unity.

The commission also pointed to administrative challenges in tracking VAT consumption across states, citing the lack of robust digital infrastructure to monitor consumption patterns effectively.

Oyedele, however, rejected some of the points raised by the RMAFC.

He clarified that the horizontal distribution of VAT among states is determined by a formula that allocates 20 per cent based on derivation, 50 per cent on equality, and 30 per cent on population, a different framework from what the RMAFC previously cited.

He also dismissed claims that advanced technology was required to track VAT consumption, asserting that existing input-output VAT mechanisms were sufficient.

The statement noted, “There is no need for any technology to track the location of consumption, every eligible business will simply be required to indicate the location of sales in its VAT returns as stipulated under section 22(12) of the Nigeria Tax Administration Bill. It is not necessary to tag VAT collections to end-user locations from sale to consumption, neither is it practical to do so. After all we may not be able to tag services or creative work that are digitally delivered as intangible goods.

“The horizontal distribution of VAT revenue among states is not based on a formula of 50 per cent derivation, 35 per cent population and 15 per cent equality as stated by the commission but rather 20 per cent derivation, 50 per cent equality and 30 per cent population.”

Also, Oyedele cautioned that decentralising VAT administration would likely result in significant revenue losses for many states, disrupt interstate commerce and heighten fiscal risks.

He said, “Moving away from the central collection of VAT will not only lead to significant revenue loss of over 50 per cent for all the states, they will also face challenges in collecting VAT as evident from the old sales tax regime administered by states and the consumption tax being collected currently by some states.”

Both RMAFC and the Presidential Committee have called for constructive dialogue to address the VAT allocation controversy.

Proposed solutions include the development of a VAT formula that balances derivation, equity, and consumption; engaging stakeholders from all levels of government; amending VAT laws to clarify ambiguities; and improving digital infrastructure to enhance transparency and accountability in VAT collection and allocation.

In a related development, the National Bureau of Statistics disclosed that a total of N4.77tn was earned from Value Added Tax on local, foreign and imported goods and services within the first nine months of 2024.

An analysis of the VAT sectorial reportt released by the NBS revealed a sharp increase in VAT revenue for the first nine months of 2024, with collections soaring by 95.76 per cent compared to the same period in 2023.

The data shows total VAT receipts for the nine-month period in 2024 amounted to N4.77tn, significantly higher than the N2.44tn recorded during the corresponding period last year.

Breaking down the figures, VAT collections in the first quarter of 2024 were N1.43tn, nearly double the N709.59bn generated in Q1 2023.

This upward trend continued into the second quarter, with collections reaching N1.56tn compared to N781.35bn in Q2 of the previous year.

By the third quarter, VAT revenue had climbed to N1.78tn, surpassing the N948.07bn recorded in Q3 2023.

The surge in VAT revenue has been attributed to a combination of factors, including naira devaluation, rising inflation, and improved tax compliance.

The sharp depreciation of the naira has increased the naira-equivalent value of taxable goods and services, especially those involving imports or priced in foreign currencies.

Additionally, persistently high inflation, which has driven up the cost of goods and services, has naturally translated into higher VAT collections since the tax is based on consumption value.

[Punch]