Since President Bola Tinubu transmitted four executive bills tagged #TaxReformBills to the national assembly last month, many needless controversies have engulfed the debate around the bill. 

Most of these controversies are simply borne out of inability of those flaming the controversies to carefully go through the contents of the bills currently before the parliament. 

As a result of, a lot of ordinary Nigerians are confused about the true position of these bills especially as it affects their pockets.

I want to briefly breakdown the tax reform bills in a very concise and easily understood manner.

The tax reform bills are four different bills that seeks to bring everything about taxation and administration of tax in Nigeria under four different pieces of legislation. The bills are as follows:

1. The Nigeria Tax Bill

2. The Nigeria Tax Administration Bill

3. The Nigeria Revenue Service Establishment Bill

4. The Joint Revenue Board Establishment Bill

The Nigeria Tax Bill is where all major taxes imposed on individuals and companies are clearly stated as well as the rates. This bill is just like a compendium of taxes charged in Nigeria. 

The Nigeria Tax Bill basically amalgamated all the existing laws in which provisions for taxation was made. If passed, this bill will lead to the repeal of 11 laws that contain provisions on imposition and collection of taxes.

Some of major provisions contained in the Nigeria Tax Bill that has far reaching bearing on both individuals and businesses include:

1. Exemption of individuals earning N800,000 or less from paying income tax. Currently, if you earn a total of N800,000 annually, you are required to pay N84,000 out of this amount as income tax. With this bill, you will not pay anything.

2. Only those earning above N50 million get to pay 25% personal income rate. Under the current law, once you earn above N3.2 million you will be charged 24% income tax.

3. Exemption of small businesses from paying income tax. In this bill small companies are defined as those with annual turnover of N50 million or less. In the current law, small businesses are defined as those with turnover of N25 million or less. What this means is that up to 90% of businesses in Nigeria will be exempt from paying income tax. 

4. Reduction of company income tax rate from 30% to 25% in 2026 for medium and large companies.

5. Elimination of minimum income tax of 1% charged on the gross earnings of medium and large companies that did not declare profit. Only profit is taxed under the new tax bill.

6. Harmonisation of 2.5% education tax, 1% NITDA tax and 0.25% NASENI tax that many firms pay in addition to their company income tax annually into a single development levy of 2% that will be used exclusively to fund student loans from 2030. 

This further reduces the total tax burden of some companies from around 33.75% of their earnings (when you add these three deductions to their income tax rate of 30%) to just 27% of their earnings.

7. Review of the VAT revenue sharing formula where states now take 55% of the revenue instead of 50% while the federal government’s share of VAT revenue shrinks from the current 15% to 10%. The share of LGAs remain the same.

8. Progressive increase in VAT rate from the current 7.5% to 10% in 2025; 12.5% between 2026-2029 and 15% from 2030.

9. Exemption of many basic items consumed by the poor from VAT such as food items, medical services and pharmaceuticals, educational fees, electricity etc.

10. Tax exemptions to encourage investment in both associated natural gas and non-associated gas.

The Nigeria Tax Administration Bill on the other hand is the bill that sets out how the tax authorities will administer the taxes, which include assessment, collection of, and accounting for the various tax revenues they collect. 

The bill also outlines the powers and functions of the tax authorities, which taxes are reserved exclusively for the NRS to collect and which ones are reserved for the states among other miscellaneous provisions relevant to the effective administration of tax in Nigeria.

Some of the major provisions of the Nigeria Tax Administration Bill include:

1. Drawing the rich into the tax net. The bill puts in place mechanism to ensure that individual customers of financial institutions whose cumulative transactions in a month amount to N25 million or more and corporate customers whose cumulative transactions in a month amount to N100 million or more do not evade taxes by mandating financial institutions to give the tax authority a list of such individual or corporate customers with their addresses.

2. Payment of taxes and royalties in Naira. Under this new provisions, taxes including royalty assessed in a currency other than the Nigerian Naira may be paid in that currency or in Naira at the prevailing exchange rate in the official exchange market. This will boost efforts to stabilise the Naira.

3. NRS to collect revenues hitherto collected by some regulatory agencies such as Nigeria Customs Service, Nigeria Upstream Petroleum Regulatory Commission (NUPRC), NPA, NIMASA, etc. This provision is meant to allow these regulatory agencies to focus on their regulatory functions while NRS whose duty is revenue collect carry out the collection of taxes and royalties.

4. The deployment of technology to automate tax assessment, collection, and accounting. This will enhance tax collection, especially on companies that operate digitally, such as social media companies, music streaming platforms, etc.

5. Deduction of unremitted tax revenues by MDAs that serve as agents of tax authorities from their budgetary allocations.

6. A new VAT derivation model where 60% of VAT revenue standing to the credit of the states are shared on the basis of derivation while 20% is shared based on population sizes and the other 20% is shared equally among the states. Most importantly, VAT revenue for the purpose of the new derivation model will no longer be attributed to the place of remittance (which is usually the headquarters of companies) but attributed to the actual locations across the states where the consumption of goods and services took place. The current method favours states like Lagos, Rivers and Oyo states which have a lot of company headquarters located in them.

7. Instalmental payment of tax.

8. Funding of tax refund accounts by deducting a percentage of money collected by the tax authority before distribution. This is to ensure that every tax refund claim that is verified is paid. Before now the tax refund account was funded by budgetary provisions, which are grossly inadequate.

9. Establishment of Local Government Revenue Committee to handle collection of taxes, fines and rates under the jurisdiction of each local government area.

10. Harmonisation of all tax offences and penalties to ensure compliance.

The Nigeria Revenue Service Establishment Bill seeks to change the name of Federal Inland Revenue Service (FIRS) into the Nigeria Revenue Service to reflect the fact that it collects revenue for the federation and not just the federal government since most of the revenue it collects are shared by the three tiers of government. The bill also specifically empowered the NRS to administer all taxes including the other taxes hitherto collected by some federal agencies like Nigeria Customs Service, NUPRC, NPA, NIMASA etc.

Finally, the Joint Revenue Board Establishment Bill provided for the establishment of three separate bodies namely:

1. Joint Revenue Board of Nigeria to help harmonise all taxes in the country and scrap nuisance taxes while also creating a national database of taxpayers.

2. Tax Appeal Tribunal to settle tax disputes between tax authorities on issues such as residency for the purpose of personal income tax collection etc.

3. Office of the Tax Ombudsman to help taxpayers get justice if they feel aggrieved against the tax authorities.

The above summary shows at a glance that these four bills, contrary to what some mischievous persons are pushing out there, are meant to radically transform tax administration in Nigeria for greater efficiency. 

These bills will update our archaic tax laws and simplify our complicated tax ecosystem. Apart from these, the tax reforms clearly favours the low income earners and small businesses, which will be exempted from paying income taxes. These bills are simply pro-poor, pro-growth and pro-efficiency. Every patriotic Nigeria needs to back these tax reforms.

-Dada is Special Assistant to President Tinubu on Digital Media

You can accuse the Bola Tinubu administration of failing on all fronts, but one thing you will never be able to say about his over-bloated press team is that they do not show up when their principal suffers disgrace. This time, the target of their ire was former president Olusegun Obasanjo, who, during a recent paper presentation at the Chinua Achebe Leadership Forum at Yale University, said Nigeria had become a “failed state” due to the policies of former president Muhammadu Buhari and Bola Tinubu. Obasanjo mentioned two ex-presidents by their nicknames, but only one leaped at him with feral rage. Out of the presidency and away from the structures that covered his detachedness from administration, Buhari’s lack of impulse is more starkly revealed. He probably does not care to revisit the scene of his crime, and neither do his aides—whom I guess he has stopped paying—think they have any record worth putting straight.

Still, do not confuse the well-coordinated counterattacks that the Tinubu administration has been firing in the direction of Obasanjo for their administrative efficiency. What you are looking at is a people who have devoted a significant chunk of their professional media career to serving Tinubu’s image since 1999, when he first became Lagos governor. If Tinubu’s hired hands could promptly come up with the right receipts to stick it to the perpetually meddlesome Obasanjo and pull him down from the moral high ground he climbs to fire salvos at each of his successors, it is because their principal and Obasanjo have been pecking at each other’s intestines for a while.

Their contest of wills began a while ago, and they still will not let up. Whatever is between them will never end, and who cares? Two wizened old men who decide to strip each other down in public at least make for good entertainment. The only disappointing aspect is that much of what they are saying is already public record. There is nothing that the Tinubu’s boys have brought up so far that is not already known. For an over-padded media team, that is unacceptable. Why are they being paid if they cannot do more digging? Anyway, I hope they keep up the fight until they eventually reach the point where both sides will start to reveal where the bodies are buried. Let them say the worst about Obasanjo, and hopefully he responds to them in like fashion. By the time they finish stripping each other naked in public, Nigerians can decide which of them is the more horrible disaster from an informed perspective.

What is really amusing about their exchange is how the APC is reacting to being paid back in its own self-righteous coin. These were the same people who gained crucial political mileage from lobbing similar attacks at sitting presidents when they were the opposition party from 1999 to 2015. Now that they are in power, they cannot take even a fraction of what they dished out. They are overly sensitive to criticism and will not hesitate to shred their “progressive” label to punish a critic. Like the proverbial decapitator who will not let anyone pass a machete behind the back of their heads, these people did not let Obasanjo’s speech land before they started sending their attack hounds after him. They know his influence and the significance of the institutional space where he made fun of their failing government. Considering how they have exploited similar resources to promote disaffection against a sitting government, they really should be afraid. Yorubas anticipated their character when they say that the person who spits on the floor and quickly uses their feet to wipe it knows what they too have done with someone else’s saliva.

Unfortunately for the APC media boys, reality vindicates Obasanjo at their expense. Having been out of power for about 18 years, the memories of his government’s failings have long receded. Also, given how progressively worse Obasanjo’s successors have fared, he now looks like a Mandela compared to each of them. The accusations of corruption and power abuse that the Tinubu’s boys have hurled against Obasanjo in the past few days look juvenile compared to what persists. Our idea of how much one can steal before being called “thief” has so shifted that the billions of dollars allegedly stolen under Obasanjo’s watch now seem like mere coins in contrast to the legalised heist routinely ongoing in Nigeria. Imagine Tinubu and his caterwaulers thinking they can impress any right-thinking person by calling Obasanjo “corrupt”! LOL!

Yes, Obasanjo might be a high-grade hypocrite, but he did not say a single thing that most Nigerians do not find relatable. Buhari and Tinubu combined have decimated Nigerians economically and ethically; yelling at Obasanjo for failing to maintain the self-restraint one expects of ex-presidents will not change that. When the man was criticising Goodluck Jonathan, did you not take him for a statesman?

Tinubu, of course, has a right to be angry at the man for calling out their failures. Obasanjo might be speaking the truth, but his grandstanding is also what happens when a country persistently fails to hold its leaders accountable. In countries where leaders go to jail after their tenure, nobody harbours a foolish nostalgic memory of their tenure. If Nigeria had gone beyond the many televised probes that attended the end of the Obasanjo regime and properly held him accountable, we would not be here. When a society fails to develop a proper system of accountability for its public officials, what you will end up with is a crass you-be-thief-I-no-be-thief exchange between its leaders.

Our country is such a funny place. Leaders like Obasanjo will vandalise a government while in power, only for them to suddenly develop acute moral clarity when they return home. Some of them, looking back at the scene of their crimes from the safety of their retirement, will even have the moral gumption to start schooling the rest of us on what we should do with our lives that they systematically diminished through their awful governance. Some of the clowns who spent eight years working for the Buhari administration are now the ones teaching us how to re-arrange our democracy. One of them, who regularly appeared on television to defend Buhari’s awful policies and his role in executing them, now uses that same mouth to advise youths not to japa, urging them to work for the betterment of Nigeria instead. The fellow wants other people’s children to spend the time of their lives repairing what he and his fellow travellers destroyed.

Let us be clear: While Obasanjo’s government was far better than the disasters that have characterised the administrations of Buhari and now, Tinubu, he has not earned the right to be the arbiter of what constitutes either democracy or a well-ordered society. Each time we elevate Obasanjo’s governance record to the standard of democratic accomplishments; we lower the bar of what constitutes viable leadership by six feet. When we talk about leadership standards, what we are talking about is integrity, competence, and efficiency.

We are not talking about jokers for whom Nigerian life is perennially about the management of pain and suffering, confused leaders who embark on reforms without end, necrophiliacs who measure their administrative progress in terms of those who died rather than those who live. No, what we mean is a leader who succeeds in providing infrastructure for various aspects of our lives such that we have access to high-quality education, modern health facilities, security, regular energy supply, clean air and water, and even a well-preserved ecosystem. We are talking about a leadership that provides a conducive environment where industries can thrive, and its citizens too can flourish. Neither Obasanjo nor Tinubu represents that ideal.

Ordinarily, the innocuous question – who speaks for President Bola Tinubu – should be a non-issue because it ought to be a given. But these are no ordinary times. In Tinubu’s bumbling emi l’okan dynasty, where the end justifies every means and jejune politics trumps governance, absurdity is the norm.

Such intrigues, in the warped estimation of his rabid supporters, elevate him to the pantheon of political gods, making him the Jagaban of Nigerian politics. But Nigeria is worse for it.

On July 31, 2023, Tinubu appointed Ajuri Ngelale, who served as Senior Special Assistant on Public Affairs to President Muhammadu Buhari, as his Special Adviser on Media and Publicity. The 38-year-old man wasn’t unknown. A broadcast journalist before his appointment, he also served as co-spokesperson of the Tinubu-Shettima Presidential Campaign Organisation.

But he was an outlier in the Tinubu political family where the likes of Dele Alake, erstwhile Lagos State Commissioner for Information and Strategy, held sway. His appointment was said to have been facilitated by a faction of the Aso Rock cabal led by Tinubu’s son, Seyi.

Ngelale was having a ball until the President appointed Bayo Onanuga as Special Adviser on Information and Strategy on October 13, 2023. Thereafter, the supremacy battle, which blew open on May 28, 2024, ensued. Preparatory to the first year anniversary of the Tinubu administration on May 29, 2024, Onanuga said the President will not make any broadcast.

“Instead the President will address a joint session of the National Assembly, which has lined up a programme to commemorate 25 years of the nation’s democratic journey at both the executive and legislative levels,” and thereafter “commission the National Assembly Library and Resource Center, now to be known as the Bola Ahmed Tinubu Building,” he disclosed.

Hours later, Ngelale countered him, telling Nigerians to disregard the statement. “In view of the public commentary concerning the President delivering a speech before a joint sitting of the National Assembly tomorrow, May 29, 2024, it is important to state that this information is false and unauthorised as the Office of the President was not involved in the planning of the event,” Ngalale said. That was an unprecedented move that drew a line in the sand. It was, therefore, not surprising when a fight to finish ensued. Onanuga triumphed and three months after, Ngelale resigned.

The former presidential spokesman, who disclosed that he had submitted a memo to the Chief of Staff to the President on Friday, September 6, predicated his action on some undisclosed “medical matters”.

“While I fully appreciate that the ship of state waits for no man, this agonising decision — entailing a pause of my functions as the Special Adviser to the President on Media and Publicity and official spokesperson of the President, Special Presidential Envoy on Climate Action and Chairman, Presidential Steering Committee on Project Evergreen — was taken after significant consultations with my family over the past several days as a vexatious medical situation has worsened at home.”

Nobody was taken in by such apparent spurious reason. It was obvious that he had been given a very hard push and Onanuga was over the moon. He couldn’t have been happier seeing the back of the upstart who publicly called him a liar and even without being officially re-designated, he moved into Ngelale’s former office at the presidential villa and appropriated the presidential spokesman title.

To be sure, Onanuga has always been a close ally of Tinubu right from his active journalism days, especially when he was the boss at the Independent Communications Network Limited, ICNL, publishers of TheNews magazine. Nigerians thought that with the exit of Ngelale, the game of musical chairs in the communications team had effectively come to an end. But they didn’t reckon with the president’s seeming abhorrence for decency and orderliness.

So, like Ngelale, Onanuga was enjoying his day in the sun when Tinubu, on October 23, appointed Sunday Dare, his former staff at TheNews magazine as Special Adviser on Public Communication and Orientation. But that was not much of a problem because Dare, former Minister of Youth and Sports, was to work from the Ministry of Information and National Orientation.

But when he appointed Daniel Bwala as Special Adviser, Media and Public Communications (State House), on Thursday, November 14, it was obvious, as Ndigbo would say, that the handshake had gone beyond the elbow. Bwala’s appointment was an invitation, once again, for Onanuga to wrestle.

It took less than a week before the battle started. Last Monday, Bwala announced himself as the official replacement for Ngelale. “Today, I resumed officially as the Special Adviser, Media and Public Communications/Spokesperson (State House),” he tweeted after briefing State House correspondents earlier.

While insisting that the three Special Advisers were all servants of Tinubu, he reiterated that: “I only came to introduce myself to you and the role that was given to me by Mr. President, and I told you that role was once occupied by Ajuri Ngelale.” 

Distinguishing his portfolio from others, Bwala emphasized: “When Ajuri was there, the nomenclature was Special Adviser on Media and Publicity, and now that role is called Special Adviser on Media and Public Communications (State House). Sunday Dare works from the office of the Minister of Information.”

But Onanuga would have none of that. Not again after surviving the Ngelale scare. A few hours later, he countered Bwala, insisting that Tinubu has no single spokesperson. Not only that, he announced that changes had been made in the designations of members of the presidential communications team.

“President Bola Tinubu has re-designated the positions of two recently appointed officials in the State House media and communications team to enhance efficiency within the government’s communication machinery.

“The restructuring is as follows: Mr. Sunday Dare – hitherto Special Adviser on Public Communication and National Orientation is now Special Adviser, Media and Public Communications. Mr. Daniel Bwala – announced last week as Special Adviser, Media and Public Communication, is now Special Adviser Policy Communication.

“These appointments, along with the existing role of Special Adviser, Information and Strategy, underscore that there is no single individual spokesperson for the Presidency. Instead, all the three Special Advisers will collectively serve as spokespersons for the government. This approach aims to ensure effective and consistent communication of government policies, decisions, and engagements.”

Was the re-designation authorised by Tinubu? Nobody other than Onanuga can tell. As at the time he released the statement, Tinubu was in faraway Brazil. But this is only the beginning of the big fight ahead.

Of course, Onunaga knows that having three Special Advisers serve collectively as spokespersons for the government cannot ensure effectiveness and consistency. It is a recipe for confusion, a classic case of too many cooks spoiling the broth. In any case, the Special Advisers do not speak for the government as he claimed. That is the remit of the Minister of Information. They speak for the President.

Three spokespersons for one president is not only redundant and inefficient, it also raises the question of whether the communication challenges of Tinubu’s government are so overwhelming that it requires multiple voices to manage. Or is this just an attempt to amplify propaganda and gaslight Nigerians through multiple channels in a devious bid to overwhelm citizen?

Yet, as if having three Special Advisers is not bad enough, the communications teams has Senior Special Assistant on National Values and Social Justice, Fela Durotoye; Senior Special Assistant on Public Engagement, Linda Nwabuwa Akhigbe; Senior Special Assistant on Strategic Communications, Fredrick Nwabufo; Special Assistant on Public Affairs, Aliyu Audu; Senior Special Assistant (Media), Tunde Rahman; Senior Special Assistant (Print Media), Abdulaziz Abdulaziz, among others, thus making it the biggest and most unwieldy presidential media team in the country’s history.

Unsurprisingly, rather than succinctly communicating the vision and governance philosophy of the President to Nigerians, the Special Advisers have redefined their role to mean who will spew the vilest vitriol against real and perceived opponents of their principal.

Of course, the only yardstick for measuring hard work in the circumstance is the level of nastiness – how bitterly harsh and caustic they are in their criticism. That is what it takes to speak for President Bola Tinubu and that is how low Nigeria has sunk under his watch.

It’s a famous story in Christendom. Palestine, a vassal territory under the Roman Emperor Caesar, was obliged to pay tributes and taxes to Rome. A radical teacher in the territory, Jesus, taught things that the teachers of the law and local administrators in Palestine were uncomfortable with. 

After setting traps for him but missing, they pitted him against Caesar by asking him a question that could have gotten him in trouble and possibly gotten rid of him for good.

“Is it lawful to pay taxes?” the Pharisees asked him.

“Give unto Caesar what is Caesar’s and unto God what is God’s,” he replied.

Caesar’s dilemma

The problem is that the world’s Caesars have never been satisfied with what is theirs without resistance or, sometimes, a nasty fight. 

Take England, for example. In the 13th century, the barons revolted against King John over arbitrary taxation. When the King would not budge, they renounced their allegiance, forcing him to back down and sign a charter (the Magna Carta) which limited his powers.

It was the same in the US about four centuries later, leading to the famous “No taxation without representation” that paved the way for American independence. The Germans had theirs earlier, and the French, who loved nothing more than a rebellion, also waged violent wars against their kings for excessive taxation.

It’s not a foreign thing. Our tax rebellions have been championed not by men who often start the trouble but by women who bear the brunt. The British colonialists, for example, will not forget the Aba Women’s Riots of 1929 in a hurry.

Money not a problem

Yet, much as the world’s Caesars may be despised or resisted, running a country without taxation is not an option. Nigeria almost succeeded in doing so. I am not using the worn-out statistic about the low tax-to-GDP ratio to make the point. As long as there was oil money to spend, the problem—as General Yakubu Gowon said in the 1970s—was not the money but how to spend it. Tax was a non-issue.

The elite lived mainly on rent. Businesses recruited smart consultants to manipulate their numbers, and a small percentage of the public sector population who paid anything at all paid a token. Oil money was not the problem, but how to spend it.

We woke up one morning to find that while our population was growing rapidly and the infrastructure was decaying, what was left from declining oil sales, after accounting for corruption, theft, and our appetite for foreign products and services, was barely enough to fix the broken system. 

The day after

The states went haywire, and Caesars everywhere launched one of the most egregious campaigns to finance themselves in an epidemic of internally generated revenue. Thus, the era of agencies staffed with some of the most ruthless staff members was born, mandated to raise revenues from the living, the dying, and the dead by hook or by crook.

It’s not funny. There was a proliferation of levies and taxes, some collected on the Walking Dead. In a September 2024 report, BusinessDay said a study by the Stakeholder Democratic Network showed that businesses in Rivers State identified 75 taxes and levies. Anambra, Lagos, and Edo are also in this brutal tax-and-levy bracket.

In addition to taxes and levies paid by companies to states and local governments, the Federal Inland Revenue Service (FIRS) collects income tax, stamp duties, capital gains tax, personal income tax, withholding tax, industrial training fund tax, VAT, and education tax for the Federal Government.

If you are wondering how bad it is, PwC cited 57 percent of multiple tax and levies incidents, revealing a significant lack of coordination between the states and the Federal Government. As it might have been said in old Palestine, it was a case of more Caesars than taxpayers. The system is broken and overdue for reform.

Anatomy of the bill

That’s why the current interest in the Tax Reform Bill 2024 is good. If the good times were still here, the government would not bother, and few Nigerians would care. But we now care more because the times are hard and mainly because, in recent years, governments have promised to use taxes and levies to improve infrastructure but have done nothing, if not worse.

According to the government, the Tax Reform Bill promises significant changes in tax relief to small businesses (with exemptions for those earning below N25 million), expansion of VAT exemptions on essential goods, and harmonisation of consumption taxes to simplify the tax system. The bill also aims to increase transparency and compliance, reduce the corporate tax rate from 30 to 25 percent, adjust the PAYE band, focus on technology, and centralise VAT collection.

Governors and the political class directly oppose the reform, especially in the North. In addition to the derivation-based VAT model and potential increased tax burden, this objection concerns regional disparity. 

The governors are concerned that the reform may not energise people and enable investment. Manufacturers also have these concerns, including the potential inflationary impact of an incremental hike in the VAT rate from the current 7.5 percent to 15 percent in six years. They worry that it does not address the economic realities of the different regions, may worsen existing inequalities, and may not benefit local economies. 

The heart of the matter

I have a slightly different concern. Centralising VAT and tax collection despite genuine concerns about a poor federal structure is ill-advised. How can a government pursuing an agenda for a state police emasculate the states? 

How can President Bola Ahmed Tinubu, whose government as Lagos governor achieved some of the most far-reaching fiscal restructuring by ligation, be the enabler of central tax collection, which Rivers State litigated against, and Lagos State even joined? 

How can a government that went to the Supreme Court to promote fiscal independence for local governments, promote a centralised system that collects revenues that should go to the states? Except if the intention is to treat the states like Rome did ancient Palestine—a conquered territory, by the way—a reform that creates a Caesar in Abuja does not make sense.

VAT is commonly used in Europe and is the prevalent system in many parts of the world. However, it’s a far cry from what has been implemented in Nigeria. For example, a critical element of VAT in Europe and elsewhere is VAT refund. That is not on the cards in Nigeria and never was. 

I wonder if it confers more advantages than the consumption or sales tax, for example, the predominant US system. If the goals are simplicity in the collection, lower compliance costs, instant revenue generation, transaction transparency, and lower risk of evasion, sales tax ticks all the boxes.

Still a federalist?

This centralised plan should be particularly troubling for Tinubu, an acclaimed exponent of true federalism. I understand the point about simplicity, transparency, and the benefits of technology. I also appreciate the nonsensical irony of states that ban certain items wanting to share VAT revenue from the same items. 

The government has responded to many of these concerns and said the bill is a work in progress. It promises that a fairer, harmonised, and transparent system will block leakages and create a larger pool by making the wealthy and big businesses pay more. However, it remains to be seen how a central collection and distribution system, which often has significant administrative costs and complexities, will deliver these benefits. 

Under the reform’s proposed centralised collection system, Abuja may become more affluent, giving Tinubu’s government more money to spend, hopefully on good causes. But nothing stops his successor from using the same larger pool of funds for bad causes, including those that would undermine his legacy.

In Ancient Rome, lack and scarcity didn’t ruin the empire. It was complacency and abundance.