VAT Collection: Why It Might Be Of More Benefits To Have A Reviewed Sharing Formula— By kazeem Abiodun Kareem

VAT Collection —  It’s no more news that a couple of states have refused to continue to go begging Aso rock for monthly stipends coming largely from their states. This spells more trouble for a Federal Government suffering a chronic financial haemorrhage, as FG stands to lose about 3.9Trn in the next few years. But I agree with Lagos and other states on the disruption of the status quo and here are the why’s.

From a governance viewpoint, places with higher commercial activities tend to rake in higher government revenues which also implies higher government responsibilities as well as various problems bordering on mitigating effects of industrial pollution and rapid population growth among a plethora of others. So, states revenue contribution ought to be clearly proportional to states “stipends” from the FG. But our reality is far from the ideal.

READ: VAT Collection: Ekweremadu Describes VAT Bill As ‘Feeding Bottle Federalism’, Tells National Assembly What To Do

Secondly, what drives a state to be more economically viable when in the end, they’ll get about the same monthly stipends whether they put in the effort or they just sleep all through the month? If we know that the more we produce as a state, the more stipends we get from FG, why then wouldn’t we struggle to get more from FG? If state governors have their destinies in their hands, they definitely would be far more responsible and triggered to find ways to solve their economic problems and that would translate to more employed people in the country, and of course, more happy people, right?

Meanwhile, the FG sits on the bulk of the proceeds without much to show for it and with debts mounting at an unprecedentedly fast pace, leaving the state government with fewer resources to serve the faces behind the revenue numbers effectively.

READ: Appeal Court Rules On Rivers, Lagos States’ Fates On VAT Collection

Another perspective to this would be that of the dwellers in some of the economically unproductive states. Unfortunately, the status quo is not benefitting most residents of the impoverished states because they have governors who are not motivated to make their states economically viable which would, in turn, translate to more jobs and prosperity for individual residents. And the little largess they (governors) get still find its way into their and their cronies’ private pockets. But ethnic jingoism and bigotry would continue to leave the greater number of Nigerians myopic about issues like this.

From a personal viewpoint, residents living in states with higher returns somehow suffer this blessing turned curse. As a Lagosian working a government job, I’m far poorer than someone From Osun working a similar job at the same level. This is obvious because what I pay for a bedroom apartment is more than what they pay for a three-bedroom apartment in Osun. Mind you, Osun is just a random example of the very many economically sick states.

It’s no news that Lagos is at the extreme receiving end of this unfavourable transaction. To mitigate this situation, some Lagos lawmakers pushed a bill that Lagos be granted “Special Status”, some years ago. The most debilitating part is that the bill has always been met with vehement rejection by lawmakers from the opposite end of the spectrum who of course form the huge majority of the National Assembly, considering that only about 5 states are genuinely economically productive.

The special status bill, among others sought to grant a Lagos worker like me — who pays through the nose for everything people from most other states buy for almost free— some special allowance to make sure living in Lagos does not spell doom for me.

Imagine this bill kicked with unimaginable energy from people who in all honesty know that the bill did not set out to harm them. Pathetic right?

READ:  Just In: Our Accounts Are Now Unfrozen – Bamboo Reveals

The ‘special status’ bill, among others sought to grant a Lagos worker— who pay through the nose for everything people from most other states buy for almost free — some special allowance to make sure living in Lagos does not spell doom for them.

One would only but imagine this bill kicked out vehemently by people who in all honesty know that the bill did not set out to harm them.

However, the one problem that continues to taint the trustworthiness of most state governors is their highhandedness. Unfortunately, State governors tend to misuse any iota of power ceded to them; but that doesn’t make for enough justification for not ceding to them the needed powers to govern properly in an acclaimed federalist entity, which include resource control. Therefore, the ongoing talk about a new modality is long overdue and the sharing formula has to be reviewed.

Kazeem Abiodun Kareem (Ksquare)

A PhD Student at the Department of Mathematical Sciences, Michigan Technological University, Michigan.