By Festus Adedayo Ph.D
“The VAT issue is the question of how Nigeria should be run in a proper federalism and who runs it – the states or the federal government? Though arguments subsist that huge heists will be perpetrated by the states if they lay their hands on such huge sums, it is defeated by the fact that huger heists are going on at the federal level now, concealed from view and anger of the law by region, religion and godfatherism. Since the military hijack of power in 1966, Nigeria has sought a resolution of this volcanic and complex issue, to no avail. Perhaps the Supreme Court would help Nigeria answer it once and for all.”
There is this ancient fable of the ant and grasshopper that best explains the Nigerian fiscal federalism duel. Rivers State governor, Nyesom Wike, amplified it recently. Ants, you know, are one of the most hardworking, organized and purposeful animals on earth. Extremely hardworking and industrious, myths that have existed for ages about these insects talk about their tireless industry and empathy for one another. Ants are also seen as the closest neighbor of man. In them is a unique prowess and organizational power that have survived centuries.
The pervasive presence of the ant makes the world to believe that it has turned the globe into one huge colony. This is reinforced by the fact that ants exist in almost every landmass on earth, except in the cold Antarctica and some other few islands whose weathers are inhospitable to the ant’s existence.
So, there was this epicurean Grasshopper who was also a musician. Given to a life of pleasure, liquour and women, he spent every time of his life guzzling alcohol and hosting the best women in the neighbourhood. In the perception of the world of his time, musicians and entertainers belonged to the rung of the ladder of society. They were seen as unserious and lazy roam-about. While hardworking persons in the village were farmers like ants who left for their farms at cockcrow, the morning was time for entertainers to snore. Having spent night times at shindigs, they spent the morning sleeping. By evening time, Grasshopper and his ilk would then take their baths, comb their hairs, apply pancake, spray perfumes that natives called lofinda on their bodies and get set for their entertaining activities.
Working together in unity and non-aggressively as a group, ant societies exploit resources for the common good and come to the rescue of one another in trouble. In their colonies, they take decisions collectively, communicate these within individuals, allocate and divide responsibilities according to individual strength, move out cohesively to achieve these decisions, thereby solving otherwise complex problems. One of the manifestations of this cooperation is the building of their habitats, the anthills.
Now, to the fable: It was now farming season. Though he had a farmland inherited from his late father, Grasshopper spent the season singing, chirping and swabbing liquor every evening, Conversely, Ant worked tirelessly on his farm, gathering and storing up foods in his barns, in anticipation of the dearth of the dry season. By autumn, it was time of plenty and relaxation for the Ant and other hardworking farmers. However, for the Grasshopper, it was a season of hunger. Unable to contain the hunger, Grasshopper gathered his wife and children to the home of the Ant, begging and prostrating to be given food for the family’s survival. Ant mocked the Grasshopper’s idleness and lazy disposition and asked that Grasshopper should eat his hair comb, perfume and dancing steps. Denied food, Grasshopper and his household eventually died of famish.
The moral the story is the virtue of hard work and the perils hidden in improvidence. The bible gives this teaching its notoriety through its rebuke of laziness in the Book of Proverbs, to wit, “Go to the ant, you sluggard! Consider her ways and be wise, which having no captain, overseer or ruler, provides her supplies in the summer, and gathers her food in the harvest.” Morals like working today to avert hunger tomorrow, hunger waits at the end of the tunnel for the idle soul and sundry others lace that fable.
In a Nigeria where the general perception of political office holders is that of bullies with inflated ego like that of a peacock, it is very difficult to like Nyesom Wike. The logic of his arguments, often times muddled by his exceptionally gruffy voice, the inkling one gets is that he romances despotism. This makes Wike’s bully picture perhaps the strongest of his public impressions. If you add these to another perception that he battles to manage a short fuse and high-pitched temperament, essences and morals of most of his public interventions are oftentimes drowned. Last week, however, rather than these impressions, Wike’s message that the Ant cannot continue to feed the fancy of the Grasshopper loomed larger, its essence and the moral of his arguments escaping out of the loop. It jolted Nigeria and became the most dominant discourse in debates about Nigerian fiscal federalism, which I have chosen to liken to the ant and grasshopper fable above.
Debates on the fiscal relationship between Nigeria’s central and state governments have endured since the amalgamation of Nigeria’s southern and northern protectorates. Indeed, the amalgamation idea by Major Fredrick Lugard was said to have been borne out of Britain’s quest to take off its shoulders the burden of bearing the financial task of administering the Northern protectorate from its taxpayers’ money. With a buoyant southern protectorate which had a robust economy, amalgamation was the most logical step to take by imperial Britain.
Since then, back and forth arguments on the relationship between the central and state governments have continued. In 1914, Lugard enacted the Mineral Ordinance of 1914 which vested all minerals in Nigeria on the Crown, a move which the Tafawa Balewa government which took over from the colonialists read to mean that at their exit, control of minerals was sine qua non under the purview of the central government. With self-government granted to them in 1957, power of exploitation and control of minerals in their jurisdictions was never granted to these regions in the constitution. Earnings from tin and columbine, which were excavated from Jos- Plateau area (North) as well as coal in Enugu (East) demanded licenses for exploitation from the federal government. Royalties from these resources only went to the regional governments. The governments however got foreign exchange earnings each from groundnuts, hides and skin and palm oil respectively, no thanks to the 1951 Macpherson and 1963 constitutions.
The recent judgment of the Federal High Court, Port Harcourt, which ruled that states and not the Federal Government had the right to the collection of the Value Added Tax (VAT) has rekindled the fiscal debates in Nigeria which began since the time of amalgamation. Beside VAT, the court also ruled that states and not the central government had the authority of the Nigerian Constitution to collect personal income tax. These pronouncements have also revved up narratives of fiscal injustice that has been the story of Nigeria from inception. Spearheaded by the Rivers State governor, Wike, last Thursday, Wike also instantly went ahead to sign into law a bill that was meant to action this disgust with the generally perceived inequity of the unitarized federal government system being practiced by Nigeria. In the bill, Rivers State government was given a force of law to thenceforth collect VAT in the state. Lagos State also followed suit with the signing into law of a bill with same texture.
Wike roused up the anger of the centrifugal advocates against the current equation in Nigeria. While signing the bill into law, he had said: “States have been turned to beggars. Hardly will any day pass that you won’t see one state or the other going to Abuja to beg for one fund or the other. In this (Rivers) state, we awarded contracts to companies and within the last month we paid over N30 billion to the contractors and 7.5% will now be deducted from that and to be given to FIRS. Now, look at 7.5% of N30 billion of contracts we awarded to companies in Rivers State, you will be talking about almost N3 billion only from that source. Now, at the end of the month, (the) Rivers State government has never received more than N2 billion from VAT. So, I have contributed more through the award of contract and you are giving me less. What’s the justification for it?”
Rolled into one in this tale told by Wike is the indolence and laziness of Nigerian states due mainly to the doll-outs they collect from the center monthly and the palpable injustice, akin to the ancient saying of a Big Brother who robs Peter to pay Paul, in the Nigerian mis-federal fiscal arrangement. The moment a truly federal comb is run through this iniquitous system and states start to get what they strictly deserve and truly work for, governors will then realize that gubernatorial administration is not a tea party; and that they are elected to think out of the box.
The current fiscal battle over VAT is one between forces I call centripetal and centrifugal – those who believe that Nigeria’s federalism should revolve around the center and those who hold that the states ought to control the levers of the Nigerian economy as it operated in the 1963 constitution. It is also a battle for the soul of and proper definition of what should constitute Nigeria’s federalism. For antagonists of the centripetal argument, they claim that majority of the problems of existence being faced by the country emanate from the excessive powers of the central government. Runners of the central government are exposed to humongous funds which make their offices attract a rat race to occupy by all and sundry, regardless of their competence.
The news of the Federal Inland Revenue Service (FIRS) acting like a desperate little urchin by running to the National Assembly to have the federal collection of VAT pushed on the exclusive list is one of the sickening fallouts from this whole VAT mess. It gave the impression that the central government, through the FIRS, was under pressure to perpetuate an unjust status quo.
More fundamental among the criticisms is that because the funds that FG superintends over are actually not its money, though the money is for all, it actually belongs to nobody, thereby legitimizing the ease and the rapaciousness with which it is filched. Opponents of fiscal centrifugal forces also claim that, with the high level of irresponsible governance and theft of public money in the states, FG should be left to play some Big Brother, patrimonial role over national assets and wealth. Again, for an adequate protection of weak states which do not have the huge resources of the “big” states, they argue, the FG should warehouse the wealth of the state and dispense to all according to its equitable wisdom.
This last argument was canvassed last week by the Kogi State governor, Yahaya Bello, represented by Kingsley Fanwo, his Commissioner for Information, on an Arise TV programme, as well as Muhammad Magaji, Gombe State Commissioner for Finance. They both represented the centrifugal voices in favour of a federal paternalism on the wealth of the country. Magaji, at the Technical Workshop on the development of the Gombe State’s Medium-Term Sector Strategy, (MTSS) appealed to Southern State governments to step down their push against the VAT proceeds regime.
“The VAT issue will have adverse effects not only on Gombe State but almost all the states of the federation. I was part of the discussion few weeks ago by all commissioners of finance across the country. The realisation was that only Lagos, Rivers and probably Delta states would be able to pull through without this VAT being administered centrally, and it is our appeal that we all put sentiments behind and work towards a federation that is one, by being our brothers’ keepers and ensuring that what is pulled together at the center is distributed to be able to balance resources across the country,” he said. To the Kogi state government, “We are not created equally, and God that created us did not give us equal potential, and we have to support one another.”
The VAT proceeds debate goes beyond the issue of tax and strikes at the core of the Nigerian situation and existence. Those who try to explain it as the complication of federalism or a tax procedure facing a lacuna just don’t get it. The debate is reminiscent of the Grasshopper and Ant fable above. A lot has been said on the ignominious situation where northern states who contribute very little to the central purse have the temerity to destroy alcoholic drinks sent to their jurisdiction, in the name of Sharia. They should have acted like the Afghan governments now and before now who, in the bid to follow the tenets of Islam on borrowing that frown at paying interests, refused to accept IMF loans and are likely to be opening their fiscal doors to China which probably will borrow them money without interests.
The VAT issue is the question of how Nigeria should be run in a proper federalism and who runs it – the states or the federal government? Though arguments subsist that huge heists will be perpetrated by the states if they lay their hands on such huge sums, it is defeated by the fact that huger heists are going on at the federal level now, concealed from view and anger of the law by region, religion and godfatherism. Since the military hijack of power in 1966, Nigeria has sought a resolution of this volcanic and complex issue, to no avail. Perhaps the Supreme Court would help Nigeria answer it once and for all.
The issue goes beyond Magaji’s pleading with the “wealthy states” to support the “weak” states. It is a question of justice which will also force states to think outside the box on methods of their economic survival so that they could wake up from being the sybaritic Grasshopper. It asks the equity question: Should the hardworking Ant subsidize the slovenly Grasshopper? At the core of the question is also the umbrella question of restructuring. Once the judiciary helps Nigeria to answer the question federally, other questions on Nigeria’s federalism would need answers as well. Then, Nigeria will be on the road to proper restructuring.