VAT controversy and the possible solution

For proper perspective, one of the issues fueling legitimate and illegitimate agitations in some quarters is the issue of resource mobilization and allocation. This has led to the sabotage of economic activities at various times and it continues to ravage through daily conversations.

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By Kabiru Adisa FCA

Undoubtedly, Nigeria is evolving and passing through significant phases in her existence. The challenges we are facing as a country are not completely unnatural; a country of multiethnic groups and diverse cultures such as ours cannot naturally escape issues like this.

For proper perspective, one of the issues fueling legitimate and illegitimate agitations in some quarters is the issue of resource mobilization and allocation. This has led to the sabotage of economic activities at various times and it continues to ravage through daily conversations.

A manifestation of this agitation could once again be noted in the latest controversy around the collection and distribution of Value Added Tax (VAT) between and among the Federal and State Governments. The ruling elite should treat this with all seriousness it deserves.

In our view as a not-for-profit organization and committed to deepening good governance, we wish to propose that the State and Federal Government should allocate VAT in the following ratio: 50% of VAT generated should be retained by each State, while the remaining 50% be shared according to population and number of Local Governments. At the same time, the States are enjoined to work assiduously to increase their Internally Generated Revenues in order to reduce overdependence on the central government.

While this could allay the arguments, true Federalism cum restructuring could address this long-standing brouhaha from the foundation and pave way for long-term economic and political stability of the nation. Therefore, we urge the Federal Government to activate the necessary policy machineries to achieve same.

Mr. Adisa is a qualified Accountant with Dangote Cement. He writes from Osun State. He can be reached via: guildancecommunity@gmail.com

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