The need to restructure Nigeria is daily dawning despite the recalcitrance of the free riders in authority. Flowing with the tide and putting the country on strong political footing and path to social progress will benefit all. This sense was recently indicted in the judgment of the Federal High Court in Port Harcourt. Precisely on August 9, 2021, the court ruled that the Rivers State government, not the Federal Inland Revenue Service (FIRS) has the right to collect Value Added Tax (VAT) and Personal Income Tax (PIT) in Rivers State. The presiding Justice Stephen Dalyop Pam consequently issued an order of perpetual injunction restraining FIRS and the Attorney General of the Federation, both first and second defendants in the suit, from collecting, demanding, threatening, and intimidating residents of Rivers State to pay to FIRS, PIT and VAT. The court, which granted all the 11 reliefs bordering on fiscal federalism sought by the Rivers State government, held that it was unconstitutional for the FIRS to demand and collect VAT, Withholding Tax, Education Tax and Technology levy in Rivers State or any other state of the federation, for the reason that the constitutional powers and competence of the Federal Government is limited to taxation of incomes, profits and capital gains, without VAT or any other species of sales, or levy other as engrossed in items 58 and 59 of the Exclusive Legislative List of the 1999 Constitution as amended.
The point should be made that this aspect of testing the fiscal federalism component of the Nigerian federal structure atomised by the players at the central government had come under legal scrutiny before. In October 2019, the FHC in The Registered Trustees of Hotel Owners and Managers Association of Lagos v. AG of the Federation & Others over the validity of the Hotel Occupancy and Restaurant Consumption Law of Lagos State upheld the powers of Lagos State to charge and collect Consumption Tax from hotels, restaurants and event centres within the state based on the content and spirit of the 1999 Constitution as amended and therefore restrained FIRS from imposing VAT on goods and services consumed in hotels, restaurants and event centres covered by the law of Lagos State government. Similarly, in December 2020, in the case of Ukala v. FIRS,the FHC expressly held that the National Assembly had no power to enact the VAT Act, in a determination of the powers of the Federal Government to make laws concerning taxation other than taxation of incomes, profits and capital gains as engrossed in the constitution. For that reason, there was no constitutional basis for the imposition, demand, and collection of VAT by the FIRS based on the constitutional powers of FIRS to do so.
Given the consequential nature of the judgment, the Rivers State government has since formally engrossed its law to rake in resources within its residual powers. However, sundry commentators have pointed to the implication of this development. Concerns have been expressed that the Federal Government would lose billions of naira in tax revenue as the bandwagon effect would make other states follow the Rivers example in ways that could compound its liquidity amidst plummeting crude prices and the volatility of oil futures. By some statistics, at a 7.5 per cent VAT rate, Nigeria might have raked in 2.5 trillion from VAT in the last18 months- January 2020 to June 2021.
In 2020, the total VAT collection was put at N1.53 trillion. Well, a window is still open to the Federal Government through FIRS administration of VAT in the FCT and non-import foreign VAT from the Nigeria Customs Service (NCS) on international trade. Truly, since the advent of the VAT regime in 1993, VAT has generated a lot of revenue for the central government. In the last three years alone, VAT has contributed1.108 trillion,1.19 trillion, and1.5 trillion respectively.
Nevertheless, fiscal federalism is to be preferred to free-riding at the centre. This is exactly what we have been advocating for 44 weeks in this serial on federalism as the answer The point was well made by Kenneth Wheare, an Australian academic in his classic, Federal Governmentthat you have no federalism without fiscal autonomy. This has been unconscionably undermined by the free-booters at the centre with a mindset to privatising Nigeria as a feudal estate.This is unacceptable!
Indeed, experts have noted that the reliance on transfers and grants from central government to finance sub-national government expenditure creates an incentive for sub-national governments to blow up expenditure and engage in recurrent negotiations with the central government for more money, a somewhat Oliver Twist syndrome. This is precisely the matter with us that has entrenched free-riding in a context where central funds are derived from unearned income, namely, the exploitation of natural resources distributable among the national and sub-national governments. This practice has proven destructive to the political stability of the country. Let the component governments enjoy financial autonomy and drive development within their respective jurisdictions.
After all, federalism is the answer, and its negation is a recipe for state collapse. So, the jurisprudential significance of the judicial pronouncement on VAT and PIT in Port Harcourt, capital of Rivers State should not be wasted by the authorities in Abuja who dont seem to know that it is only where the law rules that we call a government, not where man rules.
View post:
Federalism is the answer, after all - Part 44 - Guardian
- 2024 Lok Sabha Elections: Need to pitch for Federalism and Special Status for Goa - Herald Goa - April 6th, 2024 [April 6th, 2024]
- 1999 constitution and the quest for true federalism - Nigerian Observer - April 6th, 2024 [April 6th, 2024]
- Federalism is not Apartheid The Mail & Guardian - Mail and Guardian - April 6th, 2024 [April 6th, 2024]
- Modi has delivered confrontational federalism: Congress | Siddaramaiah highlights 'injustices to K'taka | Inshorts - Inshorts - April 6th, 2024 [April 6th, 2024]
- Lebanese Pro-Federalism Activist Alfred Riachi: Prior To October 7, The Standard Of Living In Gaza Was Pretty ... - Middle East Media Research... - February 22nd, 2024 [February 22nd, 2024]
- The Potential Impact of 'Disease X' on Federalism in the U.S. - Medriva - February 22nd, 2024 [February 22nd, 2024]
- 'People's Charter' Puts Federalism at The Heart of Myanmar's Democratic Future - The Irrawaddy - February 22nd, 2024 [February 22nd, 2024]
- Siddaramaiah vs Modi: The 'cess-y' mess in fiscal federalism - Deccan Herald - February 22nd, 2024 [February 22nd, 2024]
- Ideas Of India: Devendra Fadnavis To Take A Deep Dive Into Role Of Collaborative Federalism In Nation-Building - ABP Live - February 22nd, 2024 [February 22nd, 2024]
- Potential of federalism should be realized: PM Dahal - The Himalayan Times - February 22nd, 2024 [February 22nd, 2024]
- Sensible education policy needed - The Kathmandu Post - October 9th, 2023 [October 9th, 2023]
- Both cooperative federalism and competitive federalism have their ... - Insights IAS - August 18th, 2023 [August 18th, 2023]
- Federalism to poll promises: South India CMs bring up host of local ... - South First - August 18th, 2023 [August 18th, 2023]
- Justice Mitchell (Alabama): "The New Bar Exam Puts DEI Over ... - Reason - May 20th, 2023 [May 20th, 2023]
- Season of instability - The Kathmandu Post - May 20th, 2023 [May 20th, 2023]
- Trump Indictment Tests Congress's Role in State Investigations - Bloomberg Law - May 20th, 2023 [May 20th, 2023]
- Big Business' New Plan Would Create Fifty New Immigration Policies - Federation for American Immigration Reform - May 20th, 2023 [May 20th, 2023]
- Senator decries move to block bill loosening Wisconsin abortion law - Milwaukee Journal Sentinel - May 20th, 2023 [May 20th, 2023]
- "Illegally buying time": Congress leader Abhishek Singhvi chastises ... - ANI News - May 20th, 2023 [May 20th, 2023]
- Baby Ninth Amendments Part IV: All the Rights but Not ALL the Rights - Reason - May 20th, 2023 [May 20th, 2023]
- Amid the Fight for Myanmar, Federalism Rises from the Grass Roots - United States Institute of Peace - May 18th, 2023 [May 18th, 2023]
- Lesson from Karnataka respect states and India's federalism - Deccan Herald - May 18th, 2023 [May 18th, 2023]
- Dr. Paul Nolette named director of Les Aspin Center for Government ... - Marquette Today - May 18th, 2023 [May 18th, 2023]
- Sen. Cramer Welcomes ND Witnesses, Discusses Water ... - Kevin Cramer - May 18th, 2023 [May 18th, 2023]
- Utilities, Transmission, and the Grid: An Interview with Ari Peskoe - Brown Political Review - May 18th, 2023 [May 18th, 2023]
- Six months after elections, provincial governments are still incomplete - The Kathmandu Post - May 18th, 2023 [May 18th, 2023]
- NON-FICTION: WHY FEDERALISM ENDURES IN PAKISTAN ... - DAWN.com - May 6th, 2023 [May 6th, 2023]
- Justice Scalia's Unpublished Dissent in Kelo v. City of New London - Reason - May 6th, 2023 [May 6th, 2023]
- Citizens, civil society hold the ruling party, BJP to account ... - SabrangIndia - May 6th, 2023 [May 6th, 2023]
- ED Proposes Title IX Athletics Rule Requiring Participation Based ... - The Federalist Society - May 6th, 2023 [May 6th, 2023]
- The Mysterious Case of the Imposition of Article 355 in Manipur - The Wire - May 6th, 2023 [May 6th, 2023]
- Non-BJP State Governments Not Exercising Accountability, Allowing ... - Daily Excelsior - May 6th, 2023 [May 6th, 2023]
- Two years of Stalin government in Tamil Nadu: Two steps forward - Times of India - May 6th, 2023 [May 6th, 2023]
- What is the issue of gubernatorial inaction in the legislative process ... - Insights IAS - April 29th, 2023 [April 29th, 2023]
- World Bank Approves $100 Million to Strengthen Nepal's Healthcare ... - ReliefWeb - April 29th, 2023 [April 29th, 2023]
- Canada's federal transfer payment system badly needs a tune-up - The Conversation - April 29th, 2023 [April 29th, 2023]
- 50 years of basic structure doctrine | Only safeguard against majoritarian govt: Sr Advocate Ramachandran - The Indian Express - April 29th, 2023 [April 29th, 2023]
- Federalism - Definition, Examples, Cases, processes - Legal Dictionary - February 20th, 2023 [February 20th, 2023]
- What is federalism? | State Policy Network - February 5th, 2023 [February 5th, 2023]
- UPSC Key- January 19, 2023: Learn about Annual Status of Education Report, Federalism and State Legislatures - The Indian Express - January 19th, 2023 [January 19th, 2023]
- Advantages and Disadvantages of Federalism American Government - January 6th, 2023 [January 6th, 2023]
- fiscal federalism | public finance | Britannica - December 26th, 2022 [December 26th, 2022]
- About ALEC - American Legislative Exchange Council - December 12th, 2022 [December 12th, 2022]
- Canadian federalism - Wikipedia - November 23rd, 2022 [November 23rd, 2022]
- U.P. bags top honours at PMAY-U Awards 2021 - The Hindu - November 23rd, 2022 [November 23rd, 2022]
- Political Line sc views on conversions rajiv convicts and federalism and more - The Hindu - November 21st, 2022 [November 21st, 2022]
- Byron Williams: The court is poised to rewrite federalism - Winston-Salem Journal - October 17th, 2022 [October 17th, 2022]
- Why Hindi may set the tone for 2024 - Deccan Herald - October 17th, 2022 [October 17th, 2022]
- A Myanmar roadmap: Charting the path to federal democracy - International IDEA - October 17th, 2022 [October 17th, 2022]
- Next generation of reforms should focus on reducing cost of doing business - Economic Times - October 17th, 2022 [October 17th, 2022]
- Nigeria And The Intrigues Of Insecurity -By Kene Obiezu - Opinion Nigeria - October 17th, 2022 [October 17th, 2022]
- Trudeau's aggressive federalism may leave Ottawa weaker than before - The Globe and Mail - October 15th, 2022 [October 15th, 2022]
- What is Federalism? | CSF - October 15th, 2022 [October 15th, 2022]
- Kerala Against Hindi Imposition; Terms Recommendations Attack on Federalism and Diversity of Nation - NewsClick - October 15th, 2022 [October 15th, 2022]
- 2023: Well Vote for Candidate Committed to Federalism, Diversity, Says UPU - THISDAY Newspapers - October 15th, 2022 [October 15th, 2022]
- Attorney General Knudsen fights Biden administration rule requiring states to reach net-zero highway emissions - Montana Department of Justice - October 15th, 2022 [October 15th, 2022]
- How Scotland can learn from Quebec's third way on constitution - HeraldScotland - October 15th, 2022 [October 15th, 2022]
- Federalism and Why Presidents Fail - THISDAY Newspapers - September 22nd, 2022 [September 22nd, 2022]
- Vedanta and the missing spirit of federalism - The New Indian Express - September 22nd, 2022 [September 22nd, 2022]
- Federalism Most Suited Idea For India In View Of Its Diversity, Centralising Whole Things Will Lead To... - Live Law - Indian Legal News - September 22nd, 2022 [September 22nd, 2022]
- Urging the Use of One Federal Decision Rule to Speed Up Bipartisan Infrastructure Law Projects - Kevin Cramer - September 22nd, 2022 [September 22nd, 2022]
- Constitution Day 2022: Celebrating the right to govern ourselves - Yellowhammer News - September 22nd, 2022 [September 22nd, 2022]
- From Augusta Constitution Day: What does it mean to you? - Press Herald - September 22nd, 2022 [September 22nd, 2022]
- Explained | The office of the Governor: its origins, powers, and controversies - The Hindu - September 22nd, 2022 [September 22nd, 2022]
- Geography Professional Speaker Series kicks off with alumnus from Ohio EPA on Sept. 23 - Ohio University - September 22nd, 2022 [September 22nd, 2022]
- Vector-borne diseases trouble Nepal every year as there is not a single entomologist - Online Khabar (English) - September 22nd, 2022 [September 22nd, 2022]
- The Gujarat factor in the development project - Hindustan Times - September 22nd, 2022 [September 22nd, 2022]
- The downslide in federal relations - The Indian Express - September 22nd, 2022 [September 22nd, 2022]
- Competition between states to attract investment will boost Indias economy - Moneycontrol - September 22nd, 2022 [September 22nd, 2022]
- For state of the nation, look at states of the nation: Niti Aayogs new chief says it will help states learn - Times of India - September 22nd, 2022 [September 22nd, 2022]
- Letters to the Editor: Queen injected vitality, vigour into lives of many - The Kingston Whig-Standard - September 22nd, 2022 [September 22nd, 2022]
- Climate action that runs on cooperative federalism - The Hindu - September 15th, 2022 [September 15th, 2022]
- The spirit of federalism - The News International - September 15th, 2022 [September 15th, 2022]
- Javier Perez Sandoval Receives the 2022 William Anderson Award - - Political Science Now - September 15th, 2022 [September 15th, 2022]
- A new Constitutional Convention is a very bad idea | Opinion - Knoxville News Sentinel - September 15th, 2022 [September 15th, 2022]
- Rodney Hero Receives the 2022 Barbara Sinclair Lecture Award - - Political Science Now - September 15th, 2022 [September 15th, 2022]
- Department of the Interior, Fish and Wildlife Service: Migratory Bird Hunting; 20222023 Seasons for Certain Migratory Game Birds - Government... - September 15th, 2022 [September 15th, 2022]
- Increasing Threat To Federalism From Centrally Sponsored Schemes- Need To Form A Federal Front - Countercurrents.org - September 3rd, 2022 [September 3rd, 2022]
- Breakenridge: Supporting federalism is the only way Alberta can be a partner in LNG exports - Calgary Herald - September 3rd, 2022 [September 3rd, 2022]
- Two tools for tracking the American Rescue Plans local and national impacts - Brookings Institution - September 3rd, 2022 [September 3rd, 2022]