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Opinion

VAT battle: Lifesaver for North

My compatriots on this side of the Niger river amaze me when they keep valued, significant ideas to themselves until pushed to the wall.

I was practically panting in excitement when I came across the attached tax proposal by an egghead that does not want to be identified.

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I recommend this to all Northern states governors to ponder. Because if implemented, no state will rely on federal allocation again, while the electorate, as taxpayers, will also be forced to come to their senses and hold elected leaders and government officials responsible for every penny expended in the name of development.

Below is the proposal as casually and sarcastically put, but vital and solid:

‘[Rivers State Governor Nyesom Ezenwo] Wike’s challenge is a good one for Northern Nigeria. But, we may be stupid to miss it.

In June, N15.1bn was collected as taxes in Rivers State but N4.7bn was given to Rivers State, N46.4bn was collected from Lagos State but Lagos was given N9.3bn.

Kano generated 2.8bn and got 2.8bn.

What is missing from the picture above is that Kano could have generated N30bn or more, if it does the following:

1. Charge VAT on farm produce. Presently this is exempted from VAT. So states that rely on agriculture end up feeding the nation, but have no tax revenue to show.

2. Insist that companies pay for VAT on what they process in its state. For instance, Indomie sells a huge amount in Kano, but all its taxes are reflected as earned by Lagos state. Kano gets nothing – stupid Kano.

3. Maize is produced in Kano, but is processed in Ogun. The entire VAT is reflected in Ogun. Kura da shan bugu….

4. MTN makes brisk business in Kano, but pays personal income tax for all staff in Lagos.etc.

If the Northern states are wise, Wike’s challenge is a life-saver. They can use it to reclaim taxes currently lost to other states.They can also use the opportunity to shrink their informal business sector and bring businesses into view and the tax net.’

  • Aminu Iyawa is former Nigerian ambassador to Mexico

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