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Feeding Bottle Federalism: Allow VAT Legal Battle Run Full Course, Ekweremadu Advises NASS

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▪︎Calls for expedited hearing of VAT, stamp duty suits 

Former Deputy President of the Senate, Senator Ike Ekweremadu, has advised the National Assembly not to embark on any legislation over the collection of the Value Added Tax (VAT) and Stamp Duties, which are subjects of raging legal tussles between some states and the federal government, noting that allowing the litigations to run the full course could be a major step towards strengthening the nation’s federalism.

Ekweremadu, who recalled that he had for over a decade been warning the nation against what he had since termed a “feeding bottle federalism” in which states depend on redistributed resources of other federating units for survival, held that any constitution amendment to transfer VAT collection to the Exclusive Legislative List, as reportedly requested by the Federal Inland Revenue Service, FIRS, would amount to changing the goal post in the middle of a game.

He bared his mind in a statement by his media adviser, Mr. Uche Anichukwu, on Sunday.

The lawmaker, who chaired the constitution amendment process in the Sixth, Seventh, and Eighth Senate, asserted since past legislative efforts to get things right had failed or been scuttled, it was natural and imperative to allow the judiciary to play its role in shaping the nation’s federalism.

He said: “I commend Governors Nyesom Wike and Babajide Sanwo-Olu as well as the Rivers and Lagos Houses of Assembly for their courageous moves. It is by so doing that our constitution or laws can be tested and our federalism strengthened.

“In April 2012, I delivered a lecture at the Osgoode Hall Law School, York University, Canada, entitled ‘Nigerian Federalism: A Case for a Review’ wherein I forewarned that Nigeria would surely run into stormy economic weather unless we reinvented our federalism, steering the country away from a military-imposed ‘feeding bottle federalism’ to one predicated on self-reliance, hard work, enterprise, and resourcefulness to catalyse national development and economic prosperity. Many others have also made related calls. Unfortunately, few people were interested in what we were talking about.

“Although we achieved a number of successes, perhaps my worst experience at the helms of the constitution amendment process was in the Seventh Assembly. We recorded the most elaborate amendments to our constitution, including the rearrangement of the Legislative Lists to devolve more powers to the subnational governments by moving certain items like Aviation, Railway, Power, Stamp Duties, among others to the Concurrent Legislative List. Unfortunately, the amendments were denied assent by the President.

“But as a lawyer and lawmaker, I know that case law or judicial precedent, is also a veritable source of law. So, I think we should allow the Constitution and the laws of our land to be tested in the courts of law.

“It is untidy for the Presidency or its agency to come through the backdoor to seek legislative intervention in its favour on the same matter that is prejudice.

“The ball is now in the court of the judiciary and all we should seek at this juncture is an expedited and courageous adjudication of the lawsuits”.

Meanwhile, Ekweremadu, whose doctoral thesis is on Fiscal Federalism, has equally advised every state to look inwards to boost its revenues since every part of the country had what it takes to prosper.

“The bottom line of the raging tax ‘war’ is that having unwittingly killed industry, having elevated our nation to an oil dependent economy, and consequent upon the collapse of oil price amid other sources of energy, our economy is virtually collapsing, the naira has crashed to an all-time low, and the nation has come to rely more and more on taxes. Inevitably, some states have now begun to question some practices they feel fly in the face of federalism and justice, among them the collection and distribution of VAT and other taxes.

“VAT is essentially a consumption tax and what states like Rivers and Lagos are saying in essence is that the federal government cannot continue to rob them of taxes paid on goods and services consumed in their states, some with environmental and social consequences that they have to deal with, but only to withhold as well as transfer a large chunk of such revenues to other states. 

“The major takeaway from our ailing economy, collapse of the naira, and the VAT and stamp duty imbroglio is that our feeding bottle strand of federalism is no longer sustainable. We must diversify and expand our economy now; and there is no other way than to remake our federalism to enable states to harness and unleash their endowments and comparative advantages.

“Rather than begrudge states like Rivers and Lagos, all federating units should be encouraged and enabled to look inwards to reinvent themselves, boosting their respective competitiveness through improved security, human capital development, industry, and building of egalitarian and cosmopolitan societies to attract more investments and economically viable populations. That is how federations are meant to function”, he concluded.

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