“The only time you see the efficiency and swiftness of the Presidency in passing policies is when it comes to collecting Taxes.
“Right now, VAT is 7.5%. The new Law is proposing 10% by 2025 and 12.5% by 2026.
“With the current Tax Law, it empowers every State to keep 20% of VAT generated in that State. Then the rest is brought together and shared equally – 15% goes to the Federal Government, 50% is shared equally among the 36 and the FCT, the other 35% is shared equally among the 774 Local Governments in Nigeria.
“On paper, it looks fair. But when you use spiritual eye and tourchlight the issue, you will now see where the problem is, because VAT generated by companies is allocated to the State where the company is headquartered, not to the State where the VAT is generated from.
“MTN Nigeria is headquartered in Lagos, but has 3m subscribers in Imo State. For every call these 3m subscribers make, every data they subscribe to, they will pay VAT. Then at the end of the month, VAT generated by these 3m people is allocated to Lagos State simply because MTN is headquartered in Lagos State, so are the ones in Anambra, Delta, Abia and the rest.
“All the banks in Nigeria are headquartered in Lagos. Let us use First Bank for instance. First Bank has more than 15 branches in Anambra. By this Law, VAT generated from those 15 branches is allocated to Lagos.
“Chicken Republic is headquartered in Lagos. They have a Branch in Owerri. If I go their to eat, the 7.5% tax I paid and that of others will be brought together at the end of the month and allocated to Lagos. This is why the gap between Lagos and other States is so wide, because most companies are headquartered in Lagos.
“Lagos earns N25b from VAT monthly. The State that comes second is Rivers. The State that earns the least is Nasarawa, with average of N4b monthly.
“There is a certain robbing Peter to pay Paul in this arrangement, where the riches of the Jews at the end of the month will now belong to the Gentiles.
“Instead of thinking of how to resolve this perceived injustice, the new Tax Bill is now proposing that the state will keep 60% of whatever VAT that is allocated to that State. With 20% allocation, Lagos has N21B difference from Nasarawa. Now with 60%, check what the difference will be like. And remember, those making this Bill are those who built Lagos… “
