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VAT war: The facts and fictions

By Gbenga Olawepo-Hashim



The current controversy over who should collect Value Added Tax (VAT) between States and Federal Government is the latest mud thrown into Nigeria’s political water in an attempt to muddle the water more.

Those who have managed the information about the VAT wars have created the impression that the present distribution benefits the Northern States more than the Southern States. They try to make it look like the VAT is part of the “hegemonic domination” of the North.

Many commentators hardly look at the data before they hit their keyboards online. Many swallowed hook line and sinker very obvious lies.

From available data published in Vanguard Newspaper of 18th September, 2021, apart from Lagos, Rivers and Abuja who benefit from the fact that they host the headquarters of major economic, political and oil related institutions, most States apart from Oyo State are doing badly in VAT generation and a lot of Southern States are woeful. Most States, whether they are in the North or South are doing badly in production of goods and services except for Lagos, Rivers, Oyo, Kano and Kaduna States. The present centrally collected VAT which is then distributed subsidises everybody.

In comparison to Eastern States, States such as Kaduna, Kano and Katsina are doing better than Abia, Anambra, Imo, and Enugu. Based on available data reproduced below, in the past eight months, total VAT generated in Abia was N2.290b, Anambra -N5.938b, Imo -N1.941 compared to Kaduna -N18.262b and Kano -N24.492b.

Conversely, when it came to distribution, Nnamdi Kanu’s Abia State got N20.020B for generating N2billion, yet he wants to leave Nigeria that is “oppressing” him. Abia got 10 times what it contributed whereas Kaduna and Kano did not get as much as twice what they contributed. Lagos, Rivers and Oyo got lower.

Interestingly, Ebonyi where the Governor is more supportive of national integration is infact the State that generated more VAT in the South East, possibly owing to the activities of mining related industries.

A major fact showing in the data is also that regions who have been fortunate to benefit from the industrialization policies of fore-sighted leaders during the period of independence tend to do well today in VAT collection and Internally Generated Revenue (IGR). Such States as Oyo, Ogun, Lagos that benefitted from Chief Obafemi Awolowo’s industrialization policy between 1955-1960 stand out. Likewise, even though some of the industries are now moribund, but we see evident success of the industrialization policies of the NPC government in the period of limited self government and country’s Independence in States like Kaduna and Kano, with some spillover effects in Jigawa and Katsina. It is curious that despite the insurgency challenges, Yobe generated more VAT than Enugu and Anambra respectively. As a matter of fact Kano’s VAT generation is bigger than that of all the 5 Eastern States put together.

We are talking economic history and analysing economic data, not ethnic passion and propaganda. The VAT issue is not a South versus North thing. Whatever formula that will be worked out in future must be with the objective of bringing benefits to all Nigerians in all States and challenging States to make industrialization their priority as well as agricultural production and processing. We need a VAT collection and distribution system that will benefit ALL.

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