- Says fiscal federalism not feasible for now
By Kehinde Okeowo
The seeming unity among the governors of the 17 Southern states on matters of common interest may not be correct after all.
The governors who met on Thursday at the Government House, Enugu threw their considerable weight behind the position that the collection of Value Added Tax (VAT) falls within the powers of the States.
The governors who met under the aegis of the Nigerian Southern Governors Forum in their seven-point communique harped on the imperative of fiscal federalism.
The communique said the Forum “Reaffirmed its earlier commitment to Structural and fiscal federalism as resolved at the inaugural meeting of the Forum held on Tuesday, 11th May 2021 at Asaba, Delta State and emphasized the need for the Southern States to leverage the legislative competence of their respective State Houses of Assembly as well as representation in the National assembly to pursue its inclusion in the Nigerian Constitution through the ongoing constitutional amendment.”
It also said that “the meeting resolved to support the position that the collection of VAT falls within the powers of the States.”
But the Chairman of the South-East Governors Forum and Governor of Ebonyi State, Dave Umahi, on Friday broke ranks with his colleagues, describing their decision to support the collection of VAT by states as unrealistic.
He stated this while responding to questions on Daily Sunrise, a programme aired this morning on Channels TV.
The governor, who said the decision of his colleagues will only benefit the federal government and the super rich states, said many states will run aground if the decision is carried out.
According to him, Nigeria is a mono-economic state and majority of the states are financially handicapped to practice true federalism for now.
He went further to state that until each state is financially empowered and strong enough to develop it’s natural resources, the current status quo in VAT collection should remain.
The governor wondered why states that have benefitted from the benevolence of other states in the past, such as Lagos, is pushing a selfish agenda.
“The infrastructure in Lagos is our collective sweat,” he said.
When reminded that Ebonyi State is blessed with solid minerals and agricultural resources, he countered saying, he needed resources to harness the natural resources, insisting that restructuring won’t work for now.
He identified mechanization of agriculture and provision of capital to develop the solid minerals in state as ways of making Ebonyi self-sustaining.
When confronted with the argument that experts have said that states that are not self-sustaining should be merged with more viable ones, he argued that it will be a retrogressive action.
Moreover, he contended that rather than merging the existing states, South-East region still needs one more state to be at par with the remaining five regions.
Again, when he was told that advocates of VAT collection by states are pushing a valid legal claim and that a state like Rivers collects far less revenue in VAT than it generates, while states like Kano get far larger than they contribute, he agreed but pleaded with such advocates to show more understanding, as the implementation of what they want will lead to the total collapse of close to 30 states and engender greater insecurity.
He further stated that it is only when funds have been provided for weaker states to develop their resources and become self-reliant that fiscal federalism can be achieved.
Umahi wondered how states agitating to start collecting VAT directly would cope if a state like Ebonyi and other northern states that are the food baskets of the nation decide to impose tax on their agricultural products.
He concluded that the Nigerian economy should be structured in a way that states are funded to develop in areas of comparative advantage.
By this, he meant Ebonyi, for instance, should be helped financially by the federal government to develop it’s yam and rice agricultural projects since it leads other states in the area.
On the recent disruption of social and economic lives in the South-East, the governor said the significant compliance with the sit-at-home order happened because people were afraid and that if there was enough security cover, they would have gone about their lawful duties.
He went further to state that IPOB’s agitation has been hijacked and the economy of the South-East was being destroyed by the current uncertainty in the region.
As far as he is concerned, other regions are growing even as the South-East engages in self destruct.
He noted that an average Igbo man survives by the money he makes on a daily basis, insisting that depriving him of that is callous and unacceptable.
Finally, he blamed past governments for refusing to develop the nation with the huge resources available when they governed and insisted that even with lesser resources, President Muhammadu Buhari has managed the country’s finances very well.
