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NEWS UPDATE: Friday Adakole Elijah: VAT saga – The battle for federalism

NEWS UPDATE: Friday Adakole Elijah: VAT saga – The battle for federalism

The raging battle betwixt the Governor of River Province, Nyesom Wike and the Federal Inland Revenue Service (FIRS) nowadays is a manifestation of a good planted time bomb awaiting explosion as a prelude to implementation of what some scholars depicted as “True Federalism”. At the second, Nigeria is operating the corrupt version of federalism. The Nigerian brand of federalism is antithetical to the true concept of federalism popularly known as “ Frederickan model of federalism”.

Federalism as depicted by Wikipedia is a mixed or chemical compound mode of regime that combines a full general regime (the central or “federal” regime) with regional governments (provincial, province, cantonal, territorial or other sub-unit governments) in a single political system. It can thus be defined as a shape of regime in which powers are divided betwixt 2 levels of regime of equal status.

Examples of the federation or federal province include the U.S.A., Bharat, Brazil, Malaysia, United Mexican States, Russian Federation, Federal Republic of Germany, Canada, Switzerland, Bosnia & Herzegovina, Kingdom of Belgium, Argentine Republic, Nigeria, Islamic Republic of Pakistan, and Commonwealth of Australia. Some characterize the European Union as the pioneering instance of federalism in a multi-state setting, in a concept termed the federal union of states.

In our journeying to nationhood, Nigeria as a country has experimented with different types of political systems and constitutions as good as economical philosophies. Currently, we are practicing what could be described as the inverted pyramid or jaundiced shape of federalism which is a finish negation of the tenet of true federalism.

This is because the 1979 structure that we borrowed from the United Province of America (USA) consolidated the Ironsi Decree number 34 of May, 24, 1966. Under these laws, virtually all items were listed under exclusive chapters. And that was the outset of the quagmires that we found ourselves nowadays. Federalism in the country was implemented topsy-turvy.

Hitherto before this period, Nigeria was thriving with the system of regionalism. Regions were intentionally growing their economies via taxes, agriculture etc. That was why we heard of the famed ground nut pyramid in Kano, Rice, Millets, Sorghums, Yams. There was also the boost of Cocoas, Rubber plantation, Cola nuts in the Due west, Palm trees and Palm oil in the East.

Regional governments could generate revenue for its sustainability and and so had diplomatic ties with foreign Nations. The Due north had robust human relationship with Sudan. Ditto, the Due west had diplomatic human relationship with the Province of State of Israel. It was this human relationship that culminated into the establishment of the Academy of Ife. The East had its brilliant human relationship with Tanzania. There was salubrious competition amongst the Province. They were also cooperating and collaborating with themselves. They comprehensively placed their destinies in their have hands as there was nil similar “province destitution”.

But because Nigeria as a country via the instrumentality of the War machine opted for centralized federalism, people are nowadays clamoring for financial federalism with the hope that it has the capability of triggering evolution.

According to Olabanji Olukayode Ewetan (2012), Financial decentralization has get fashionable regardless of levels of evolution and civilization of societies. Nations are turning to devolution to improve the performance of their public sectors. Financial federalism is essentially in relation to the resource allotment of regime resources and spending to the various tiers of regime.

In full general, the scholar cited Aigbokhan, 1999; Oates, 1972; Tanzi, 1995 and Chete, 1998 as positing that, the intensification of clamor for greater decentralization is informed by a combination of people desiring to acquire to a greater extent involved in regime, and the inability of the central regime to deliver character services.

He explained farther that, Decentralized systems of regime give ascension to a set of financial exigencies referred to as financial federalism also known as financial decentralization. According to the scholar, It refers to the orbit and structure of the tiers of governmental responsibilities and functions, and the resource allotment of resources amongst the tiers of regime to deal with respective functions.

In Nigeria, the scholar opined that the dismal performance of the public sector since the foremost half of the 1980s has brought to the front end burner the issue of financial federalism which has remained dominant and most contentious in Nigeria’s polity (Arowolo 2011).

Federalism according to Arowole, Akindele and Olaopa as cited by Ewetan (2012), is a political concept in which the powerfulness to rule is shared betwixt national, states and local governments, creating what is often called a federation (Arowolo, 2011, Akindele and Olaopa, 2002). Arowolo (2011,) postulated farther that “It is a political theory that is divergent in concept, varied in ecology and dynamic in exercise”. On his division, Vincent (2001), elucidated that, the concept of federalism implies that each tier of regime is coordinate and independent in its delimited sphere of potency and should also have appropriate taxing powers to exploit its independent sources of revenue.

Financial federalism in the estimation of Vincent thence demands that each level of regime should have adequate resources to perform its functions without appealing to the other level of regime for financial assistance (Wheare, 1963).

Financial federalism the scholar maintained is characterized by financial relations betwixt central and lower levels of regime. The financial relationships betwixt and amongst the constituents of the federation is explained in terms of 3 main theories, namely, the theory of financial relation which concerns the functions expected to be performed by each level of regime in the financial resource allotment; the theory of inter – jurisdictional cooperation which refers to areas of shared responsibleness by the national, province and local governments, and the theory of multijurisdictional community (Tella, 1999).
Each tier of regime is seen as seeking to maximize the social welfare of the citizens within its jurisdiction.

From the discussions, the role assignment which flows from the basic theory of financial federalism is summarized as follows: The central regime is expected to ensure equitable distribution of income, maintain macroeconomic stability and provide public goods that are national in character. Decentralized levels of regime on the other paw are expected to concentrate on the provision of local public good with the central regime providing targeted grants in cases where there are jurisdictional spill-overs associated with local public goods. One time the assignment of roles had been carried out, the next stair in the theoretical framework is to determine the appropriate taxing framework. In addressing this taxation assignment job, attending is paid to the demand to avoid distortions resulting from decentralized taxation of mobile taxation bases.

Vincent cited Gordon (1983) emphasising that the extensive application of non-benefit taxes on mobile factors at decentralized levels of regime could termination in distortions in the location of economical activity.

It was this dislocation as highlighted that the governments of Rivers and Lagos States seek to cure with the current VAT brouhaha. Whether implemented it is capable of extricating the states and country in full general from the clutches of “feeding bottle federalism”. It will also confer on Province Governors to a greater extent responsibilities in the direction of scarce resources. What that agency is that province must begin to think exterior the box for revenue strategies. And when that is done, Nigeria would have no incertitude entrenched the American model of federalism in her clime. It is not proper for all the states to be looking forward to Abuja for financial succor. They should develop their agency of livelihood.

Nil halt Benue Province for instance to develop her oil good in Okwiji, Apa Local Authorities Area or avalanche of solid minerals available in many locations in the Province so as to raise and solidify her revenue base of operations.

It was plain in preparation for a daytime similar this, that Kogi Province strenuously worked and ensured that oil is discovered in the province. Fortunately for them, Kogi has been listed as one of the oil producing states in the country. And they will begin to savor the fruits of their labour when existent exploitation commences.

Zamfara Province is currently exploiting their gold and fifty-fifty said they were going to pay royalty to the Federal Authorities against the spirit of the structure of the FRN.

Wike’s posture, no incertitude is in tandem with the expectations of Nigerians in relation to true or Financial federalism. States should not go along to depend on the centre for funding.

Dr. Elijah writes from Otada – Otukpo.


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