The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, reassured Nigerians on Wednesday that VAT proceeds would not be mismanaged by sub-national governments.
He clarified that the proposed tax reform bills currently before the National Assembly include clear guidelines on how the funds should be spent.
Oyedele made this disclosure at a one-day roundtable on the tax reform bills, organized by the National Institute for Legislative and Democratic Studies in Abuja.
He also clarified that the Revenue Mobilisation Allocation and Fiscal Commission does not have a role in VAT, as it is not included in the revenues specified in the nation’s constitution.
He stated that since the bills provide a framework for generating and allocating taxes, no governor or local council authority in the country would be able to spend VAT proceeds on wasteful projects.
He said, “We have a document we call the National Fiscal Policy that speaks to our principles and framework as a country around taxation; who should pay tax, how much should they pay, how should they pay, among other issues.
“We have another framework for spending. How should we spend our money? What should be the priority, and the quality of spending?
“For example, there are more than 15 airports in Nigeria today built by different states that should not have been built because they were not necessary.”
He continued “We have States with flyovers where they have no traffic. They’ve never had a traffic jam in those places since the States were created.
“We have States with malls where people don’t go there, but they have built those malls, even though they have no primary schools with roof and books.
“They have no health centers. They have no road from the farm to the market. This is a misplaced priority.
“We know the priorities of our people. They are in multi-dimensional poverty. The four dimensions of poverty are education, health, living standard, insecurity, and unemployment.”
Oyedele stated that those claiming the committee did not involve the RMAFC had not thoroughly studied the constitution.
“The role of RMAFC is to determine formulas for distributing revenue. Our view is that VAT is not in the constitution.
“Section 162 of the constitution, that speaks to the role of the RMFAC as advisory, is focusing on federation revenues. So this VAT is actually state revenue. And that’s why when the military decreed it in 1993, it replaced the sales tax that states were collecting.
“That is the reason why VAT does not go to the regular federation accounts. It goes to a special pool accounts, then we share it to states and their local governments.
“The federal government keeps a small portion for administering needs and also recognising that if we were to collect VAT by state level, the federal government will be entitled to Import VAT, International VAT, and interstate VAT,” he said.
Oyedele also dismissed as false claims that the Federal Inland Revenue Service planned to use Alpha Beta Company from Lagos as tax consultants.
He clarified that the proposed bills prohibit the FIRS from engaging tax consultants, in contrast to the possibility of states collecting VAT.
