Gov Amosun calls for review of VAT-sharing formula

  • Says wealthy Nigerians dodge tax

Ogun State Governor, Senator Ibikunle Amosun, on Monday called for a review of the sharing formula of revenues accruing to the Federation account through non-oil taxes, including Value Added Tax.
Governor Amosun said such a review of the revenue-sharing formula had become imperative because the current one being used by the Federal Government had become obsolete.
The governor stated this while addressing the management team of the Joint Tax Board, led by its Chairman, Babatunde Fowler, during a visit to his Oke-Mosan, Abeokuta, office.
He argued that the new revenue-sharing formula should reflect the current realities about the state of the Nigerian economy and the contribution of the various states.
According to him, “The non-oil revenue sharing formula currently in use is obsolete. As at the time it was done 20 years ago, Ogun State, for instance, was way back because of the number of industries we had then. Today, Ogun State is the industrial capital of Nigeria. The sharing formula should reflect this new reality. This is derivation in another form.
“It is a good thing that for the first time in the life of this administration, non-oil receipt accounted for over 70 percent of the fund shared at the last FAAC. It is a commendable and a welcome development because it signifies a major shift in focus from oil to non-oil revenue.
“But in the same token, I think it is very expedient to ask that we cast a second look at the formula we use in sharing the proceed from these non-oil revenue.
“If we make a lot of money from industries, we should also remember that these companies reside in a state and they put enormous pressure on the environment and the roads in those states. Those various state governments carry the can and pick the bill for cleaning the environment. It is therefore only good for the management of RMFAC to give more back to those states hosting these companies.”
The Ogun State governor also seized the opportunity to challenge the management of the JTB, which includes chairmen of 36 states Internal Revenue Services, representatives of the Revenue Mobilisation and Fiscal Allocation Commission (RMFAC), the Nigeria Customs Service and the Immigration Service to “device creative strategies” for ensuring that more wealthy Nigerians were brought into the national tax bracket.
“The rich and wealthy don’t pay taxes and even when they do, they underpay. They make a lot of money but don’t pay anything or don’t pay the requisite tax. We all go to other advanced nations and see that these wealthy people don’t escape the way they do here. So the challenge for the JTB is to correct this. You must think out of the box to achieve this,” Amosun said.
Speaking earlier, Fowler, who is also the chairman of the Federal Inland Revenue Service, said the JTB management team was in Abeokuta for the 135th meeting of the group.
Fowler also praised the performance recorded by the Ogun State Government in its internal revenue drive, disclosing that the state came first in 2015 as it grew it’s internal revenue base by 50 percent.
The JTB boss also announced that non-oil receipt accounted for over 70 percent of the over N500bn shared at the last FAAC meeting.
Governor Amosun later attended the opening ceremony of the 135th Meeting of the JTB, where he enjoined the board’s management to increase their non-oil revenue drive.
Speaking at the opening ceremony, Fowler explained that the meeting was to ensure uniformity of taxation and compare notes in tax administration across the various states of the federation.
He lamented that 33 states of the federation currently rely on federal allocation to fund their budget, saying the goal of the meeting was also to bring other states to a level where they would be able to generate at least 50 percent of their budget internally.
The JTB boss noted that only 10 percent of taxable adults were currently being taxed in Nigeria.
Fowler, however, disclosed that the JTB would target 10 million new taxpayers before the end of 2016.