Amosun Calls for Review of VAT Sharing Formula

Sheriff Balogun in Abeokuta

Ogun State Governor, Senator Ibikunle Amosun, monday canvassed for review of sharing formula of revenues accruing to the federation account through non-oil taxes including Value Added Tax (VAT).

“The non-oil revenue sharing formula currently in use is obsolete.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,” Amosun said.

The governor spoke in Abeokuta while hosting management of Joint Tax Board (JTB) who visited him at the governor’s office.

While addressing the JTB management team led by the Chairman of JTB and Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, Amosun said: “It is a good thing that for the first time in the life of this administration, non-oil receipt accounted for over 70 per cent of the fund shared at the last FAAC.”

He added: “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 this 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 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.”

Amosun, however, 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 Nigerian Customs Service (NCS) and the Nigeria Immigration Service, to “device creative strategies” for ensuring that more wealthy Nigerians are brought into the national tax bracket.

According to him, 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.

He continued: “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.”
However, Fowler who said the JTB management team was in Abeokuta for the 135th meeting of the group, commended “the excellent performance” recorded by the state government in its internal revenue drive.

He revealed that the state came first in 2015 as it grew it’s internal revenue base by 50 per cent.
The JTB boss also announced that non-oil receipt accounted for over 70 per cent of the over N500bn shared at the last FAAC meeting.

Shortly after the team’s visit to the governor’s office, the governor proceeded to declare the 135th meeting of the Joint Tax Board opened where he urged the JTB 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, therefore, 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 are able to generate at least 50 per cent of their budget internally.

The JTB boss noted that only 10 per cent of taxable adults are currently being taxed in Nigeria, revealing that the JTB targets 10 million new taxpayers before the end of 2016.