Olisa Agbakoba SAN, former Nigerian Bar Association President and human rights activist, has voiced strong opposition to the Tax Reform Bill, highlighting its implications for the devolution of powers in Nigeria.
In a statement on X on December 16, Agbakoba emphasized the broader significance of the Bill beyond revenue distribution, pointing to its potential impact on the federal structure of the country.
Federalism Under Threat
Agbakoba argued that the resistance to the Bill is rooted in deeper political issues that challenge the very nature of federalism in Nigeria.
“The Tax Reform Bill strikes at the heart of devolution of powers in Nigeria. The implications of the Bill are evident from the revenue side, but it has wider significance,” he stated.
He questioned the role of the Federal Government as merely a revenue-collecting agency, stressing that it has far more important constitutional responsibilities to Nigerians.
VAT and Over-Centralisation
Agbakoba criticized the application of Value Added Tax (VAT) at the federal level, asserting that it should be a state-level tax.
“VAT is simply a sales or consumption tax applicable at the state level, certainly not federal. Consumption and sales taxes are generally not concerns of the Central Government. They are local and state government revenue sources,” he explained.
He highlighted the unsustainable nature of the current over-centralised tax system and called for its decentralisation to foster creativity at the local and state government levels.
Unlocking Revenue Potential
In his recommendation, Agbakoba proposed abolishing VAT at the federal level and transferring it to local and state governments.
He cited the example of Plateau State’s potential in mechanised agriculture, which is hindered by the centralised Federal Revenue Collection process.
“The absolutely flat savannah lands on the Plateau can grow every type of produce needed to feed Africa, but this opportunity is lost to an over-centralised Federal Revenue Collection process,” he noted.
Agbakoba drew parallels with Europe, pointing out that many European countries thrive without oil resources.
“The United Kingdom is the only country in the European bloc with oil reserves in the North Sea. Spain, as the world’s largest producer of olive oil, makes billions from this single product,” he added.
Call for Political Devolution
Agbakoba concluded by asserting that the Tax Reform Bill could be the key to unlocking Nigeria’s vast revenue potential through political devolution.
“The Tax Reform Bill may be the key we need to unlock the vast revenue potential of Nigeria, hidden in a centralised and inefficient collection process, through political devolution,” he stated.
See the X post below:
Reps May Reverse Action on Tax Reform Bills
Previously, Legit reported that the House of Representatives is set to resume debate on President Bola Tinubu’s tax reform bills, which are currently before the National Assembly.
This comes after the southern caucus of the Green Chamber pledged to subject the bills to thorough legislative scrutiny.
