Tax reforms: Agbakoba tells FG to decentralise tax collection

Olisa Agbakoba, Senior Advocate of Nigeria (SAN), has called on the Federal Government to immediately decentralise the tax collection and allow states and local governments to institutionalise models for tax collection in their domain.

Agbakoba said that the appetite by states to depend on the Federal Government for revenue support and subsidy was based on the over-centralisation of the tax collection system in Nigeria.

The senior advocate stated this in a statement to the media on Monday, saying that the Federal Government should concentrate on bigger constitutional responsibilities and allow state and local governments to devise ways of tax collection.

“VAT is simply a sales or consumption tax applicable at state level, certainly not Federal. Consumption and sales tax are generally not matters concerned with the central government. They are local and state government revenue sources. The potential to generate tax at the base is underestimated.

“The stampede by states to lean on the Federal Government for revenue support and subsidy is based on overcentralisation. This is simply not sustainable in the long term. It is time to free up the centralised tax system to allow creativity at local and state government level.

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Speaking further, he called for the abolishing of VAT, transferring it to local and state governments, pointing out that the potential to generate tax at the state and local government is underestimated.

“My recommendation is to abolish VAT and transfer it to local and state Governments. Each state has its unique revenue resource.

“As a Jos boy, where I grew up, I am very much aware of the massive potential of Plateau State in mechanised Agriculture.

“The absolutely flat Savannah lands on the Plateau can grow every produce to feed Africa but this opportunity is lost to an over-centralised Federal Revenue Collection Process.

“We must not forget that Europe does not have oil resources at all. 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 produce,” Agbakoba said.