VAT and fiscal federalism

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VAT and fiscal federalism

Editorial
Editorial

WE expect a major round of legal fireworks to commence very soon over the ruling of a Federal High Court in Port Harcourt last Monday voiding the powers of the Federal Government to collect the Value Added Tax, VAT, in Rivers State and by extension other states.

The ruling, therefore, transferred the VAT collection right to the states.

As the Federal Government contemplates appealing the judgement, we draw attention to the wider implication of the ruling on Nigeria’s federal system and Fiscal Federalism debate in particular.

Most observers would readily see the implication in terms of loss of revenue by the Federal Government against apparent gains or even windfall for states.

Nothing can be more misleading. The present structure of revenue from VAT does not support this perception.

Yes, currently the Federal Government takes just 15 per cent of the VAT revenue while the states get 50 per cent and the local governments 35 per cent. On the average, each state…



Source: Vanguard Newspaper