Wike; FIRS and Cooperative Federalism

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CBN

Governor Wike; FIRS And Cooperative Federalism

 By; Jerome-Mario Utomi

The recent signing into law by the Rivers State Governor, Nyesom Wike, the bill that authorizes the state to collect VAT., coupled with the ruling by a Federal High Court in Port Harcourt, that states, and not the Federal Inland Revenue Service (FIRS), should be collecting Value Added Tax (VAT) and Personal Income Tax, takes my consciousness back to recent debates/arguments/occurrences in the country,

Chief among these arguments is a declaration by a public affairs commentator that Nigeria has a choice, to restructure by plan or by default. In his explanation, a planned restructuring will be collaborative, systematic, and redesign Nigeria, yet keep it whole.  A default restructuring will happen, certainly not by choice, but definitely like an uncontrolled experiment with attendant risks and indefinite outcome. The challenge confronting Nigeria now is that the long-overdue restructuring will happen when the cost of not restructuring far outweighs the cost of restructuring.   

Indeed, while Wike has by this move stamped his name in gold and other states in the federation continue to visit the Federal High Court ruling with conflicting reactions, with states such as Lagos lacing up its shoes to effect the decision of the Federal High Court, the advancement confirms the call for nation’s restructuring/fiscal federalism by Nigerians of goodwill. And more than anything else raises the question as to; what form/type or kind of Federalism have Nigeria as a nation Practiced all these years? Is it a classical/conventional/conformist type where each region or state ‘eats what it gets’ and is allowed to develop at its own pace?  Or the Post Second World War Cooperative federalism marked by federal-provincial taxation agreements on the revenue side and a host of shared-cost programs in terms of expenditures as then practiced in Canada?

Adding context to the discourse, according to Rand Dyck and Christopher Cochrane, lecturers at Carleton University and University of Toronto respectively,  the essence of this concept (cooperative Federalism) is that although neither level is subordinate to the other (the same as in classical federalism) they are closely intertwined, rather than operating independently. Here the crucial variable is financial relations. It resulted from several developments.

First, federal and provincial objectives often must be harmonized if public policy is to be effective, such as in the case of countercyclical fiscal policy. Second, public pressure forces the federal government to establish minimum standards throughout the country in the provision of certain public services within provincial jurisdiction, such as health care. Third, the two levels of government compete for tax revenues and end up needing to coordinate these efforts to some extent, at least for the convenience of taxpayers. Fourth, given a generally vague division of powers, federal and provincial ministers and bureaucrats usually overlap with the other level of government. Federal and provincial government operations are no longer confined to separate “watertight compartments.”

 

In view of the above, if objective analysis can replace emotional discussion regarding the tax collection issue in the country, it will again necessitate the questions as to ; why can’t the President Muhammadu Buhari led Federal Government allow and support the urgent need for nation’s restructuring?

The same demand goes to the need/demand for the creation of state Police.

 

To further arrive at the answer, there are no federal police or state police models, but there are fundamental differences between the two. While cultural and geographical homogeneity which are strong factors and advantages of state policing are lost in federal policing, state police depend on these factors and more such as historical and friendship to keep the society orderly and without anarchy. This value no doubt makes a productive policing without disorder. And it is my belief that state governments have the capacity to fulfill this obligation.

In my view, there is no alternative to having the country restructured. The reasons are not far-fetched. Aside from the fact that President Buhari in his campaign in 2015, promised to “Initiate action to amend the Nigerian Constitution with a view to devolving powers, duties, and responsibilities to states in order to entrench true Federalism and the Federal spirit,” notable Nigerians, groups have in different times and places called on the Federal Government to take steps that will have the nation restructured.

To help catalyze the process, what the people are saying, in my views, is that the over blotted exclusive list has made our nation to currently stand in an inverted pyramid shape with more power concentrated at the top and the base not formidable enough making collapse inevitable if urgent and fundamental steps are not taken. What the proponents of restructuring are saying is that the majority of the items are too trivial for the Federal Government to handle and should serve the greater good of the people if left in the hands of both the state and the local government. This is the hub of the masses’ expectations. Items such as; Police and some government security services, mines and minerals; including oil fields, oil mining geological surveys, control of parks, stamp duties, public holidays, taxation of incomes, profits and capital gains, and insurance among others  to my mind  should find their ways back to the states and the local councils.

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To solve this present challenge, we must remember the remark by  Frantz Fanon, that every generation must, out of relative obscurity, discover its mission, fulfill it or betray it. The restructuring debate has graduated from mere rhetoric to an issue of national concern, so is our responsibility.

Instead of living in denial, this time is auspicious for the Federal Government to prime and position for what is to come. Looking at commentaries, a financially tough time awaits the Federal Government as they may starve of funds if the VAT debate goes in favour of the state.  I hold the opinion that as a responsible Government, the only two available options left for the FG are; one, to cede part of the current responsibilities at the state to the centre. Secondly and very important is to start contemplating more creative ways of generating income other than VAT.

Utomi is the Programme Coordinator (Media and Public Policy), Social and Economic Justice Advocacy (SEJA), Lagos. He could be reached via;jeromeutomi@yahoo.com/08032725374.

 

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