VAT debate: PGF DG, Lukman asks leaders to focus on generating more resources

The Director-General of the Progressives Governors Forum, PGF, Mr. Salihu Lukman has called on political leaders to rise above sentiment on issues about national resources but rather focus on how to generate more resources.

Lukman said in a press statement in reaction to the debate on whether it should be state or Federal government to collect VAT blamed the APC leaders for failing to amplify the progressive increase in VAT recorded since the party entered government in 2015.

He said, “In 2015, the total amount collected was N759.43 billion. Between 2016 to 2020, there was a consistent increase in the amount collected respectively to N777.51 billion, N972.35 billion, N1.11 trillion, N1.17 trillion and N1.531 trillion. Everything considered, under the APC-led federal government of President Muhammadu Buhari, VAT collection increased from N759.43 billion in 2015 to N1.531 trillion in 2020, an increase of more than hundred percent.

“Overall, APC leaders must take advantage of the current VAT debate to take ownership of its achievements, which the fact of improved VAT collections in the country represent. In doing, APC leaders must go beyond the narrow debate about access to what is currently available. Every opportunity to remind Nigerians about the failure of PDP should be amplified. Similarly, all evidence of success of APC and its governments should be affirmed.

“Commitment to develop capacity to mobilise large scale financial resources to develop productive potentials of all Nigerian states should be the minimum requirement for all APC leaders. Already, since the time of Asiwaju Bola Ahmed Tinubu, as Governor of Lagos State between 1999 and 2007, Lagos State has emerged to be the leader in mobilising large scale financial resources in the country, which is why it is the only state with about one trillion Naira annual budget. Justifiably, Lagos was able to undertake large-scale public investment commensurate with its resource base. It’s not by accident therefore, it is the leader in the country with a model transport infrastructure. If the Lagos vision is limited to sharing available resources, it wouldn’t have been the leader it is” he said.

The PGF DG also emphasised the need for political parties in Nigeria to build capacity for national debates on policies of governments devoid of ethnic or religious sentiments.

“The VAT debate in the country also poses a significant challenge to political parties in terms of developing capacity to coordinate policy debate within the structures of parties as well as ensuring that policies of governments produced by the party reflect emerging consensus,” Lukman said.

Mr. Salihu Lukman noted that there is a need for high-income earners to be taxed more than low-income earners. adding that taxing the poor less will increase the demand for goods and services.

He said if the All Progressives Congress, APC led government toe the line of taxing the poor less, it would show that it’s a progressive government.

“Generally, debate around tax is about how governments can use it to influence economic development. As fiscal policy tool, it is basically about controlling amount of money individuals should have for consumption. Will government tax policy seek to support low-income groups, i.e., ensure that the higher income groups pay more tax? Or will government tax policy disfavour the lower income group. The first test of whether any government can make any claim to being progressive will be reflected in the orientation of its tax policy. A progressive government will generally be associated with progressive tax policy, which means it will seek to tax the rich more. A conservative government will tax the rich less. Beyond who is taxed more, taxing the poor less is proven economically to be a strong incentive to increase demands for goods and services. If government wants to ensure increased production of goods and services in the country, increasing the amount of money available to low-income groups is an attraction. Therefore, in addition to progressive tax policy being in favour of low-income group, given that low-income group are in the majority, any government that want to be popular with citizens would lean towards progressive tax policy.

“The desire to access more resource is perhaps the main driving factor in the battle to get state governments to collect VAT in the country. Wouldn’t it be possible to work with federal government and manage all the challenges, including ensuring that businesses are not necessarily encumbered by having to deal with multiple points of collection? There is no need to go into the details about how decentralised collection can impact on prices of products and services. Also, no need to go into the potential conflicts that would emerge between branch offices of companies and state governments in the country. All these are issues that would be instigated because VAT collected at the point of sales by a branch of company is expected to be remitted to the host state government where the head office is located. If state governments want to control what is generated in their states therefore, the administrative framework of how it is remitted to government and which government will be a major issue,“ Lukman said.

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