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Wike, VAT and the Quest for True Federalism

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By Chidiebere Nwobodo

History is being made in Rivers State. There is a bold move by the State Government at challenging the retrogressive status quo of the federation. Nigeria’s political structure is not only lopsidedly skewed against the states but has become a clog on the nation’s wheel of progress.

Like local government areas, the states are mere appendages of the behemoth center—yet we call this country “Federal Republic of Nigeria”.
It is feeding bottle federalism!

The rattling question is: what is federal about a country structured along unitary system by respective military dictatorships. In the last few years, there have been vehement agitations for a restructured Nigeria that will encompass true federalism where states will have the needed autonomy and resources to determine and unleash their socio-political cum economic destinies.

Failure to make any meaningful progress in the direction of restructuring, in the last few years, has birthed agitations for self-determination, especially in southern Nigeria. Restructuring advocates are opposed to separatist campaigners calling for total balkanization of the country. While true federalists believe that Nigeria can still be salvaged via restructuring, self-determination proponents have been pummeling them for not walking their talk.

Rivers State Government has changed the game. Age-longed problems cannot be solved by persistently and indefinitely talking about them without action. There comes a time in history when courageous and well-calculated actions are left to do the talking because all talk and no action makes someone a rabble-rouser reveling in ramblings. Rivers State decided to confront the hydra-headed monster of unitary structure that made states subservient to the center.

The bone of the contention is Value Added Tax (VAT).

Recently, Rivers State Government went to court to challenge Federal Government’s collection of VAT via Federal Inland Revenue Service (FIRS). It argued that FIRS did not have the constitutional right to collect VAT and Personal Income Tax (PIT) on behalf of local governments, states and federal government. It advocated that states should be allowed to collect VAT—and not Federal Government.

On August 9, Justice Stephen Pam of Federal High Court, Rivers State, ordered the tax agency of the FG, the FIRS and the Attorney General of the Federation, from collecting VAT and Personal Income Tax (PIT) from residents of Rivers State. Federal Government via FIRS fumed and vowed to appeal the judgement.

Rivers State Government did not stop there; it ensured that the State Assembly legislated on it through a bill, which was swiftly signed into law on August 19, 2021, as Value Added Tax Law No. 4 of 2024 by the man behind the wheels—Governor Nyesom Wike. I doff my cap for this courageous move of Rivers State Government.

There are insinuations in the media that FIRS is lobbying National Assembly to put VAT in the exclusive list, in order to legitimacy its illegality—to continue the exploitation, and but this move is dead on arrival. I am sure that even all other states will sleep and allow the agency to ambush the states using National Assembly; Rivers State Government under the leadership of Governor Wike will not allow this to happen.

Governor Wike has demystified the bogus term called restructuring cum true federalism. It is not rocket science. He has proved that easiest way to handle mountainous challenge is by compartmentalization of it. My own definition of restructuring of which Governor Wike has accentuated, is using legitimate avenues to get back your resources and power that were illegally taken away using military regimes.

Back to issue at stake—VAT.

Value Added Tax (VAT) was introduced in 1993. The sharing formula; states—50%, LGAs—35% and FG—15%. FIRS gets 4% from FG’s share as operational cost. But the subject of controversy had been whose duty it was to collect VAT—states or FG via FIRS? But the judgement of Federal High Court has lent credence to narratives of restructuring advocates; though FIRS said it has appealed the historic judgment. Let wait and see how it goes. But why is it running to National Assembly if it has water-tight case?

VAT falls under consumption tax, which is within the state government power to collect and remit 15% to the Federal Government. Majority of the VAT are generated from the states, which gave them lion share of 85% in the sharing formula. Why then should FIRS, on behalf of Federal Government, collect VAT and distribute to the state? Did states complain that they lack capacity to collect VAT?

What is the work of states Internal Revenue agencies responsible for Internally Generated Revenues (IGR)? Why will a minority stakeholder in a company be the one collecting revenues, especially when the revenues are being generated from the states—majority stakeholders? Sadly, this illegality cum impunity had gone on unchallenged for decades. As a restructuring advocate, I am happy Rivers State Government has taken the bull by the horn to correct this obnoxious practice of “monkey dey work bamboo dey chop”.

FIRS collection of VAT from states and distributing same via the Federation Accounts Allocation Committee (FAAC), is tantamount to robbing Peter to pay Paul. Majority of the VAT remitted to FAAC monthly comes from just few economically viable states with high volume of VAT generation like Lagos, Rivers, Ogun, Delta, Enugu, Akwa Ibom, etcetera, yet other states get rewarded for indolence and crass unproductivity—the reason Nigeria is economically backward—and poverty capital of the world.

FAAC shared a total of N733 billion as June, 2021 revenue, out of the sum, VAT revenue got N143.6 billion—huge chunk of the VAT came in from alcohol consumption. Look at the injustice and irony here, majority of Sharia-compliant states that routinely destroy alcoholic beverages in their states, did not only partake in revenues from VAT but got lion share of it—going by the hegemonic template of using number of states and local government councils to share revenues.

Why will someone drink beer in Lagos and another person in Kano State that detest alcohol as a result of religious belief gets more share in the distribution of VAT emanating from the produce? This is wickedness taken too far. I strongly stand with Governor Nyesom Wike and Rivers State Government on this courageous step to end this official theft.

Other state governments with huge volume of VAT generation should throw their weight behind Rivers State and see this to a logical conclusion. This is the real battle for a restructured Nigeria. The die is cast. Governor Wike has shown leadership where it mattered mostly and should be railed round. There is a weighty allegation that FIRS illegally withholds some VAT it collects on behalf of the states—it remits only a fraction of what truly comes into it coffers.

States do not control FIRS; its operations and recruitment process, thereby cannot efficiently monitor its modus operandi yet FIRS generates most of its revenues from the states. Ideally, FIRS should not collect VAT outside Abuja—FCT; where FG has substantial control of its Internally Generated Revenues. It VAT collection influence should be limited to FCT alone.

While signing the historic Value Added Tax bill into law, Governor Wike could not hide his ill feelings towards impunity of Federal Government using FIRS to strip states of their VAT revenues, of which made state governors to always go cap-in-hand begging for financial support from the center. He was quoted as saying:

“In this (Rivers) state, we awarded contract to companies and within the last month we paid over N30billion to the contractors and 7.5% will now be deducted from that and to be given to FIRS.

“Now, look at 7.5% of N30billion of contracts we awarded to companies in Rivers State, you will be talking about almost N3billion only from that source. Now, at the end of the month, Rivers State government has never received more than N2billion from VAT. So, I have contributed more through the award of contracts and you are giving me less. What’s the justification for it?”

With this calculated move that has quaked the foundation of the FIRS and rattled Federal Government, Governor Wike has become the Moses of our time leading true federalists to the promise land of a restructured Nigeria. We are morally bound to give him all the support.

POLITICS

Obi, TCM Condemn Tinubu’s Distribution of Vehicles to Renewed Hope Ambassadors

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By Mike Odiakose Abuja

Presidential Candidate of the Labour Party, Peter Obi and a socio-political organisation, The Collective Movement (TCM), have strongly condemned the recent revelation that President Bola Tinubu has started distributing vehicles to state coordinators of a political structure otherwise known as Renewed Hope Ambassadors, apparently as part of an early push for the 2027 elections.

In a post on his verified X handle on Thursday, Obi said at a time when Nigerians are struggling with hunger, unemployment and insecurity, the decision of the government to allocate limited public resources for distribution of luxury vehicles like Hilux trucks and Hummer buses as part of the 2027 campaign mobilisation is not only insensitive but also represents a serious moral failure.

The former Anambra State governor said while ordinary Nigerians are grappling with poverty and hopelessness, those in leadership positions continue to flaunt their wealth by driving brand-new luxury vehicles, treating the suffering of the people as mere background for political theatrics.

According to him, leadership should focus on providing food for the hungry, ensuring access to healthcare for the sick, restoring hope for millions of unemployed youth, and securing the communities.

He stressed that it should not be about parading luxury vehicles or campaigning for votes.

“It is disheartening that, at a time when children are dropping out of school because their families cannot afford tuition fees, when mothers are dying during childbirth due to a lack of basic medical supplies, and when insecurity is tearing families apart, the response from those in power is to purchase and distribute luxury vehicles rather than urgently addressing the needs of the people.

“This is not governance. It reflects a profound insensitivity and an abuse of public trust disguised as a political strategy. It betrays the essence of public service, which should always be about serving the people rather than staging political publicity.

“At times like this, we must recognise that Nigeria cannot continue on a path of wastefulness, insensitivity, and misplaced priorities.

“Our citizens deserve leadership grounded in empathy, prudence, and accountability. Regardless of how bleak the situation may appear today, I firmly believe that a New Nigeria is not only necessary,” Obi wrote.

In his own reaction, TCM’s founder, High Chief Franklin Ekechukwu, in a press release on Thursday, described the move as nothing short of a scandalous betrayal of public trust.

The vehicles range from brand-new Toyota Hilux trucks, Hummer buses, and Land Cruiser jeeps.

Each of the 36 states and the Federal Capital Territory reportedly received these luxury vehicles; coordinators were simultaneously instructed to raise one billion naira each for campaign logistics. This raises urgent questions: From which coffers is this extravagance being funded? And at what cost to millions of suffering Nigerians?

He noted that the timing of this lavish distribution is not only tone-deaf but deeply disturbing. While terrorists roam freely, kidnappings escalate, communities are displaced, and Nigerians live in daily fear, the administration appears more focused on assembling campaign convoys than implementing urgent security reforms.

According to him, it is morally repugnant to prioritise political power over the lives and safety of citizens. The decision reeks of contempt for ordinary Nigerians, those whose children are abducted, whose homes are attacked, whose futures remain uncertain.

Ekechukwu added, “In 2025, what Nigeria desperately needs is a government that prioritises human lives. We need well-funded security architecture, community policing, strengthened intelligence systems, and reforms that protect lives and restore public confidence.

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Musa Takes Oath, Vows United Front against Insecurity

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By David Torough, Abuja

President Bola Tinubu yesterday swore in former Chief of Defense Staff, General Christopher Musa (rtd), as Nigeria’s new Minister of Defence, just as he transmitted an additional list of ambassadorial nominees to the Senate for screening.

Musa took the oath of office at the State House in Abuja.

His appointment follows the resignation of Mohammed Badaru Abubakar on health grounds, prompting the President to forward Musa’s nomination to the Senate earlier in the week.

During his screening on Wednesday, the former CDS assured lawmakers that Nigeria has the capacity to defeat insurgency, banditry, and kidnapping—provided there is unified national cooperation and adequate deployment of troops and technology.

He stressed that state governors and high-level political leaders must work more closely with the Armed Forces to close operational gaps.

“We can win this war, but we have to work together,” he told senators, adding that he would review all existing security strategies and investigate alleged lapses, including reports of troop withdrawal from a Kebbi school shortly before terrorists abducted 24 schoolgirls two weeks ago.

Meanwhile, Tinubu has submitted more names to the list of ambassadorial nominees, expanding the pool of non-career diplomats awaiting confirmation. Among the new nominees are former Naval Chief Ibok-Ete Ekwe Ibas; former Senator Ita Enang; former Imo First Lady Chioma Ohakim; and former Minister of Interior and ex–Army Chief Abdulrahman Dambazau.

Their names were read on the floor by Senate President Godswill Akpabio during Thursday’s plenary and subsequently referred to the Senate Committee on Foreign Affairs for screening within one week. This follows an earlier batch of nominees including Reno Omokri, Femi Fani-Kayode and immediate past INEC chairman, Mahmood Yakubu.

Tinubu urged the Senate to expedite the confirmation process to ensure that Nigeria’s diplomatic missions are promptly staffed and fully functional.

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Reps Accuse DisCos of Crippling Nations’ Power Supply System

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By Ubong Ukpong, Abuja

The House of Representatives on Wednesday, accused the electricity Distribution Companies (DisCos) in the country, of crippling the nation’s electricity supply system.

The House Ad hoc Committee investigating Nigeria’s power sector reforms and expenditure from 2007 to 2024, said that the DisCos wallowed in years of poor investment, inadequate expansion, and failure to meet obligations outlined in their original business plans.

Speaking during an investigative hearing, Chairman of the committee, Arch. Ibrahim Almustapha Aliyu, said most distribution companies had misled the government at the point of acquisition, presenting impressive business plans but failing to deploy the required resources to upgrade substations, transformers, and distribution networks more than a decade after privatization.

He expressed shock that despite claims by the Transmission Company of Nigeria (TCN) that it can wheel up to 8,000 megawatts, the DisCos continue to take only about 4,000 megawatts due to limited infrastructure, a problem he said is self-inflicted.

According to him, the power distribution firms have “refused to invest, refused to expand, and refused franchising options,” thereby creating the conditions for energy theft, meter bypassing, and consumer apathy across the country.

“You have caused this problem because you could not expand from what you inherited,” he said. “For 13 to 14 years now, if you had made the necessary investments, substations, up-to-date transformers, proper network expansion, there would be no issue. You would uptake more energy, the cost would be lower, and Nigerians would be happy.”

He noted that many consumers resort to illegal connections because they are billed monthly for electricity that is either not supplied or grossly inadequate.

“How do you expect someone whose monthly bill equals his salary to keep paying? People will look for alternatives. And your refusal to invest has contributed to this unholy attitude of bypassing and stealing energy,” he said.

The committee chairman reminded the DisCos that Nigerians enjoyed better supply under the defunct NEPA/NITEL-era systems in some areas, and expected significant improvements after private investors took over the assets.

He further challenged the DisCos to reconcile their earlier claims of competence and financial capacity with their current inability to meet tariff obligations, network expansion expectations, and service delivery benchmarks.

Chief Regulatory and Compliance Officer of Kaduna Electric,  Dr. Mahmood Abubakar said about 60 percent of electricity supplied nationwide is subsidised, a situation the company said has continued to weaken investor confidence and limit the ability of distribution companies (DisCos) to make the necessary capital investments.

He said during the hearing that only about 40 percent of electricity, largely consumed by Band A customers, is cost-reflective, while the rest depends heavily on government subsidies that are often delayed or unpaid.

According to him, the current subsidy structure distorts billing, revenue collection, and the ability of DisCos to expand infrastructure more than a decade after privatisation.

“If we go strictly by the multi-year tariff order, about 60 percent of the energy consumed in Nigeria is subsidised by the government. Only Band A pays the reflective tariff. Even then, we have Band A feeders recording up to 80 percent energy losses due to theft and bypasses, making full recovery impossible,” he said.

Abubakar explained that because DisCos cannot recover their full revenue requirement, they cannot secure investments or loans needed to upgrade their networks.

He added that the delay in the payment of subsidies affects the entire value chain, particularly affecting generation companies’ ability to pay for gas, thereby affecting power production.

“The subsidy is not forthcoming as and when due. It comes whenever the government decides to pay. That is the reality, and it affects everyone. We cannot pay our market invoices fully, the Gencos cannot fulfil firm contracts with gas suppliers, and the whole chain is weakened,” he said.

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