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States should collect VAT on activities taking place in their spaces, says Onigbinde – Guardian Nigeria

Akin Onigbinde
INEC should control and regulate parties to check reckless defections
Dr. Akin Onigbinde is a Senior Advocate of Nigeria (SAN) and former Speaker of the Oyo State House of Assembly. In this interview with ROTIMI AGBOLUAJE, the lawyer faulted the position of the Attorney-General of the Federation and Minister of Justice, Abubakar Malami, on the issue of Value Added Tax (VAT) debate. He also called for sanctioning of judges who grant frivolous orders, among other topical issues.
There have been arguments about who collects VAT between the Federal Government and the states. Recently, the AGF said VAT is in the exclusive legislative list. As a senior lawyer, what is the correct position?
VAT is essentially a consumption tax. It is payable at the points of purchases. It is a product of economic activity and economic productivity. To earn VAT, any state must drive activity and productivity and not accrued by ‘sharing’.
  
VAT is not included in the exclusive legislative jurisdiction of the Federal Government. If any activities of the Federal Government attract VAT, it should collect it, but that cannot preclude the states from collecting VAT on economic activities taking place in their spaces.
 

 
Economic activities must not be perceived only on the lenses of accruing tax revenues. Economic activities create environmental, health, infrastructural and human costs that only the states experience and the states must answer to and resolve them. The state must deal with plastic bottles, broken legs, pollution and others that attend to all aspects of production activities.
 
Let the FG create activities from its many assets: roads, dams, airports, refineries, agricultural establishments, and so on, to fund its activities. FG cannot continue to appropriate resources not created by it and leave the producers to deal with the consequences and outcomes.
  
All states have human and material resources that can increase economic activities and productivity to deliver VATable earnings. They should engage those.
What amendment will you propose in the Constitution to ensure that the furore over VAT is laid to rest?
At the core of the VAT law and practice in Nigeria is the issue of the power to collect and administer proceeds of revenue accruals from the collection of tax. The artery of the revenues is the economic activities and production that throw up these revenues. The problem is not really one of law. Law, indeed, should follow the economic reality. The law must never be or be perceived to be unjust. VAT is specie of tax that derives from consumption and economic activities, payable at the point of activities and consumption. Its collection and administration should also be domiciled at the points of generation. If by law, the power to collect and administer VAT is domiciled outside the point of generation, it will be anomalous and will always generate social discontent. VAT and the powers to collect it are presently not exclusive to the Federal Government. This should remain so.
 
VAT is not included in the exclusive legislative jurisdiction of the Federal Government. If any activities of the Federal Government attract VAT, it should collect it, but cannot preclude the states from collecting VAT on economic activities taking place in their spaces.
   
The Attorney-General of the Federation should interrogate the Constitution again. And when he does that, he will be convinced of the error of his position to the effect that collection of VAT is exclusive to the FG. Federal Inland Revenue Service  (FIRS) has taken steps to write to the Senate, requesting that VAT should be transferred to the exclusive legislative list. That will not be necessary, if that was the case, ab initio.
Is there any federation in the world where sub-nationals collect VAT?
All over the world, consumption taxes, which VAT is, is collected where the consumption takes place and as many times as property passes. The whole idea of a federal agency collecting on behalf of the sub-nationals is absurd.
Some scholars and lawyers have argued that the best way to restructure the country is for the President to send a bill to the National Assembly.  To you, how do you think the country can go about it?   
The agitation for the restructuring of Nigeria must be understood that it relates to both constitutional arrangement upon which Nigeria is governed and the structure of its political architecture. Nigeria had experienced earlier restructuring before now, resulting in various constitutional amendments. The last being the amendments made at various times to the 1999 Constitution.
   
The political architecture has similarly been restructured across history, the regional era, the 12 States, 30 States and 36 State structures. The calls for restructuring are socio-political responses to citizens’ experiences to the operation of the Constitution and the political architecture. This being the case, neither of the two species of restructuring can be effected without significant amendments to the Constitution. Amendment to the constitution in theory is to take the form prescribed by the 1999 Constitution.  
    
However, the nature of the social and political discontent generating the call for restructuring can hardly be addressed by the present constitutional amendment processes or by the present legislative institutions.
   
For one, the legislatures, states and federal are institutions that the citizens’ want restructured. It is, however, doubtful if these institutions will willingly allow themselves to be restructured out of political and financial advantages that characterise the present configuration. Federal legislatures, for instance, draw salaries and allowances over which the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) hardly has a control. The legislatures will hardly pass a constitutional amendment that may replace the present bicameral arrangement with a mono-cameral arrangement and so on.
There are cacophonies of agitations for self-determination. What will be your advise to the proponents of self-determination?
There is nothing in law that precludes any groups from seeking self-determination. It is a legitimate desire and demand of people to seek and, if possible, get a future that they can control and will answer to their aspirations.
This, however, must be sought and got in line with due process under national and international laws. A key method that must be avoided is the use of violence.  In the UK, for a long time, the mumbles and rumbles of the Irish people and others have only been managed, perhaps, very well, to keep the United Kingdom united.  In Spain, the demand of the Catalonia people for self-determination has been on for a long time, and only silenced again recently.
   
In Nigeria, some groups want to break out of Nigeria in the East and the West. Conducted within the law, there is nothing wrong to agitate, mobilise and make your case for a country in your family house, if done without violence. This is a right, which if a citizen decides to exercise, cannot and should not be criminalised.
The agitation for self-determination by ethnic groups must, however, be vigorously interrogated by the proponents and opponents of the demand.
 
Are the reasons for a separatist demand founded on facts, logic, depth, and socio political and economic realities, or some wooly, poorly thought out, sentimental considerations and motifs? Are there gains from separation that will outweigh remaining in the bigger union in the final analysis? Is it absolutely impossible to remedy the mischief, which the separatist agitation cannot cure? Is it likely that, in the new, separated country, the same reasons that prompted agitation cannot resurface in the new country?
Humanity is diverse. In every country, you have elements of diversity in languages, religions, cultures and so on. What is important is for the diverse groups to recognise, respect and do justice without regard to the differences that exist.
  
America is diverse along racial lines – the whites, the blacks, the Hispanics, the indigenous Indians, the gay, the straight men and women – all manners of differences that are enough to generate agitation. The Hispanics, the traditional owners of Texas areas are, however, not agitating to be a separate country from America. Ubi jus, ibi remedies. Where there is a wrong, there must be a remedy. If a sub-national or ethnic group feels unjustly treated by any other group, is separation the only viable remedy? Injustice is a common phenomenon in every human society, including states. Is separatist option the only option or should it be the last option after being very well thought out?
  
In Yoruba land, the Yoruba feel unjustly treated by the Fulani-led Federal Government, especially in the lopsided nature of appointments into key Federal Government positions. But can it be said that similar discontent does not exist in Ogun State, between the Yewa and the Ijebu, the Remo and the Egba? Should the Yewa seek self-determination or adopt other less drastic measures to remedy their grievances?
 
In Oyo State, are the Oke Ogun, the Ogbomoso, the Ibarapa and the Oyo not grumbling about perceived overbearing control of the State by Ibadan? Should the Oke Ogun, on account of the injustices seek another State, or country?
 
Social and political dis-equilibrium will always manifest in all human societies. Our common humanity should teach us to seek means and methods of resolving these, develop just systems, promote statemanly approaches to issues of governance over and above the winner-take-it-all of the political class and leadership. Maybe, these will make the clamour for separatism less, or less strident.
Issuing of frivolous ex-parte orders was rife some weeks ago. What is the way out of this?
The reason the law allows courts to issue interim orders is to do the ‘justice of emergencies’. Situations arise where if such orders are not made, the res or subject matter of dispute may be destroyed or may escape before adjudication. If an offending ship is not arrested by such an order or a house is destroyed before hearing can take place, there might be no remedy. Otherwise, the court will be locking the staple after the proverbial horse has already escaped. Interim orders are very great instruments of fair and just adjudication of disputes. They allow all parties fair chances of presenting their cases, while the subject matter is preserved.

 
But like every useful instrument, they are amenable to abuses. These abuses can originate from politicians, their legal counsel and/or the courts. Parties can simulate a situation of emergencies and foist these on the courts. Applications for such orders are based on affidavit evidence of the party asking the courts to grant them, without the other parties being available to interrogate and controvert the contents of the affidavit of the applicants. Such orders normally have short life spans like seven days, when the parties affected are allowed to come to court to state their side of the dispute.
    
Interim orders will continue to be an important tool of administration of justice. When any party can be shown to have misrepresented facts to deceive the court to obtain any order, he/she should be subjected to severe reprimand, including penalties for perjury. Where a court knows or can be presumed to know of the existence of a parallel suit or suspicious of the geographical choice or forum shopping and the court fails to exercise its discretion judicially and judiciously, the National Judicial Council (NJC) should investigate the reason the court turned a blind eye.
 
Where counsel can be shown to know that a similar case is being adjudicated in another court on a similar subject involving similar parties, and still aids the filing of a suit, he should be subjected to appropriate sanctions by the court.
The tempo of defection from one party to another by politicians is embarrassing. Can the law curb this gale of defections?
The fundamental law regulating membership of any association is the 1999 Constitution of Nigeria and the Electoral Act. In addition to these are the provisions of the constitutions of political parties. That is what they allow in their provisions for membership and resignation from memberships. In so far as the Constitution provides for freedom of association as one of the fundamental freedoms that citizens can claim, no one and no lower regulation or by-law can take away the rights of citizens to freely enter or exit any association, including political parties.
  
However, rights like these can be abused as they provide great leverage for citizens to live and associate freely. What can be done to provide stability, responsibility, credibility and check on constitutional abuse of this freedom is for regulators of the political space to limit what political actors can do, or not do in course of political engagements.
   
If Nigeria and especially INEC intend to introduce discipline into the political process, it can introduce control and regulation into the issue of membership, especially for persons seeking political offices. INEC may seek to satisfy itself that a proper register of members of parties is maintained in its state offices and that no person seeking political office may change party membership. For example, stipulating that such cannot happen six months before seeking nomination of another party. That may be a starting point.
Should defection be made outright unconstitutional?
Defection can be made unconstitutional but this will be a tough call. It will negate the more general provision for freedom of association, which is larger than the mischief, which such a provision may seek to address.
The Constitution cannot seek to regulate every aspect of a citizen’s life. Just as the Nigerian Communications Commission (NCC), the Central Bank of Nigeria (CBN), Nigerian Broadcasting Commission (NBC), Nigerian Stock Exchange and others regulate the practitioners in their spaces, INEC should be constitutionally empowered to regulate political engagements. Politicians should “fear” INEC enough to play by the rules, if impunity of the political class is to abate. On the final analysis, the voting public should be more circumspect and make the important distinction between politics of principles and self-serving politics.
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