Babachir I have been studying the arguments making the rounds on the Tax Reform Bills. The North has come out studiously in opposition to the bills; in particular, the provisions as regards VAT collection and distribution have been most contentious.
The South on its part, arguably with few exceptions, has come out vociferously in support of the bills not minding the fact that most of their states are in the same basket with the northern states.
Not being an accountant, economists or tax expert, I have read the bills severally with the mind of an engineer and have surmised that the only beneficiaries of the VAT proposals are Lagos and Rivers States and marginally, the FCT.
This vapid opposition to the Northern position by a majority of the Southerners is motivated by a disdain for everything North and a sort of morbid fascination with and support of everything that does not favor or hurts the North.
The Southerners’ argument is that Northerners are lazy, blood sucking parasites. But this southern position is driven by a lazy mindset and and an intense hatred of everything North that has no basis in facts or political history. I lived out some of my youthful life in Warri and Lagos and therefore have grown familiar with this baseless mindset.
Now, I want to use the case of Adamawa State (where I come from) as part justification of the northern position on the VAT debate as I perceive it. Every week, over 30,000 cattle are sold in the various international cattle markets in the State. These cattle are transported out of the state to the south where they are processed into gala, sausages, raw beef, etc to be sold in the supermarkets that subsequently charge VAT. The VAT earned is then attributed to the southern states of value-addition rather than Adamawa State where the raw material (the cows) originate from. Were Adamawa to charge a levy of N5,000.00 per cow, it will earn at least N7.8 billion per annum from such levy.
Similarly, over 90% of the nearly 1 million metric tons of paddy rice produced by farmers in Fufore, Numan, Demsa, Lamurde, Shelleng, Yola North, Yola South, Girei etc end up in rice mills located outside the state where they are milled and sold, VAT inclusive which VAT is then attributed to the southern state of value-addition or company headquarters which then aggregates the VAT from the nationwide branch offices and then remits it to FIRS as if the VAT was generated in state of location of the headquarters alone.
A levy of N50,000 per ton of rice paddy would result in a revenue of N50 billion per annum. Similar computations can be made for maize, beans and sorghum which, based on 2023 farm yield data, would yield for the state an estimated annual revenue of over N100 billion, N20 billion, and N10 billion respectively.These products feed the breweries, flour mills and other food processing factories in the south which products are then sold to us inclusive of VAT which is attributed to the producing states.
The reason why Adamawa State Government refuses to levy agricultural produce is the argument that it will result in double taxation and a high cost of food stuff. It is driven by the mindset of a humane leadership that has the wellbeing of Nigerian citizens at heart as opposed to the mercantilism of this Tinubu government. So, when Southerners say Northerners are lazy and unproductive, they are only displaying crass ignorance and ingratitude to their benefactors.
You might then ask: why does Adamawa State people not embark on this value-addition to the raw materials derived from their state? The simple answer in simple economics terms is that we have comparative advantage in raw material production rather than in finished-goods production. This is where we are efficient.
Besides, other policies of the federal government have over the years, impacted negatively on the state’s ability to engage in manufacturing. Electricity supply is practically non-existent in the state, the roads leading in and out of the state have been in decrepit conditions for as long as one can remember, and there isn’t even one inch of railway track in the state etc. So, the basic requirements for manufacturing are non-existent in the state. Hence, our preference to sticking to where we have comparative advantage namely, agriculture. It is a wise choice. I wonder where the VAT-grabbing Lagos State would be if its factories are rendered dormant due to lack of northern raw materials? I wonder! I wonder! You could extrapolate this argument to almost all the northern states.
So my dear “hard working” southern brothers and sisters, get ready for prices of food items and raw materials that punctures the ceiling. We have “hardworking” Tinubu’s petroleum price and currency exchange rate to look up to.
*Babachir is former Secretary to the Government of the Federation
