THE PROBLEM OF TAXATION AND TRUE FEDERALISM IN NIGERIA

THE PROBLEM OF TAXATION AND TRUE FEDERALISM IN NIGERIA?

Introduction It is an obvious fact that taxation has a major and very

important role to play in any given economy. In the contemporary

world, every government relies on taxation measures, either

minimally or substantially, to provide the much needed revenue

for its socio-economic development and also to reduce the

inequalities in the wealth distribution of its society. Many

times, tax is used to reduce criminal tendencies and to minimize

moral decadence in the society. In the words of Justice Oliver

Wendell Holmes1, "taxes are what we pay for a civilized society."

Nigeria operates a Federal system of government, and much like

other countries all over the world, relies heavily on the revenue

generated through taxation to finance its projects and further

the socio-economic needs of its citizens. However, due to the

problems associated with federalism as a system of government

coupled with the unique nature of the Nigeria Nation, true fiscal

federalism has always been a subject of discuss, for the purpose

of protecting the multitudes of sectional interests. Due to the

importance of these two concepts: Federalism and Taxation in

Nigeria, the continued existence or disintegration of the Federal

Republic of Nigeria have been, at different and many times,

predicated on the proper management of these two concepts. The

writer is set in this paper, to peruse problem of true fiscal

federalism with particular reference to the Nigeria situation and

suggest the way forward.? Michael Sunday Afolayan, Esq. LL.B (Hons.), B.L, LL.M, is a Lecturer in theFaculty of Law, Ekiti State University.1 Reported in the U.S Supreme Court Reports (1927) Vol.275 pg. 100

Background to Taxation and FederalismTax or Taxation is an ancient concept and practice. No one can

precisely date the inception of the concept. It is almost as old

as the creation in itself. Many ancients and Biblical history

points to the fact that tax has been in existence for a long

time, though the system and methodology of its management may

have varied considerably. However, Federalism as a system of

government in Nigeria can be dated with precision and accuracy.

Federalism as a system of government in Nigeria began in 1954.

Nigeria's adoption of federalism as a mechanism for managing

conflicts among its heterogeneous population was partly the

result of her history. In the throes of its nationalist movement

against colonial rule, Nigerians found themselves interacting

with one another as strangers in the same polity. The emerging

fears and suspicions among groups in the competitive setting

during the terminal colonial period, led to the emergence of

aggressive ethno regional politics. By 1954 the unitary colonial

state saw itself being gradually federalized, especially under

the Lytletton constitution.

On October 1, 1960 when Nigeria became independent, the country

was politically baptized as the Federal Republic of Nigeria with

a Federal Constitution. One of the major challenges of the

Nigeria federation since then has been the coordination,

management, and distribution of its resources. At times this has

generated a lot of furore and bickering among the federating

parts and the federal government. Many have called for

accountability and change in distribution and income generation

formulae. Fiscal federalism has thus become a rally point of

agitation for many sections and activists within the populace. A

lot of articles have been written, many activists have agitated,

and a lot of regional protests - both peaceful and

confrontational have been battled on the issue of fiscal

federalism and empowering the units of the federacy more.

However, up till the moment, the issue is still on the front

burner, and it will hardly go away.

Definitional Concept of Taxation

In the simplest term, tax is defined as the money which has to be

paid to the government so that the government in turn can pay for

public services. People pay tax according to their income and

business pay tax according to their profit2. It is generally

recognized, that taxation has an important and established role in any

economy. The tax system is therefore, one of the most powerful levers

available to any government to stimulate and guide its economic and social

development. It is in the words of the United States Supreme Court in Nichols

V Ames3;

The one great power upon which the whole national fabric is based. It is as

necessary to the existence and prosperity of a nation as is the air he

breathes to the natural man. It is not only the power to destroy; it is also the

power to keep alive.

Tax as a concept has been seen, to be so important and certain to

a Nation's economy that Benjamin Franklin in the 18th century,

while commenting on the then new Constitution of United States

Constitution of 1789 said;

2 Hornby A.S, The Oxford Advanced Learner's Dictionary, International StudentEdition, 7th Ed. Oxford University Press. 2005. pg 1516 3 173 U.S 509 (1899) at P. 515

Our constitution is in actual operation, everything appears to promise

that it will last. But in this world, nothing is certain but death and

taxes.4

The Black's Law Dictionary5 defines tax as; "A monetary charge imposed by the

government on persons, entities, transactions, or property to yield public revenue". In the same

vein, tax has been defined by Chief Justice Latham, in the Australian case of

Mattews V Chicory Marketing Board6 as follows; "A tax is a compulsory exaction of money

by a public authority for public purposes." By taxation then is meant, the process

whereby the government imposes levies on the income or profit of persons who

have income or profit which are taxable for the purpose of defraying the cost

of running the government. Any definition of tax and by extension taxation,

which is not to serve the purpose of public social infrastructure, is not

taxation.

According to Professor C.S. Ola;7

Taxation is a compulsory levy imposed on a subject matter or upon his

property by the government to provide security, social amenities and

create conditions for the economic wellbeing of the society. The main

purpose of taxation is to raise funds to meet government expenditure and

to redistribute wealth and management of the economy.

However, in the definition and analysis of the concept of

taxation by Oluwole Akanle, "Taxation may be defined as a compulsory levy

imposed on a subject or upon his property by the government having authority over

him".8

Features of Taxation4 The United States Constitution and Fascinating facts about it. 7th Ed. Oak Publishing Company. 5 Brgan A. Garner, Eight Edition, West Publishing Co. 2004, at page 14966 (1938) 60 C.L.R 263 at P. 2767 Income Tax Law and Practice in Nigeria, Heinemann Educational Books (Nig.) Plc, 2004 at Pg 11.8 Oluwole Akanle, Nigerian Income Tax Law and Practice, Centre for Business and Investment Studies Ltd. 1991. Pg. 1.

Akanle9 identified four important characteristics of taxation which are here

referred to as features of taxation from the definition above as follows;

i. The levy must be compulsory and not voluntary: This implies

that payment of tax is not dependent upon the receipt or

conferment of any benefit on the payer. A tax payer or

prospective taxpayer cannot thus have a basis for refusing

to pay his/her tax, on the ground that the road to his house

is not tarred.

i. It is an imposition by the government: This account for why

the language of tax legislation is always commanding,

imposing and mandatory. For example, section I of the

Personal Income Tax Act10 provides;

There is hereby imposed a tax on the income-

(a) of individuals, communities and families; and

(b) arising or due to a trustee or estate, which shall be determined

under and be subject to the provisions of this Act.

i. It is levied for the purpose of financing government: Much

of this has been earlier discussed. However, quite a number

of taxes are imposed not with the objective of raising money

but to achieving certain governmental aims or objectives

such as social justice, redistribution of income and

economic development. In such cases, the raising of money

for the government may be merely ancillary to the main

objective.

i. The government imposing the tax or levy must have or

exercise authority over the payer or his property: The need

to finance and sustain government and its machinery in the

9 Op. cit10 Personal Income Tax Act, CAP P8 LFN 2004 as Amended by Act No. 20, 2011

discharge of its responsibilities has been the traditional

connotation of taxation. Governmental activities are

expected to be beneficial to the society and individuals.

However, in the developing countries like Nigeria, such

benefits are not usually enjoyed contemporaneously or

proportionately to contributions by taxpayers. The resultant

effect is the reluctance, unwillingness, and involuntary

contribution by taxpayers, to the support of government

which is often seen by the suffering taxpayer as an

inanimate, detached and remote entity. Thus the element of

compulsion becomes an essential ingredient for determining

whether a particular demand for payment by the government

from the individual is taxation11.

The Concept of FederalismFederalism is essentially a compromise solution in a

multinational State between two types of self determination - the

determination provided by a national government which guarantees

security for all in the Nation-State on one hand, and the self-

determination of component groups to retain their individual

identities on the other. Federalism emanates from the desire of

people to form a federal union without necessarily losing their

identity.12 Scholars of federalism have traced its origin and development to

the United States of America. For Example, K.C Wheare argues that;

The modern idea of what Federal Government is has been determined by

the United States of America…. Any definition of Federal government

which failed to include the United States would thereby be condemned as

11 Oluwole Akanle, Nigerian Income Tax Law and Practice op. cit. at pp. 1-212 Isawa Elaigwu, The Politics of Federalism in Nigeria, Aha Publishing HouseLtd., 2005 at Page 1.

unreal…. For the Federal Principle has come to mean what it does,

because the Unites States has come to be what it is.13

In supporting the view of Wheare on the importance of United

States of America to the origin and development of federalism,

Carl Freidrich argues as cited by Ben Nwabueze; "Whenever men have

gathered to draft a (Federal) Constitution, they have drawn upon American

Constitutional theory and practice.14 Federalism emphasizes non-centralization ofpowers. Each component unit of a federal system has its powers and functions

delineated and guaranteed in a constitutional document. As K.C Wheare wrote,

federalism is "the method of dividing powers so that the general and regional governments are

each, within a sphere coordinate and independent".15

It is proper at this point to look at the judicial pronouncement

on the concept of our federalism. In the Nigerian case of A.G

Abia State & Ors V A.G Federation & 32ors,16 the Supreme Court made

elaborate decision on the concept when said:

Federalism, as a legal and political concept, generally connotes an

association of states; formed for certain common purposes, but the states

retain a large measure of their original independence or autonomy. It is the

coordinate relationship and distribution of power between the individual

states and the national government, which is at the centre. Federalism, as a

viable concept of organizing a pluralistic society such as Nigeria, for

governance, does not encourage so much concentration of power in the

centre, which is the federal government. In Federalism, the components,

States, do not play the role of errand boys. The other extreme is also true and

it is that they do not exercise sovereignty, which only belongs to the nation as

13 Keneth C. Wheare, Federal Government, Oxford Univ. Press, New York. 1964 at Pg 112.14 Ben O. Nwabueze, A Constitutional History of Nigeria, Longman London, 1985at Pg 1.15 Keneth C. Wheare, Federal Government Op. Cit Pg 10.16 1 CLC 94, Per Niki TObi, JSC.

a sovereign entity. States in a federation rather exercise the middle role, if I

may say so, for lack of better expression, of exercising legislative and fiscal

autonomy as provided for in the Constitution....

The above dictum of the Supreme Court in our view summarises the

whole essence of federalism especially with specific reference to

Nigerian version of the concept, with the attendant call for re-

examination of our federalism.

Fiscal Federalism as a ConceptIn the simplest term, fiscal federalism generally connotes

revenue generation in a Federal System of government especially

through taxes. It is important at this stage to clearly demarcate

or identify the difference between revenue and taxation as two

concepts. While revenue points at all sources of income for the

government including grants, loans, foreign aids etc. from

internal and foreign bodies, taxation is narrowed at the income

generated by the government through the exercise of its taxing

powers on its citizens and subjects. Taxation does not include

foreign aids and loans while revenue includes all that. Taxation

is thus one of the ways of generating revenue by a government.

Perhaps, one of the most debated issues in Nigeria is fiscal

federalism and or revenue allocation, due to their importance on

the generality of the citizenry. In any federal system, there

must be a solid arrangement on how the revenue of the State will

be shared among the component parts. The Supreme Court in the

case of A.G Abia State 2 ors v A. G. Fed. & 32 ors 17 observed as

follows;

The Peculiar Federal problem is this. The Federal principle requires that the

General and the Regional governments of a country shall be independent of

each other. Now if this principle is to operate not merely as a matter of strict

law but also in practice, it follows that both General and Regional Government

must each have under its own independent control, financial resources

sufficient to perform its exclusive functions. Each must be financially

coordinated with the other….

It is observed with specific relevance to the Nigerian situation

that the fulcrum of the efficiency of our Federalism is in the

independence of the various units to develop independently

without going cap in hand to the central government to beg for

means of livelihood. In the words of Lord James Bryce, the

problem is summarized as follows;

The problem which all federalized nations have to solve is how to secure an

efficient central government and preserve national unity; while allowing free

scope for the diversities and free play to the members of the Federation. It

is…to keep the centrifugal and centripetal forces in equilibrium so that

neither the planet states shall fly off into space, nor the sun of the central

government draw them into its consuming fires. 18

Instrumentalities for Revenue Sharing in Nigeria.It is a fact of life in modern federation that the division of expenditure and

revenue responsibilities is never such that both orders of government are

fully self-financing…when one order of government collects more revenue

17 Supra 18 Lord James Bryce in Peterson P.E. The price of Federalism, Brookings Institution Press, Washington D.C. 1955, at page 75

than it needs for its own expenditure responsibilities, a vertical imbalance

is said to exist. Fiscal transfer from one order of government to another are

used to deal with vertical imbalances. In some federations specific

transfers are designed to deal with both vertical imbalances and between

provinces, i.e horizontal imbalances.19

The above quotation is perfectly apt in the Nigeria case of

federalism, which is in favour of the federal government. It

requires no "Solomonic Wisdom" "or Josephic Interpretation" to

identify the imbalance in the Nigeria fiscal federalism which

tilts generously in favour of the Federal Government. The need

has therefore been felt and steps taken to ensure "appropriate"

redistribution of resources in line with the principle of fiscal

federalism. It is apt to say that the "imbalance" is not unique

to Nigeria. In many modern federations, there are fiscal

imbalances because components units of a federation hardly have

enough resources to meet their desirable expenditure. Fiscal

equilibrium is often not easy to attain.

In Nigeria, the history of resource distribution has been

centered on four major principles with relative consistence.

These are; the principle of derivation, the principle of need,

the principle of equality and the principle of national interest20

i. Principle of Derivation: This emphasizes that federally

collected revenue on resource from land or water of a

particular State should be returned to them wholly or

substantially. The usual quarrel here is over how much of

19 Paul Boothe, Taxing, spending and sharing in Federations: Experience from Australia and Canada, In Paul Boothe (ed.) Fiscal Relations in Federal Countries: Four Essays. Ottawa: Forum of Federation 2003 at pg. 1120 J. Isawa Elaigwu, The Politics of Federalism in Nigeria, op. cit at pg. 247

the collected revenue should be returned to the States from

where these resources were derived.

i. Principle of Need: This is often difficult to operate as

revenue capacity and expenditure profiles are reconciled. In

Nigeria, population has been used as an index of need. The

principle of need essentially emphasized the need to meet

expenditure demands of sub national units, in order to carry

out desirable devices.

i. Principle of Equality: The logic of federalism presupposes

the equality and autonomy of all sub-national units of

federation. Not only should they receive equal shares of

federally derived revenues (irrespective of population and

contribution to the account of the federation), they should

have their independent sources of tax or revenues. Political

equality of sub-national units which ignores population is

likely to create inequality of development in the country.

i. Principle of National Interest: This emphasizes the need to

raise the living standard of those in poorer sub-national

units, above the minimum national standard as fixed by the

country's leaders.

The problem with these broad principles of revenue distribution

is that they are in potential conflict with one another in the

course of fiscal adjustments in a federal system. For example,

the principle of derivation works at cross-purposes with the

principle of need. Derivation also works against the necessity to

harmonise income with needs of states in a federation and the

need to "level up", so that gaps between poorer and richer States

may be at the very least, narrowed to some minimum level21. It is

almost needless for example to say here that the need of a state like Lagos

State cannot be compared to that of Ekiti State, while the derivation in Akwa

Ibom State, or Abia State cannot be compared to that of Gombe State.

The history of revenue sharing in Nigeria has been one of the

Inter-regional or Inter-state conflicts with many Supreme Court

decisions. It shows a gradual movement from the derivation

principle to a mix of principles for distribution purposes. Much

of the problems shall be discussed in the next chapter. But what

is the current instrumentality for distribution of tax in

Nigeria.

Nigeria operates under the rule of law and a purely written

constitution. This implies that for any step to be legal in

accordance with the rule of law, it must trace its origin to a

written law in Nigeria. The 1999 constitution of the Federal

Republic of Nigeria22 which is the grundnorm makes provision for the

distribution of resources in the Federation. Section 162 thereof specifically

provides for the operation of the "Federation Account" into which the revenue

collected in the federation shall be paid it provides;"the federation shall maintain a

Special account to be called "the federation Account" into which shall be paid all revenues collected by

the government of the federation…"

On the allocation of the resources, the Constitution provides in

section 162(2)23 as follows;

"The President, upon the receipt of advice from the Revenue mobilization

Allocation and Fiscal Commission, shall table before the National Assembly

proposals for revenue allocation from the Federation Account, and in

determining the formular, the National Assembly shall take into account,

21 Ibid22 CAP C24 LFN 2004 As Amended23 1999 Constitution of the Federal Republic of Nigeria, CAP C24 LFN 2004 As Amended.

the allocation principles especially those of population, equality of States,

Internal revenue generation, land mass, terrain as well as population

density:

Provided that the principle of derivation shall be constantly reflected in any

approved formula as being not less than thirteen percent of the revenue

accruing to the federation account directly from any natural resources".

It is convenient at this stage, based on all that have been

expose above, to pin-point the instrumentalities for distribution

of tax in Nigeria which are;

a. The Constitution of Nigeria from which all other bodies

derived their power.

a. The National Assembly of the Federation which consist of the

Senate and the House of Representatives.

a. The Revenue Mobilization Allocation and Fiscal Commission

(RMAFC) as established in section 153(1)(n) of the 1999

Constitution of the Federal Republic of Nigeria as Amended.

a. Allocation principles as enunciated above and recognized by

section 162(2) of the 1999 constitution of Nigeria.

a. The president of the Federal Republic of Nigeria as

empowered by section 162(2) of the Constitution. This is due

to the influence he has on the commission (RMAFC) and his

involvement in tabling the allocation formula as formulated

by the commission before the National Assembly.

Whither Nigeria?The principle of federalism as enunciated above emphasizes the

autonomy of component units and the maintenance of coordinate

status among these units. The economic viability of a component

State in federalism is however very crucial to the sustainability

of such state, if it must maintain its required autonomy.

Presently in Nigeria, with 36 States and a Federal Capital

Territory, all the States are predominantly funded from the

Federation Account. It is notable that central funding of States

as such, has never adequately catered for the needs and

developmental objectives of these sub-federal units. The problem

was aptly summarized by Chief Afe Babalola in the following

words:24

If the truth must be told, ours is a glorified unitarism masquerading as

federalism. A situation where the component unit- the States, go cap-in-

hand to the central government (called federal government) for assistance

cannot, by any stretch of imagination qualify as a federation.

It is also notable that new States in particular often face

severe resource constraints, which pose enormous administrative

challenges and which undermine their putative roles as agents for

development. Many scholars have postulated that the upsurge in

the number of States in Nigeria posed basic administrative and

financial problems for the States.25 The States are so weak that they

cannot muster enough strength to mobilize resources internally. The overall

effect of this is that Nigeria is practicing centralised federalism since 1966

when the Military first took over the throne of power, there was indication

that the country moved towards unitary system of government than to a federal

system. Due to the command structure of the military and the nature of their

posting, everything in the country was centralized.

24 Chief Afe Babalola, "The Nation or Country called Nigeria", a lecture delivered at the Law Week of the Law Society Faculty of Law, University of Ado-Ekiti on Friday, 1st July, 2005. at Pg 2625 Femi Omotoso op cit.

Communicating on the nature of Nigeria Federation which he called

"a deformed federation", Dare Babarinsa, one of the fiery

journalists in Nigeria in his book "House of war" at pages 227-

278 had this to say;

Nigeria is a deformed federation. The components nationalities have few

logical bases for relating to one another. They usually feel uneasy about

the nation of the federation. A federation is supposed to be state where

the component nationalities have a measure of control over their

destinies. Component units are supposed to be autonomous and

economically viable units. They are supposed to have linguistics affinity

and cultural cohesion. But since the coming of the military in 1966, they

have transformed the federation into one of very strong centre and very

weak states. Now the Federal government has become a monster,

terrorizing the States.26

In The Punch of 7th April, 2011 the Nigerian Ambassador to the

United States of America, Prof. Ade Adefuye was quoted to have

said that the prolonged Military rule experienced by the country

(Nigeria) have impacted negatively on the country's practice of

true federalism. He observed that though the nation's democracy

was modeled after the United States', the Nigeria system has

always exhibited peculiar and irregular characteristics. On

quote, he said;

The overwhelming domination of the Nigeria economy by federally

collected oil revenue which account for some 80 percent of public

finances at all levels of government and about 90 percent of the

country's foreign earnings tended to emphasize the power of the Federal

Government. The continued intensity of distributive contentions as

26 Quoted by Chief Afe Babalola op. cit. at pg 25.

opposed to productive accumulation in the Nigeria federation as the

constituent state government struggle relentlessly for the centre's

abundant financial resources and distributive largesse tend to make the

doctrine of federalism in Nigeria more as ideal yet to be achieved." 27

It is thus not a far fetch truth that Nigeria federalism is still

far from the ideal. Many political and legal analysts agreed on

this.28 The many Lilliputian States of the Nigerian Federation are at the

mercy of titanic federal government.

Conclusion and the Way ForwardThe proper aphorism to begin with here is the American saying

that ‘if it ain't broke, then don't fix it'. The basic truth in

line with the saying is if everything has been okay with our

federalism in Nigeria, then we would not have been here pin-

pointing various problems. A true fiscal federalism depicts a

workable arrangement with fairness, equity and justice. According

to Chief Afe Babalola;

Our's (federalism) represent a perfect example of what a federation

should not be. Not only is the centre too attractive and unwieldy, the mad

rush to the centre is a product of over attractiveness made possible by the

designers of our brand of federation.

It is the general agreement by writers and scholars of

governance that something germane and fundamental is wrong with

our unitary system being displayed under the guise of federalism.

The Federal Government's stronghold on the States is deadly and

27 Francis Falola and Sesan Olufowobi, Why Nigeria can't practice true federalism. The Punch, Thursday April 7, 2011 at pg 7.28 In the Punch Newspaper of Wed. June 16, 2004 with the caption; Sagay, Osuntokun fault Nigeria's federation, Prof. Itse Sagay insisted that under thepresent system, the relationship between the centre and the states, was a master - servant relationship.

choking. The concentration of powers and resources at the centre,

at the expense of the States, has destroyed States' autonomy,

which is sine qua non to federalism. The overwhelming presence and

power of the federal government is a serious threat to the

continued unity of Nigeria.

What then is the way forward? The following are suggested;

a. True Federalism through Restructuring

It is believed that the only path to the survival of Nigeria

as an entity is true federalism, involving fundamental

restructuring and decentralization of power. According to Dr.

Ayo Opadokun, Secretary of the erstwhile National Democratic

Coalition (NADECO) and present Chairman of CODER, the two

crucial questions in this respect are;

i. Do we want to stay together in Nigeria as one country?

ii. On what basis?

These two crucial questions must be answered at a roundtable

discussion by all stakeholders. The only and surest way of

achieving this is in National Conference. The National Conference

being proposed here is not an avenue to divide the Country into

pieces. This has been the fear of those who want to preserve the

corporate existence of Nigeria, but unable to pulse and

understand the fundamental Constitutional principles needed for

the survival of a corporate, multi-ethnic entity like Nigeria.29

The concept of national conference being canvassed is a national

avenue where all the accredited representatives from all the

ethnic and interest groups of the existing six geo-political29 Dr. A.A Idowu, "Constitution and the Problems of Federalism in Nigeria", in, "Law, Justice and Good Governance". Essays in Honour of Hon. Justice J.A Ajakaye, Chief Judge Ekiti State. Ed by; Akin Ibidapo Obe & Timothy Yerima, PETOA Educational Publishers, 2003, pp 247-266 at pg 265.

zones will meet to fashion out the required principles of

federalism suitable for the Nigerian nation. The conference will

also determine how such principles can be entrenched in the

People's made Constitution to emerge, the devices for making such

Constitution that will be accepted by all Nigerians, and the most

viable judicial process to ensure that all Nigerians succumb to

the rule of law. Though the Federal Government under the current

dispensation has set the machineries in motion towards the

convocation of a national conference, Nigerians are skeptical on

the outcome of the exercise due to subjection of its outcome to

the decision of the National Assembly.30

a. Fiscal Equality Of States

It is believed that the future threat to the survival of Nigeria,

if any, may not come from the vertical relations between the

federal government and the subnational States, but from the

horizontal relations among the States as the centre becomes

increasingly, a big political prize to win, especially as the

crisis of allocation of scarce but allocatable resources increase

in tempo and in the aggressiveness of such demands.31 In light of

the above challenge and its inherent danger, it is advised that the centre

(Federal Government) should be made less attractive by reducing the percentage

of revenue to the federal government and empowering the States more

financially.

The States could be empowered and equity maintained among all the

States as far as possible by adopting the equalization transfer

system as obtainable in Canada. This can be done through

30 The Okurohunmu Panel has submitted its report and President Goodluck Jonathan has hinted that the Conference will kick off by March 2014.31 J. Isawa Elaigwu, the politics of Federalism in Nigeria. Op.cit at page 15.

unconditional transfer of fund to the less developed States. This

will encourage near equal development and reduce the cutthroat

competition to the federal seats among the States and Regions in

Nigeria.

b. Harmonization of The Tax Laws

In order to curb and avoid multiple taxes, all the tax laws in

Nigeria should be harmonized and every incidence of multiple

taxes eliminated. This will lift the burden off taxpayers and

encourage transparency in our tax system. However, this must be

in addition to ensuring maximum cooperation and effectiveness of

the Tax administrators. The Federal Inland Revenue Services can

promote investment flow through the following;

Eradicating multiplicity of taxes

Improving the institutional capacity to administer taxes

effectively

Continuous introduction of and review of tax exemption and

incentives

Minimizing the incidence of tax evasion and avoidance and

accountability for tax revenue.32

c. Devolution of Power

As a result of the Military incursion into our politics, there is

undue concentration of power in the centre which makes the so

called federal government a unitary government in structure, with

the States as appendages which cannot survive without the

almighty central government. The reasonable option is to cut our

coat according to our cloth. This is a modest experimentation

32 This is one of the points suggested by the Nigerian Institute of Advance Legal Studies Lagos, Nigeria. "Colloquim on the Tax Payers Money" 19th January, 2011. Culled from The Nation, Tuesday, January 25, 2011.

that will give more powers to the regions, states and local

governments. The exclusive legislative list should be limited to

the items such as external affairs, immigration, currency,

citizenship and the military.

d. Reducing the Cost of Governance

The American form of Presidential system of government currently

being experimented by Nigeria is too expensive for our resources

to conveniently accommodate. It is high time we face the reality

of our existence. Having regard to the history and resources of

America, their presidential system of government is perfectly

suitable for them and it is being operated religiously and in

accordance with the tenets of their union. The same situation,

background and history do not justify its application to Nigeria.

The adoption and wholesale application of American federalism and

presidential system of Government by Nigeria is a monumental

mistake in the first place. Our erstwhile rulers who imported

that system wholly and applied same willy-nilly did not do us any

good at all. America presidential system in Nigeria has been

nothing but a huge failure.

We simply cannot afford 36 States Houses of Assembly, 36 Cabinets

of Commissioners, large number of State Legislators, National

Assembly of more than 460 Legislators, thousands of staff for all

these offices, over 40 federal ministers and numberless staff and

assistance.

The fragmentation of Nigeria into 36 States is unhelpful. Most of

the so-called States were formerly local governments or

provinces. Such local governments were manned by District

Officers and or Assistant District Officers. The Provinces were

manned by Residents supported by Chief Clerk and Clerks. The

substitution thereof of these District officers and Residents

with expensive-to-maintain Governors, Deputy Governors, and

Legislative Houses is most unreasonable and uneconomical.33

The sight of these Governors driving round in company of as many

as 30 to 40 very expensive cars and motorcycles outriders worries

the ordinary citizens who cannot afford three square meals, whose

taps are dry, who cannot watch 9 0'clock news on NTA due to poor

or none electricity supply, whose children are unemployed, who

finds it difficult to pay their children school fees and so on.

Our attention must be shifted to the welfare of the governed,

rather than milk them dry to feed the Governors fat. This is the

essence of governance.

Very recently, the Nigeria Labour Congress on the event of 2011

Workers' day called on the Federal Government to cut down on the

cost of governance. According to the NLC President, Mr.

Abdulwaheed Omar;34

There is need for setting of salaries of political office holders to be moved

to the National Salaries and Wages Commission so that the same

underlying parameters can be used in establishing guidelines for all

public sectors and public sector officers. Moreover, there is need for

transparency, such that the salaries and other perquisites of public office

holders are matters of public knowledge and not shrouded in secrecy… it

is instructive that a federal Legislator on the average earns about

N289million or more than N24million a month… the annual Constituency

allowance of a Senator, stands at about N1.6 Billion. What is called for is a

re-ordering of priorities and reduction in waste and graft.

33 Afe Babalola op.cit.34 "NLC to Jonathan: cut cost of governance" The Nation, Monday May 2, 2011

The statement above is in our opinion very apt, worth of

consideration, and is the way forward.