By Chuka Nnabuife|ANCISRO
ANYONE of Anambra nativity who still nurses any inhibition about basing his business in Anambra State or investing in homeland needs to an examination of his patriotism.
Current developments in Nigeria make such inward check very needful. Beyond the calls Anambra State has been making since 1991 for pro-homeland investment (Akụ lue Ụnọ), economic developments across Nigeria currently, make such home-bound thinking wiser and strategic.
Some states who were not prepared for the economic challenges expected from the proposed tax reform bills in the National Assembly (NASS) are now visibly kicking but the ones who would fail to rise to the needs of the development would definitely shed more tears when the bills become law.
The dust being raised by the proposed bills were foreseen by those knowledgeable on the basic facts of the relationship between taxation and distribution of a common wealth. Societies who pay more taxes should enjoy more of its dividends.
The hue and cry about the mulled tax regime and the heat it is generating in Nigerian politics, notwithstanding, the underlined fact is that it proposes to restructure how the country generates and redistributes revenue from such taxes as the value added tax (VAT) while also giving deeper economic meaning to the place of domicile of a firm as well as where their products are consumed.
The tax reform bills proposed by the federal government of Nigeria have several key highlights. Among them are redistribution of VAT revenue, through which the bills propose new sharing formula for VAT revenue, where 55 per cent of it will go to state governments, 35 per cent to local government councils while the federal government’s share will be reduced to 10 per cent.
The tax reform plan proposes that the location of a firm will be a key factor in determining the allocation of VAT revenue to states.
In the proposed plan, host states will benefit from being the places of supply as VAT will be attributed to the state where the goods or services are supplied, rather than where the firm is registered. This means that states with high economic activity, such as manufacturing or retail hubs, will receive a larger share of VAT revenue. This is unlike what obtained, hitherto.
States will therefore reap increased revenue from hosting firms as such states will receive a significant portion of the VAT revenue generated by the firms. The explanation is that the increase in revenue of host states will enable them to fund development projects and provide better public services.
For economic growth therefore, the proposed tax reforms plan to encourage firms to locate in states with favorable business environments. The federal government also reason that this will lead to increased economic activity and job creation in those states.
Proposers of the tax reforms also wish to encourage states to be very innovative and competitive in their VAT revenue drive, believing that the new allocation formula will foster competition among states to create business-friendly environments, invest in infrastructure, and provide quality public services.
All the incentives notwithstanding, the underlined factor in the proposed tax reforms is that where a firm is located will now matter seriously. For such a state as Anambra, this factor is crucial.
Given the importance that the development places on nativity of firms and recorded location of consumption of products and services, a smart way to respond to it will be for natives who feel very strongly about the economy of their homeland to cite or relocate their firms to their state. States and local councils would ultimately benefit if they have dependable registry or census of their residents and consumers’ record. Such statistics will be helpful in making claims during distribution of tax revenue.
Very importantly states and councils should pay serious attention to raising revenue through taxes. Citizens and resident firms too, should be made to know that paying their taxes is a mandatory civic responsibility, on which most of the dividends of being part of a society depend.
Having proper and updated headcount of residents and firms with their tax credentials have been a key factor of development in many states with buoyant economies. Beyond many Western countries where taxation play vital roles in ensuring development, in Africa and Nigeria too, there are good examples to cite.
Lagos State is one of such instances. Lagos, for example organises her own state-wide census of residents and commercial ventures which it updates and regularly utilises in every encounter with residents, including in granting judicial surety, Police bails, traffic management penalties, market shop rental, even in political communications among others. The most recent of such headcount in Lagos was in 1991 and 2006. Since the turn of 21st Century, Lagos State has set itself on an undisguised task of capturing every resident and business, small, medium or large-scale in her tax network.
It is therefore no surprise that there are unsubstantiated insinuations that the tax reform is wired to favour such a state.
Anambra is one of the very handful other states of Nigeria that have engaged in the project of getting the residents into a similar tax despite an increasing wave of sometimes, politically motivated resistance.
Despite the inexplicable pockets of resistance, especially during peak political periods, the fact that Anambra State is sustaining the laudable tax drive and getting good results in her improving internally generated revenue (IGR) numbers justifies the new direction.
The current national discourse on the Federal Government’s proposed ultimately underscores the good thinking in Gov. Chukwuma Charles Soludo’s commitment to keen but clean tax drive in Anambra State.
What the current national debate recommends to ndị Anambra, at home and Diaspora is to support the state’s tax drive; adopt the ideology of Akụ lue Ụnọ in their investments and imbibe the financial intelligence in citing the headquarters of their firms at home.
Moreso, the judiciary, law enforcement agencies, markets as well as all ministries, departments and agencies (MDA) should have functional tax desks as the Ministry of Lands has done.
That is the solution, and every well-meaning onye Anambra should encourage it here.
•Nnabuife is the Managing Director of Anambra State Civic and Social Reformation Office (_ _ANCISRO),Awka
