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Nigeria: How Rivers Governor Wike’s VAT law sets a new precedent for Abuja

By Dele Yusuf
Posted on Tuesday, 7 September 2021 12:48

Governor Nyesom Ezenwo Wike of Rivers State, Nigeria (Facebook / @GovernorNyesomEzenwoWikeCON )

The controversy playing out in Nigeria over Governor Nyesom Wike's new value-added tax (VAT) law in Rivers State is not so much about the expected earnings from the tax, but rather about how other states will respond. The law has brought back the debate about restructuring in Nigeria and some see it as a wake-up call for states to become more independent of Abuja.

Governor Nyesom Wike of Rivers State in southern Nigeria recently took a step that might just change the status quo in Africa’s most populous country.

He signed a law allowing the administration of VAT following a court judgement that ruled that the state – not the Nigerian government – should collect such tax. The matter is still playing out in the court where the government-led Federal Inland Revenue Service (FIRS) has filed an appeal.

But this is not just an arcane move about a complicated tax procedure. It touches on a volcanic argument: who runs Nigeria, the centre or the states? How should Nigeria’s wealth be shared? And more obliquely, whether the South should subsidise the North; a complex of issues known in Nigeria shorthand as ‘restructuring’.