Nigeria tax spat reignites federalism debate

A legal battle between Nigeria’s government and states over sales tax is fueling fierce debate about federalism in Africa’s most populous country as politicians jockey for position before 2023 elections.

The spat –- whether federal or state governments have the right to collect value-added tax (VAT) –- may be about money, and the sum at stake runs into billions of dollars. But the squabble also reflects long-standing questions about how Nigeria is governed and how wealth is shared in the continent’s top oil producer.

How the dispute ends may open up more state autonomy, analysts say, as wealthier southern regions test federal management of issues from oil resources and security policing to cattle grazing rights. 

In August, a court in southern Rivers State, Nigeria’s petroleum heartland, ruled states should be responsible for collecting VAT and not the Federal Inland Revenue Service or FIRS.

Rivers State Governor Ezenwo Nyesom Wike, a staunch opposition Peoples Democratic Party leader, pushed through a law authorising local collection of VAT, warning FIRS against any “sabotage.”