The battle raging between River State Governor Nyesom Wike and the Federal Inland Revenue Service (FIRS) today is a manifestation of a well-planted time bomb awaiting explosion as a prelude to the setting implementing what some scholars have described as “true federalism”. Nigeria is currently exploiting the corrupt version of federalism. The Nigerian brand of federalism is antithetical to the true concept of federalism commonly known as the “Frederickan Model of Federalism”.
Federalism as described by Wikipedia is a mixed or compound mode of government that combines general government (the central or “federal” government) with regional governments (provincial, state, cantonal, territorial or other sub-unit governments) in one political system. It can thus be defined as a form of government in which powers are distributed between two levels of government of equal status.
Examples of a federation or federal state include the United States, India, Brazil, Malaysia, Mexico, Russia, Germany, Canada, Switzerland, Bosnia and Herzegovina, Belgium, l ‘Argentina, Nigeria, Pakistan and Australia. Some describe the European Union as the pioneering example of federalism in a multi-state framework, in a concept called the federal union of states.
In our journey to nationhood, Nigeria as a country has experienced different types of political systems and constitutions as well as economic philosophies. Currently, we are practicing what could be described as the inverted pyramid or the icteric form of federalism which is a complete negation of the principle of true federalism.
Indeed, the 1979 constitution that we borrowed from the United States of America (United States) consolidated Ironsi Decree number 34 of May 24, 1966. Under these laws, virtually all articles were listed in chapters. exclusive. And that was the start of the quagmires that we met today. Federalism in the country has been implemented backwards.
Until before this period, Nigeria prospered under the system of regionalism. Regions deliberately developed their economies through taxes, agriculture, etc. That’s why we heard about the famous peanut pyramid in Kano, rice, millets, sorghum, yam. There was also the rise of cocoas, rubber plantations, cola nuts in the west, palms and palm oil in the east.
Regional governments could generate revenue for its sustainability and then had diplomatic relations with foreign nations. The North had strong relations with Sudan. Ditto, the West had diplomatic relations with the State of Israel. It is this relationship that led to the creation of the University of Ife. The East had its fantastic relationship with Tanzania. There was healthy competition between the state. They also cooperated and collaborated with themselves. They put their fate completely in their hands because there was no such thing as “the misery of the state”.
But because Nigeria as a country through the instrument of the military has opted for centralized federalism, people today are calling for fiscal federalism with the hope that it has the capacity to trigger development.
According to Olabanji Olukayode Ewetan (2012), fiscal decentralization has become fashionable regardless of the levels of development and civilization of societies. Nations are turning to decentralization to improve the performance of their public sectors. Fiscal federalism is essentially about the allocation of government resources and spending to the various levels of government.
In general, the researcher cited Aigbokhan, 1999; Oates, 1972; Tanzi, 1995 and Chete, 1998 argue that the intensification of the demand for greater decentralization is influenced by a combination of people eager to become more involved in government and the inability of the central government to provide quality services. .
He further explained that decentralized systems of government give rise to a set of fiscal requirements called fiscal federalism also known as fiscal decentralization. According to the researcher, this refers to the scope and structure of levels of government responsibilities and functions, and the distribution of resources among levels of government to cope with the respective functions.
In Nigeria, the scholar estimated that the poor performance of the public sector since the first half of the 1980s has brought to the fore the issue of fiscal federalism which has remained dominant and most controversial in the Nigerian regime (Arowolo 2011).
Federalism according to Arowole, Akindele and Olaopa cited by Ewetan (2012), is a political concept in which the power to govern is shared between national, state and local governments, creating what is often called a federation (Arowolo, 2011, Akindele and Olaopa, 2002). Arowolo (2011) further postulated that “It is a political theory that is divergent in concept, varied in ecology and dynamic in practice”. For his part, Vincent (2001) explained that the concept of federalism implies that each level of government is coordinated and independent within its delimited sphere of authority and should also have appropriate taxing powers to exploit its independent sources of revenue.
According to Vincent, fiscal federalism therefore requires that each level of government have adequate resources to perform its functions without calling on the other level of government for financial assistance (Wheare, 1963).
Fiscal federalism, according to the researcher, is characterized by fiscal relationships between central and lower levels of government. The fiscal relations between and among the constituents of the federation are explained in terms of three main theories, namely, the theory of the fiscal relation which concerns the expected functions of each level of government in the tax allocation; the theory of inter-jurisdictional cooperation which refers to areas of responsibility shared by national, state and local governments; and the theory of the multi-jurisdictional community (Tella, 1999).
Each level of government is seen as seeking to maximize the social welfare of citizens under its jurisdiction.
From the above discussions, the role assignment that follows from the basic theory of fiscal federalism is summarized as follows: The central government is expected to ensure a fair distribution of income, maintain macroeconomic stability and provide public goods of national character. On the other hand, decentralized levels of government should focus on providing local public goods, with central government providing targeted grants in cases where there are jurisdictional spillovers associated with local public goods. Once the roles have been assigned, the next step in the theoretical framework is to determine the appropriate tax framework. In addressing this tax allocation problem, attention is drawn to the need to avoid distortions resulting from decentralized taxation of mobile tax bases.
Vincent cited Gordon (1983) in pointing out that the extensive application of non-benefit taxes on moving factors at decentralized levels of government could lead to distortions in the location of economic activity.
It is this dislocation as outlined above that the governments of Rivers and Lagos states are seeking to remedy with the current VAT hubbub. If implemented, it is capable of pulling states and the country in general out of the clutches of “bottle federalism”. It will also give state governors more responsibility for managing scarce resources. This means that the state must start to think outside the box for revenue strategies. And when that is done, Nigeria would undoubtedly have anchored the American model of federalism in its climate. It is not appropriate that all states eagerly await Abuja for financial assistance. They should develop their livelihoods.
Nothing prevents, for example, Benue State from developing its oil well in Okwiji, in the local government area of Apa or an avalanche of solid minerals available in many places in the state in order to improve and consolidate its revenue base.
It was obviously in preparation for a day like this that Kogi State worked hard and ensured that oil was discovered in the state. Lucky for them, Kogi has been listed as one of the country’s oil-producing states. And they will begin to enjoy the fruits of their labor when the real exploitation begins.
Zamfara State is currently mining its gold and has even said it will pay royalties to the federal government against the spirit of the FRN constitution.
Wike’s posture, without a doubt, is in tandem with the expectations of Nigerians about true federalism or fiscal federalism. States should not continue to depend on the center for funding.
Dr Elijah writes from Otada – Otukpo.