Unending Vat War under Nigeria’s Federal Constitution: Exploring the Contours of Nigeria’s Fiscal Federalism and Sociology

Abstract

Nigeria’s Federal High Court recently disrupted the sleep of the federal executive government when it decided that consumption tax is not on the exclusive list of the Constitution and as such an item for State legislative competence. This decision has been challenged and we must await the Supreme Court decision on the final word.
While nations have the inherent powers of taxation derived from their sovereign status, the presence of multiple levels of government means there should be an agreement among them on who imposes or collects certain taxes. This is why the Constitution of federated states is usually preceded by the phrase 'we the people' or an analogous expression to affirm an accord.
This paper examines the various taxing powers shared among the different levels of government in Nigeria. It will interrogate the federal government’s capability to impose and collect the Value added tax. It will also examine what options are available to end the VAT war while also appraising the prospects of State VAT laws.

Keywords: Retail sales tax, VAT, Consumption tax, fiscal federalism, constitution