Constitution revision: CITN urges NASS to review taxation powers

The Chartered Institute of Taxation of Nigeria (CITN) has urged the National Assembly to review and reconsider the distribution of state taxation powers as part of the ongoing 1999 constitutional amendment process.

Dame Gladys Simplice, President of CITN, made the proposal in a memorandum to the National Assembly during the southwest zone public hearing on the 1999 constitutional revision in Lagos on Wednesday.

According to her, the state’s taxing powers appear to be illusory and speculative under the current constitution.

Simplice recommended a separate state legislative list, such as the model 1995 draft constitution, to enumerate subjects upon which states could legislate and to establish the basis for taxes that are impossible, administrable and collectable by the state.

It also recommended that point 59 of the exclusive legislative list (taxation of income, capital gains and stamp duties), point 13 (copyright) and point 62 (trade and commerce and in particular sub-points a, b, d, e and f) must be modified.

According to her, item 43 (patents, trademarks, trade or trade names, industrial designs and trademarks) should also be amended.

Simplice said this should be in favour of the state and local communities in terms of legislation, imposition and administration of ancillary taxes on the matter.

“Exclusive use of the added value of states and local authorities for autonomous revenue is strongly recommended.

“The current constitutional rationale for the Value Added Tax Act under Article 315 of the Constitution that it covered areas relating to sales tax is disturbing.

“It is recommended that the VAT be transformed into a simultaneous legislative list with a different formula, namely:

“The federal government should legislate and administer interstate, wholesale and export VAT, while states should register and administer intrastate and retail VAT,” she said.

According to her, in any case, the collection of these revenues should be independent of the use by each state and federal government.

She added that the current condition of the constitution, which brought together the powers of taxation and legislative powers, gave the mistaken impression that states did not have specific powers to impose and administer taxes except by relying on an imaginary residual list.

The President noted that there were certain items in the exclusive and competing legislative list that the federal government should not have to deal with, adding that this made states and local governments mere parasitic appendages of the federal government.

“Given the particular needs and development of state and local governments that are closer to the people, there is a practical need to evolve expansive taxes and net revenues. This current configuration of the constitution does not encourage this reality.

“The expansion of state taxation powers will encourage a high commitment to tax mobilization and improve healthy development competitions between federative units,” she said.

In addition, Simplice said the constitution should guarantee the independence of the Federation’s Auditor General to ensure accountability, transparency and credibility.

She added that this should also be amended to allow the Auditor General to directly reimburse any funds from anyone deemed not to have been spent for the purposes for which they were intended.

The CITN president said there was a need to clearly delineate the exclusive federal and state legislative list.

“This will secure the powers of the states and allow them to function without being too dependent on the federal government,” she said.
(NAN)