Nigeria’s Tax Reform: A battle for economic supremacy between Lagos and the rest, by Yusuf Alhaji Lawan
Nigeria’s federal system is designed to promote economic balance and development across its 36 states. But in reality, the country’s economic fortunes have long been tied to the performance of one state: Lagos. As the federal government proposes a new tax reform bill, the question on everyone’s lips is: what does this mean for the future of Nigeria’s economic development, and will it address the long-standing issue of Lagos’ dominance?
The decision to move the Federal Capital Territory from Lagos to Abuja was made to promote a more central location, reducing the dominance of a particular section of the country against the rest and alleviate exploitation of other vulnerable states in the best way possible with equity and fairness.
However, Lagos still hosts the headquarters of many government agencies and mega companies, which has led to concerns about the city’s continued influence and revenue generation. Despite the capital’s relocation in 1993, Lagos remains a significant economic hub, and its retention of key government agencies has raised questions about the effectiveness of the capital’s relocation.
The Federal Capital Territory (FCT), Abuja, was created in 1976 to serve as a neutral, central location for the country’s capital. The FCT is administered by the Federal Capital Territory Administration, headed by a minister appointed by the president.
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The issue of Nigerian banks, telecommunication companies, and oil companies maintaining their headquarters in Lagos, despite having operations across the country, is a contentious one. Many argue that this concentration of corporate power in Lagos perpetuates economic inequality and undermines the federal government’s efforts to promote development in other regions.
The Federal Capital Territory (FCT), Abuja, was established to serve as a neutral, central location for federal government institutions and agencies. However, the relocation of corporate headquarters to Abuja has been slow, with many companies citing logistical and infrastructural challenges. This claim remains a challenge after three decades.
The recent case of the Federal Airports Authority of Nigeria (FAAN) headquarters is particularly striking. Despite being a federal agency, FAAN’s headquarters was moved to Lagos, rather than retaining its status quo of Abuja. This has raised questions about the government’s commitment to decentralizing power and promoting regional development. Relocation of some Departments of Central Bank of Nigeria (CBN) to Lagos is still fresh in minds.
Similarly, many concerned individuals especially from Northern extraction are of the view that the dredging of the River Niger was a project aimed at improving transportation and commerce in the region, but stalled due to concerns that it may reduce Lagos’ revenue and influence. This perception that Lagos’ interests are being prioritized over those of other states is fueling the controversy surrounding the proposed tax bill.
Ultimately, the issue at hand is one of equity and fairness. Shouldn’t federal institutions and agencies be located in the federal capital, Abuja? Shouldn’t corporate headquarters be distributed more evenly across the country, rather than being concentrated in Lagos? If they remain in Lagos, should the state adopt them as its share of the national cake alone? These are part of the salient points that raise questions which need to be addressed in promoting more balanced regional development and reducing economic inequality.
The proposed tax bill has four key components, three of which have been generally accepted as fair. However, the fourth part, which deals with the derivation revenue distribution model, has raised concerns among majority of the states, particularly those in the North.
They argue that this model unfairly favours Lagos, to their detriment. A possible solution is to pass the first three components and revisit the contentious fourth part for a review to make it more equitable for all states. This approach would ensure that the tax bill promotes fairness and equality among all states, rather than perpetuating regional disparities.
Nigeria’s economic future depends on its ability to address the deep-seated issues of regional imbalance and economic inequality. The proposed tax reform bill offers an opportunity to reassess the country’s economic priorities and promote a more decentralized, equitable economy. Let us hope that Nigeria’s policymakers will seize this moment to create a brighter, more prosperous future for all Nigerians.
Yusuf Alhaji Lawan writes from Hausawa Asibiti Ward, Potiskum Yobe State. He can be reached via nasidi30@gmail.com.
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