The Lagos Chamber of Commerce and Industry (LCCI) has advised that the current sharing formula of taxes for states and local government areas be adjusted using the factors of equality, 20 per cent; population, 30 per cent; and derivation, 50 per cent, going forward.
The chamber noted that the arrangement should be agreeable by all concerned parties, adding that it can drive innovation on revenue generation in all the states towards increasing their internally Generated Revenue.
The Director General, Chinyere Almona, gave the advice following the confusion that businesses face as to who is in charge of Value Added Tax (VAT) collection, which she noted was not healthy for the business community and planning.
She however, hailed the swift intervention of the Court of Appeal to reduce the uncertainties surrounding the controversies.
“Businesses should not be subjected to unnecessary hurdles and made to pay the same tax twice from different agencies. The Federal Government should urgently establish an understanding with states on what is best for the nation and businesses.”
On the sharing formula , she said it will also make the states more sensitive to the needs of businesses, knowing that an enabling business environment is likely to boost tax revenues.
“VAT was introduced in 1993 to replace the sales tax in the States. The original formula for the distribution was 50 per cent to the Federal Government, 35 per cent to States, and 15 per cent to LGAs. But with effect from January 1999, the formula was adjusted to be 15 per cent to FGN, 50 per cent to States, and 35 per cent to LGAs.”