By Eric Teniola
The first instalment examined the current VAT war as a protest on the central government and its certain policies of exclusion, partisanship, nepotism, ethnicity, non-consultation and unfairness. This issue examines the process of the approval of the decree by the defunct military regime
THE programme was first introduced by the first Minister of Finance under General Babangida, Dr. Kalu Idika Kalu (82), from Ebem, Ohafia in Imo State. He first served as commissioner for finance in Imo State under the administration of Major General Ikechukwu Omar Sanda Nwachukwu (81). Dr. Kalu had his education at the Ladilak Institute, Yaba, 1948, Colony Public School, Ebute-Metta, 1949-1950, St. Jude’s School, Ebute-Metta, 1951-1953, King’s College, Lagos, 1954-1960, University of Wisconsin, Madison, Wisconsin, USA, 1961-1966, 1970-1972; research fellow and lecturer, economic development, University of Nigeria, Nsukka, 1966-1970, economist, World Bank, Washington DC, 1972-1980, head of economics, Skoup Company (Nigeria) Limited, 1980-1983 and commissioner for finance and economic planning, Imo State, 1984-1985.
In his 403 page book entitled Letting A Thousand Flowers Blossom, Dele Sobowale narrated how VAT came to be. He said “VAT was one of Dr. Kalu Idika Kalu’s unpopular proposals and for which he would have been lynched if the economic illiterates dominating discussion in the media could lay their hands on him. It was not even accepted by the majority of the cabinet members.
On the day General Babangida adopted the proposal, Dr. Kalu was invited as was usual before such monumental decisions were made, to defend the initiative. The matter was thrown open for discussion. Dr. Kalu’s reliable supporters – Chief Samuel Oluyemi Falae (82), Dr. Chu S.P. Okongwu (87), Alhaji Abubakar Alhaji (83), Professor Jubril Muhammad Aminu (82) and Professor Bolaji Akinwande Akinyemi (79) – constituted a small minority. The rest went after Dr. Kalu Idika Kalu’s with every verbal arsenal at their proposal.
Suddenly, General Babangida stopped the discussions and started to summarise in a way that indicated that he had accepted the minority view. But, he was also politically sagacious enough to realise that it would be a tough sell. So, when he mentioned one of the sticking objections of those against, Dr. Kalu raised his hand.
It was fortunate that sitting next to him was Professor Jubril Aminu who kicked Dr. Kalu under the table and asked him to put down his hand. Later, Aminu, warned him by saying “When the boss apparently adopted your proposal you have nothing more to say.” That was how VAT came to be.
By the way, talking about Dr. Okongwu, he is now almost blind, with loss of memory, coping alone in the only house he has in the world in Nnewi, Anambra State built for him by General Ibrahim Babangida. Yet this was a man who was minister national planning between 1985 and 1986, minister of finance between 1986 and 1990 and minster of petroleum thereafter.
It is a sad story of a brilliant career. According to the Value Added Tax decree, item 40 (distribution of revenue) states that notwithstanding any formula that may be prescribed by any other law, the revenue accruing by virtue of the operation of this Act shall be distributed as follows, that is – (a) 15 per cent to the Federal Government (b) 50 per cent to state governments and the Federal Capital Territory, Abuja and (c) 35 per cent to the local governments.
In 1992, General Babangida appointed a study group headed by Professor Emmanuel Chukwuma Edozien (1937-2019), the late Ojiba of Asaba. It was this group that established the Federal Inland Revenue Service, FIRS, as the operational arm of Federal Board of Inland Revenue and set up revenue services at other tiers of government – states and local governments.
Professor Edozien was a member, Housing Sub-Committee, Adebo Salaries Review Committee, member, Constitution Drafting Committee, Dean, Faculty of Social Sciences, University of Ibadan, chairman, New Nigerian Newspapers Ltd, member of Board, Ethiope Publishing Corporation; member, Economic Advisory Council, Government of Bendel state, now Edo state, Professor of Economics, University of Ibadan, 1976-1979, adviser to the President for Economic Affairs, 1979-1983; President, Nigeria Economic Society.
In the same year, 1992, General Babangida also established another study group on indirect taxation headed by Dr. Sylvester Uzor Ugoh (90) from Umuokrika Ekwerazu; Alii- azu-Mbaise in Imo State, which culminated in policy shift from direct to indirect/consumption tax (VAT evolved). To most Nigerians, Dr Ugoh is mostly remembered as the running mate of Alhaji Bashir Othman Tofa (74) in the June 12, 1993 Presidential election. But he was more than that, he was an outstanding economist.
He had his education at Holy Family College, Abak, 1947-1951, University of New Hampshire, Durham, New Hampshire, USA, 1955-1959, Harvard University, Cambridge, Massachusetts, USA, 1959-1961, 1963-1964, deputy director, Economic Development Institute, University of Nigeria, Nsukka, 1966-1972, executive director, SKOUP and Company (Management Consultants), 1973, member, Constituent Assembly, 1977-1978, Minister of Science and Technology, 1979-1982, Minster of Education, 1982-1983 and detained between 1984 and 1985.