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Tax, Consumption Tax, Value Added Tax, Fiscal Federalism, Nigeria


Nigeria has a long history of legal conflict on fiscal federalism. One dimension borders on who has the power to tax the consumption of goods and services. Although the Nigerian Constitution prescribes how taxing powers are to be exercised between the federal government and the federating units, controversy remains as to the extent of taxing powers exercisable by each tier of government. This is because, apart from the Constitution, a peculiar military-era statute, the “Taxes and Levies Act” prescribes what taxes each tier of government can collect and appears to circumscribe their constitutional taxing powers. The federal government and the states have “fought” legal battles to determine who can tax what, without managing to obtain clarity in court. The continued agitation of some states to assert their taxing autonomy as regards consumption taxes led the federal government to alter the schedule to the above Act in 2015 to accommodate more taxing powers for states. The alteration seemed to ameliorate the long-standing conflict, but also raised concerns of double taxation among businesses. The validity of the alteration was successfully challenged in court by business owners, thereby reigniting the unending debate over whether states can tax consumption in Nigeria. This succinct article contributes to the literature on this aspect of Nigeria’s fiscal federalism debate. It argues that the recent decisions of the court have assuaged the concerns of double taxation, but they have not satisfactorily settled this fundamental issue of fiscal federalism.

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