SUS ETAPAS PRINCIPALES

72 However, some federal constitutions like that of Nigeria did not really give the federating units much taxing powers as is obtainable in places like the United States where the States enjoy wide taxing powers.

73 governments have very narrow taxing powers under the 1999 Constitution.⁵¹ This situation has forced several States into the habit of introducing arbitrary and unnecessary taxes. In chapter five this issue will be addressed extensively, however, it is suggested that the Constitution should be amended to give the states more taxing powers.

The State Houses of Assembly by the combined effect of Section 4(7) c and Section 7(5) of the Constitution, and the Fourth Schedule to the Constitution,⁵² are empowered to legislate on the taxation for Local Government Councils. The Fourth Schedule to the Constitution contains the main functions of Local Government Councils, and the State House of Assembly by virtue of Section 7(5) of the Constitution⁵³ is the competent authority to legislate on matters concerning local government. Consequently, the State Houses of Assembly can enact laws for the imposition and collection of taxes, fees, or rates by local government in respect of the following matters:

(a) collection of rates, radio, and television licences⁵⁴

(b) licensing fees for bicycles, trucks (other than mechanically propelled trucks), canoes, wheel barrows and carts;⁵⁵

(c) Collection of rates for the use of public facilities like cemeteries,⁵⁶ slaughter houses, markets, motor parks and public conveniences.⁵⁷

(d) Tenement rates⁵⁸

(e) Outdoor advertising⁵⁹ etc.

50Ibid, Section 4(7) c.

51Op cit.

52Op cit.

53Op cit.

54 Item 1(b) of the Fourth Schedule to the Constitution, op cit.

55Ibid, Item 1(d).

56Ibid, Item 1(c).

57Ibid, Item 1(e).

58Ibid, Item 1(j).

59Ibid, Item 1(k)i.

74 Furthermore, by the combined effect of Section 4(7) b and items 9 and 10 of the Concurrent Legislative List of the Constitution,⁶⁰A House of Assembly may, subject to such conditions as it may prescribe, make provisions for the collection of any tax, fee or rate or for the administration of the law providing for such collection by a local government council.⁶¹ Provided that the liability of persons to the tax, fee, or rate, shall be regulated in such a manner as to ensure that such tax, fee or rate is not levied on the same person in respect of the same liability by more than one Local Government Councils.⁶² The implication of this is that, the House of Assembly can delegate the collection of any tax, fee or rate it has powers to impose to the Local Government councils. This is further strengthened by the fact that, it has powers to confer such other functions on Local Government Councils.⁶³

The State Houses of Assembly is the only competent authority to legislate on any matter not included in the exclusive and concurrent legislative list. By the provisions of Section 4(7)a of the Constitution,⁶⁴ the National Assembly cannot legislate on residual matters, only the State Houses of Assembly can legislate on it.⁶⁵ The courts have long settled this issue in AG Ogun State v Aberuagba,⁶⁶ the Supreme Court put the issue beyond doubt, where it stated per Bello JSC as follows:

A careful perusal and proper construction of Section 4 would reveal that the residual legislative powers of government were vested in States. By residual legislative powers within the context of Section 4, is meant what was left after the matters in the

60Op cit..

61Item 9 of the Concurrent legislative list.

62Ibid, Item 10.

63 Item 2(d) of the Fourth Schedule.

64Op cit.

65Fawehinmi v Babangida (2003) 3 NWLR (Pt 824) 623.

66 (2009) 1 TLRN, 82

75 exclusive and concurrent legislative and those matters which the

Constitution expressly empowered the Federation and States to legislate upon had been subtracted from the totality of the inherent and unlimited powers of a sovereign legislature. The federation had no power to make laws on residual matters.⁶⁷

It is obvious, that a State has powers to impose tax on all matters in the Concurrent Legislative List and residual matters. However, the provision of Section 4(5) makes the taxing powers of the State on Concurrent matters subject to the inconsistency rule and doctrine of covering the field. For the inconsistency rule or the doctrine of covering the field to apply, the law made by the National Assembly must have been validly made. That is to say, it must be within the legislative competence of the National Assembly. If the National Assembly makes law on a residual matter, it cannot be said to have been validly made because the National Assembly has no competence to legislate on residual matters. In such circumstance, the law made by the State House of Assembly will stand.

It is doubtful, if the drafters of the Constitution intended to create any concurrent legislative powers on taxation, this is because items 7 and 8 of the Concurrent Legislative List of 1999 Conctitution,⁶⁸ only gave express powers to the National Assembly to delegate collection of taxes to the States, this provision did not give the State Houses of Assembly powers to impose tax on those matters. While item 9 and 10 of the Concurrent Legislative List,⁶⁹ gave express powers to the State Houses of Assembly to delegate collection of taxes to Local Government Councils, without giving any powers to the National Assembly on the same issue. Thus, under

67Particular at 97.

68Op cit.

69ofthe Constitution, op cit.

76 the Concurrent Legislative List, there are no concurrent taxing powers between the National Assembly and States. Item 7 and 8 of the Concurrent Legislative List⁷⁰ should have been sub paragraphs of item 59 and 60 of the Exclusive Legislative List,⁷¹ respectively.

It is instructive to note that the National Assembly is vested with the legislative powers of the Federal Capital Territory, as if, it were one of the States of the Federation.⁷² This implies that the National Assembly has all the powers of a State House of Assembly to impose and collect taxes, in respect of the Federal Capital Territory.

The combined effect of Sections 4(1-4), items 16, 25, 39, 58, 59, 62 and 68 of the Exclusive Legislative List of the Constitution,⁷³ leads to an irresistible conclusion that there is an over concentration of taxing powers on the federal government. Thus, there is need to amend the Constitution to give the States more taxing powers.

In some other jurisdictions that practice a federal system of government, taxing power as noted earlier is distributed between the Central and Federating Units. However, States in some countries have more taxing powers than states in Nigeria, for instance, in the United States of America, Section 10(2) of the United States Constitution grants each state powers to impose tax, duties, and excise on goods circulating inland or within the country.⁷⁴ Similarly, Section 92(2) of the Canadian Constitution vests each of the provinces with power to raise direct taxation within the province.⁷⁵

It is hoped that, Nigeria will adopt the provisions of the United States of America‘s and Canada‘s constitution by amending the constitution to expand the taxing powers of states. It is

70Op cit.

71Op cit.

72Section 299 of the Constitution, op cit.

73Op cit.

74www.archives.gov, accessed on the 10^TH OF October 2014.

75 Constitutional Act ,1982 and includes the United Kingdom Constitutional Act, 1867 www.justice.gc.ca, accessed on the 10^th 0f October, 2014.

77 expedient that the taxing powers of states be expanded, because the major challenge of investors in Nigeria is that they are made to pay similar taxes by State Governments after they have paid Federal taxes. State Governments are in the habit of imposing arbitrary and unnecessary taxes and in some cases unconstitutional taxes. This is because they have very limited taxing powers and they have an uncontrollable urge to generated revenue notwithstanding the impact it will have in our economy. Thus, state taxes are perceived in most cases as double or multiple taxation and impacts negatively on trade and investment in Nigeria. This practice of imposing unnecessary taxes increases the cost of doing business, discourages investment and contributes in no small measure in the rating of Nigeria as one of the worst places to do business in the world.

A more detailed discussion of the impact of State tax laws is in Chapter five of this dissertation.