The Chartered Institute of Taxation of Nigeria (CITN) has advised the Federal Government to allow all states of the federation to be fiscally independent.
The CITN Registrar, Mr Jayeoba Abayomi, told the News Agency of Nigeria (NAN) in Lagos on Thursday that such move would make the states less dependent on statutory allocations form the federation account.
According to him, the absence of fiscal federalism was the major source of friction between the federal and state governments.
He described fiscal independence as a situation where the federation allows the states to grow on their own.
“States should not rely on federal allocations from the federation account. Whatever they have in their states, they should manage. They are on their own and they can grow at their own pace. ’’
He said that contrary to views expressed by some Nigerians, the new Personal Income Tax Act (PITA) recently assented to by President Goodluck Jonathan did not affect the fiscal independence of the states.
“In the amendment to Section 2a of PITA, the word `imposed’ is now replaced with the word `collect’, meaning that the states do not have the power to impose Income Tax but only to collect.
“Thus, the new Act restricts the powers of the State Internal Revenue and Federal Inland Revenue Service (FIRS) to a collection authority as opposed to the old power to impose. ’’
According to Abayomi, owing to the non-implementation of fiscal federalism states will continue to be subjected to the federal government on matters of taxation.
“They can’t impose tax again. Before now, they could impose tax, but they cannot do that now.
“They are only to collect. Imposition has nothing to do with collection, because what they are just saying is the Federal Government that will be making laws on taxation but they will still be collecting tax in the states.”