Tax is one of the ways successive governments have used in raising funds for government expenses especially in executing projects and programs that are beneficial to the citizens. Value Added Tax (VAT) is among the numerous forms of taxes collected by the government. VAT became a prominent and topical issue among scholars, experts and practitioners following the suit instituted against the Federal Inland Revenue Service (FIRS) by River State Government. The issue has further divided the country along ethnic, primordial, religious and party lines either speaking for or against VAT collection by the Federal Government or State Government. It is against this background that this study seeks to examine the rationale behind the power to raise taxes. The study reveals that there is a constitutional flaw about tax rising, there is also a faceoff between the Federal Government and State Government with regards to who collects Value Added Tax (VAT) in the state. The study further reveals that VAT has made some states to be lazy in terms of exploring other sources of revenue other than waiting for the share from the federal purse. Lastly, if states are allowed to collect VAT and remit the same to the federal government, it will promote true federalism and enthrone financial autonomy to states. The study recommended that the constitutional provision for rising tax should be made clear, the federal mighty should be curtailed by adequate constitutional provisions, the state should be granted financial autonomy especially in the area of raising the taxes. This is to bring about true federalism and to promote good governance among states.
Citation: Asomba, Ifeyinwa and Etalong, Thomas Alama (2021) Federalism and Tax Raising Power in Nigeria: The Issue of Value Added Tax (VAT), Global Journal of Political Science and Administration, Vol.9, No.3, pp.70-80