… Move to convert 37 Lagos LCDAs to LGs
… To probe N8trn revenue loss from tax incentives, waivers
Twenty-four hours after passing for second reading two bills to review the death penalty law and removal of immunity for the Offices of the Vice President, governors, and deputy governors, the House of Representatives has rescinded decisions on the proposed legislation.
The resolution of the House was disclosed at a plenary session on Thursday by the House Leader, Prof Julius Ihonvbere.
Recall that both bills passed through a second reading stage on Wednesday as part of the 42 proposed legislations considered during plenary.
The Deputy Speaker of the House of Representatives, Benjamin Kalu, who presided over the plenary session in the absence of the Speaker, Tajudeen Abbas, said the decision on the bills is to enable the House to conduct a more robust debate by the lawmakers.
“We want to apologise to the sponsors of the bills, but this action is to enable the House to have a further debate considering the importance of the subject matters,” Kalu said.
Meanwhile, the House of Representatives, on Wednesday, passed for a second reading a bill seeking to recognise the 37 Local Development Area Councils of Lagos State as full-fledged Local Government Areas.
If this proposal scales the legislative hurdle, Lagos, which currently has 20 LGs, will now have 57 LGs, pushing the total number of LGs in the country from 774 to 811.
The 37 Lagos LCDAs were created by President Bola Tinubu when he was the Lagos State governor between 1999 and 2007.
The creation of the LCDAs brought Tinubu into a confrontation with then-President Olusegun Obasanjo, who then seized Lagos State’s federal allocations.
The bill seeking the conversion of the 37 LCDAs to full-fledged LGs was jointly sponsored by the members representing Ikeja Federal Constituency, Lagos State, Abiodun Faleke, and 21 other lawmakers.
The bill seeks to alter the Constitution to “Allow for the accommodation of the 37 Development Area Councils of Lagos State to operate as full-fledged Local Government Areas, to bring the total of 57 numbers of Local Government Areas in Lagos State and that of the Federation to eight hundred and eleven (811) numbers.”
Clause 3 of the proposed bill also seeks to alter the First Schedule – Section 3, Part 1, Item 24 (Lagos State Local Government Areas) “State – Lagos Capital City – Ikeja, Agege, Ajeromi-Ifelodun, Alimosho, Amuwo-Odofin, Apapa, Badagary, Epe, Eti-Osa, Ibeju-Lekki, Ifako-Ajaye, Ikeja, Ikorodu, Kosofe, Lagos Island, Lagos Mainland, Mushin, Ojo, Oshodi-lsolo, Shomolu, Surulere.
The lawmakers proposed in Clause 4 the alteration of the First Schedule – Section 3, Part 1, Item 24 (Lagos State Local Government Areas), “State – Lagos Capital City – Ikeja; Agege, Orile-Agege, Ajeromi, Ifelodun, Alimosho, Agbado, Oke-Odo, Ayobo-Ipaja, Egbe-Idimu, Igando-Ikotun, Mosan-Okunola, Amuwo-Odofin, Oriade, Apapa, Apapa-Iganmu, Badagary, Badagary West, Olorunda, Epe, Eredo, Kosi-Ejinrin, Eti-Osa East, Eu-Osa West, Iru Victoria Island, Ikoyi-Obalande, Ibeju, Lekki, Ifako-Ijaiye, Ojokoro, Ikeja, Ojodu, Onigbongbon, Ikorodu, Ikorodu North, Ikorodu West, Imota, Ijede, Igbogbo-Baiyeku, Kosofe, Ikosi-Isheri, Agboyi-Ketu, Lagos Island West, Lagos Island East, Lagos Mainland, Yaba, Mushin, Odi-Olowo, Ojo, Oto Awori, Iba, Shomolu, Bariga, Oshodi, Ejigbo, Isolo, Surulere, Coker Aguda, Itire-Ikate.”
As provided in the explanatory memorandum, the bill seeks to convert the 37 Development Area Councils of Lagos State to operate as full-fledged Local Government Areas captured in the Constitution of Nigeria, 1999.
Also, the House of Representatives has launched an investigation into the alleged abuse of tax incentives, waivers, and exemptions, which has reportedly cost the Federal Government an estimated N8trn in lost revenue.
The decision followed the adoption of a motion of urgent public importance moved by a member representing Oriade/Obokun Federal Constituency, Osun State, Oluwole Oke, during plenary on Thursday.
The House had initially adopted the motion on July 14, 2023, but Oke’s renewed push suggests that no significant action had been taken on the matter.
Speaking on the motion, Oke noted that taxation of incomes, profits, capital gains, exports, and imports falls exclusively under the Federal Government’s control, with fiscal policies designed to stabilise economic conditions.
He said, “Some of the tools available to monetary and fiscal policy authorities to stimulate economic activities in certain sectors include tax waivers, tax breaks, tax exemptions, and tax incentives. The government grants these incentives to attract investments into specific industries.”
He recalled that successive administrations had issued fiscal policy measures and tax modification orders in line with national economic strategies, with some interventions yielding positive results.
However, the lawmaker lamented that despite the government’s good intentions, tax incentives and waivers had created a “major black hole in the country’s finances,” mainly due to abuses by companies benefiting from the scheme.
Citing available data, Oke revealed that Nigeria loses an estimated N8tn annually due to tax waivers, with N6tn lost to companies that exploit the system and N2tn attributed to mismanaged waivers.
He highlighted specific fiscal items prone to abuse, including capital allowances, investment allowances, pioneer status incentives, free trade zone exemptions, and VAT exemptions.
“These loopholes have significantly impacted Nigeria’s tax-to-GDP ratio, which currently stands at 10.6%—one of the lowest in Africa,” he added.
Oke warned that if urgent steps were not taken to curb the abuse of tax waivers, Nigeria could face a severe fiscal crisis.
He stated, “If this situation persists, Nigeria may not only be on the verge of a fiscal collapse but could suffer a fate similar to Venezuela—where a country with vast resources finds itself in deep economic turmoil, recession, and depression.”
Following deliberations, the House mandated its Committees on Industry, Finance, and Commerce to investigate the issue and submit a report within four weeks for further legislative action.
