“VAT is best collected by the centre, so that it doesn’t result in the other VAT — value-added trouble — in multiple taxation; since the VAT concept is both paying tax on goods you buy and charging tax on goods you sell.”

1. First, the Concurrent Legislative List of Nigeria’s 1999 Constitution should not have denied any tier of government the right to levy any form of tax, including personal and corporate income tax, sales tax, etc. Only excise tax collected on imported goods should be exclusive to the FG.
2. If the FG, States, and LGs wish to levy VAT these can be harmonized, levied on all sales occurring within the LG, and then shared according the tax rate that’s legislatively approved by voters in the LG, State and the NASS. This will generate revenues for all tiers of government.

Basically, there is absolutely no need for a bureaucracy within the FIRS to be charged with collecting VAT, which can best be done locally where sales transaction occur. The important thing is to work out efficient mechanisms to collect and disburse the harmonized VAT among tiers of government.

In many cases, businesses operating within the LG will be mandated to add the harmonized VAT to every goods sold, and remit same to a consolidated government VAT account. For businesses that use POS, these can be automatically configured to add the harmonized VAT. For sales that pass through the payments system, the appropriate tax rate can be automatically withdrawn and remitted to the consolidated government VAT account from which they’re disbursed to the appropriate LG, State or FG VAT accounts, etc.