Rebalancing Taxing Powers in Nigeria: The Case of Rivers State
EBOH, Agodi Adonis
DOI: 10.67588/0012
Abstract
This article critically investigates the constitutional, statutory, institutional, and fiscal arrangements governing the allocation and exercise of taxing powers in Nigeria, focusing on the position of Rivers State within Nigeria’s federal structure. Following decades of hyper-centralised governance under military administration, Nigeria’s fiscal architecture under the Constitution of the Federal Republic of Nigeria 1999 (as amended) exhibits a fundamental structural asymmetry: subnational State Governments bear extensive socio-economic and infrastructural responsibilities but possess severely circumscribed independent taxing powers. The resulting financial subordination forces States to depend heavily on statutory transfers from the Federation Account, eroding fiscal federalism and subnational democratic accountability. This research examines the legal catalyst provided by the landmark decision of the Federal High Court in Attorney General of Rivers State v Federal Inland Revenue Service, which invalidated federal administration of Value Added Tax (VAT) on intra-state supply of goods and services, affirming the residual tax jurisdiction of States. The article evaluates the landmark judicial precedents governing legislative competence, including AG Ogun State v Aberuagba, AG Lagos State v AG Federation, and AG Lagos State v Eko Hotels Ltd, alongside the four legislative Acts comprising the 2025 tax reform package (the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, the Nigeria Revenue Service Establishment Act 2025, and the Joint Revenue Board of Nigeria Establishment Act 2025). Incorporating a substantive comparative legal analysis of subnational fiscal federalism in South Africa and Canada, the article demonstrates how tax collection agreements, explicit constitutional assignment, and revenue-sharing mechanisms can harmonize central coordination with subnational tax autonomy. The article concludes with concrete constitutional, statutory, and administrative reform proposals designed to rebalance fiscal authority in Nigeria while strengthening the internally generated revenue capacity of Rivers State.
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A. Cases
AG Federation v AG Lagos State (2013) 16 NWLR (Pt 1380) 249.
AG Ogun State v Aberuagba (1985) 1 NWLR (Pt 3) 395.
AG Rivers State v FIRS (2021) 16 NWLR (Pt 1801) 1 (FHC).
Attorney General of Lagos State v Attorney General of the Federation (2003) 12 NWLR (Pt 833) 1.
Attorney General of Lagos State v Eko Hotels Ltd & Anor (2017) 13 NWLR (Pt 1582) 413.
Emmanuel Chukwuka Ukala v Federal Inland Revenue Service (2020) 130 ATR 1 (FHC).
Eko Hotels Ltd v AG Lagos State (2017) 13 NWLR (Pt 1582) 413.
Lakanmi v AG Western State (1971) 1 UILR 201.
B. Legislation and constitutional instruments
Capital Gains Tax Act, Cap C1, Laws of the Federation of Nigeria 2004.
Companies Income Tax Act, Cap C21, Laws of the Federation of Nigeria 2004.
Constitution Act 1867, 30 & 31 Vict, c 3 (Canada).
Constitution of the Federation of Nigeria 1963.
Constitution of the Federal Republic of Nigeria 1999 (as amended).
Constitution of the Republic of South Africa 1996.
Constitution (Suspension and Modification) Decree 1966 (No 52).
Customs and Excise Management Act, Cap C45, Laws of the Federation of Nigeria 2004.
Excise Tax Act, RSC 1985, c E-15 (Canada).
Federal-Provincial Fiscal Arrangements Act, RSC 1985, c F-8 (Canada).
Financial and Fiscal Commission Act 99 of 1997 (South Africa).
Hotel Occupancy and Restaurant Consumption Law of Lagos State 2009.
Joint Revenue Board of Nigeria (Establishment) Act 2025.
Lyttleton Constitution 1954.
Nigeria Revenue Service (Establishment) Act 2025.
Nigeria Tax Act 2025.
Nigeria Tax Administration Act 2025.
Offshore Revenues Decree 1971 (No 9).
Personal Income Tax Act, Cap P8, Laws of the Federation of Nigeria 2004 (as amended by the Personal Income Tax Amendment Act 2011).
Personal Income Tax Decree 1993 (No 104).
Petroleum Industry Act 2021.
Petroleum Profits Tax Act 1959.
Rivers State Hotel Occupancy and Restaurant Consumption Law 2014.
Rivers State Land Use Charge Law 2016.
Rivers State Value Added Tax Law No 4 of 2021.
Revenue Allocation Decree 1970 (No 13).
South African Revenue Service Act 34 of 1997 (South Africa).
Stamp Duties Act, Cap S8, Laws of the Federation of Nigeria 2004.
Taxes and Levies (Approved List for Collection) Act, Cap T2, Laws of the Federation of Nigeria 2004.
Tertiary Education Trust Fund (Establishment) Act 2011.
Unification Decree 1966 (No 34).
Value Added Tax Act, Cap V1, Laws of the Federation of Nigeria 2004 (as amended by the Finance Acts 2019-2023).
Value Added Tax Decree 1993 (No 102).
C. Books and monographs
A A Adegoroye, Military Decrees and the Centralisation of Tax Powers in Nigeria (Malthouse 2005).
I O Agbede, Themes in Nigerian Jurisprudence (MIJ Publishers 2010).
R M Bird, Subnational Taxation in Developing Countries: A Review of the Literature (World Bank Policy Research Working Paper 5450, 2010).
C A J Chinwo, Resource Control and Fiscal Federalism in Nigeria (Renaissance Publishers 2018).
J O Fabunmi, Fiscal Federalism and Subnational Governance in Nigeria (University of Lagos Press 2021).
P W Hogg, Constitutional Law of Canada (5th edn, Carswell 2019).
C O Okonkwo, Analysis of Tax Reforms and Economic Development in Nigeria (Malthouse Press 2024).
S O Olagunju, Fiscal Decentralisation and Regional Development in Nigeria (Spectrum Books 2017).
A G Ogundele, Elements of Nigerian Tax Law (4th edn, WUSA Publishers 2018).
K M Mowoe, Constitutional Law in Nigeria (Malthouse Press 2008).
R A Musgrave, The Theory of Public Finance (McGraw-Hill 1959).
B O Nwabueze, Federalism in Nigeria under the Presidential Constitution (Sweet & Maxwell 1983).
K C Wheare, Federal Government (4th edn, Oxford University Press 1963).
B A Williams, Intergovernmental Fiscal Relations in Colonial and Post-Colonial Nigeria (Oxford University Press 1989).
W E Oates, Fiscal Federalism (Harcourt Brace Jovanovich 1972).
C Murray and R Simeon, Subnational Autonomy in South Africa’s Constitutional Order (Juta 2015).
Uche Val Obi, The Value Added Tax Quandary: Which Way to Go (UUBO Legal Series 2021).
D. Journal articles, reports, policy papers and other publications
Andersen Nigeria, Overview of State Taxing Competence in Nigeria (Tax Alert, 2023).
Central Bank of Nigeria, Annual Economic Report 2024 (CBN 2025).
Chartered Institute of Taxation of Nigeria (CITN), Report on Multiple Taxation in Nigeria (CITN Press 2022).
C A J Chinwo, ‘The Nigerian Tax Reforms Acts 2025: A Critical Appraisal of Subnational Fiscal Autonomy’ (2025) 17 Journal of Tax Law 235.
Goldsmiths Solicitors, The Nigerian VAT Conundrum: Pay You Are Damned, Don’t Pay You Are Damned (Legal Article, 2021).
Human Rights Watch, Petroleum Environmental Degradation in Rivers State (HRW Report 2022).
ICAN, Position Paper on Rivers State VAT Judgment (ICAN Executive Statement, September 2021).
Manufacturers Association of Nigeria (MAN), Survey on Subnational Tax Harassment (MAN 2023).
National Bureau of Statistics, Subnational Internally Generated Revenue Report 2024 (NBS 2025).
National Bureau of Statistics, Subnational Revenue Statistics 2024 (NBS 2025).
I E Nwosu, Local Government Fiscal Autonomy and Statutory Allocation in Nigeria (Fourth Dimension 2020).
Taiwo Oyedele, ‘Presidency Clarifies VAT Derivation Provisions under Tax Reform Bills’ (NAN News, 18 October 2024).
Policy and Legal Advocacy Centre (PLAC), Understanding the Tax Reform Bills 2024 (PLAC Legist, 2024).
PwC Nigeria, Nigerian Tax Reference Guide 2024 (PwC 2024).
Rivers State Board of Internal Revenue, Revenue Performance Report 2024 (RSBIR 2025).
Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Report on Revenue Allocation Formula Review (Abuja 2023).
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