By Jeph Ajobaju, Chief Copy Editor
Value Added Tax, a 7.5 per cent consumption tax on goods and services, yielded more than N1 trillion in the first half 2021 (H1 2021) but plans by Federal Inland Revenue Service (FIRS) to collect N2.44 trillion in full year 2022 are on the ropes.
The ruling by a Port Harcourt Federal High Court on August 9 that only Rivers and other states have the constitutional powers to collect VAT and Personal Income Tax (PIT) may scuttle the ambitions of the FIRS, even though it has appealed the ruling.
Unless the Constitution is amended, the FIRS cannot win the argument, even at the Supreme Court.
The PUNCH quotes a document produced by the FIRS in which it projects to collect N2.44 trillion VAT in 2022.
Hurdle of amending the Constitution
The newspaper also reports that the FIRS wrote to the National Assembly on July 1 to amend the Constitution and place VAT and other related items on the Exclusive List controlled by the federal government. But that is still a hurdle.
The Constitution can only be amended with a two-thirds majority each in the Senate and the House of Representatives, as well as two-thirds majority in two-thirds of the 36 state Houses of Assembly. That means 24 states must agree to the amendment.
There are 19 states in the North and 17 in the South.
In the South, agitation for true fiscal federalism has gone on for decades and the court ruling on the VAT has shed more light on the historical injustice of the North being a dogged parasite on the South.
Both Rivers and Lagos are hoisting the same true fiscal federalism in their pursuit of VAT collection. Other Southern states are watching how it all plays out before they make their own moves.
All the 19 Northern state Houses of Assembly may collude (as usual) to amend the Constitution to perpetuate the injustice of them collecting money they neglect to work for, but they are not likely to get support from five Southern states.
And that will crush the plot.
El-Rufai laments grief caused by the North
“The North has always been behind in education, we’ve continuously been the disadvantaged region right from independence even though we’re given preferences, JAMB scores and all that,” Kaduna Governor Nasir el-Rufai said on Channels Television on September 6.
“That has not helped, in fact, it has made our people lazy,” he lamented.
Grief caused by the North is felt and voiced out even by El-Rufai, a Fulani supremacist who panders to Islamist jihadists and is in the Northern elite that keeps the region down.
Legislative action in Rivers, Lagos
The FIRS has appealed the court judgment to the Court of Appeal.
But the same Port Harcourt Federal High Court rejected on September 6 an application by the FIRS for a stay execution of the ruling pending resolution of the appeal. Justice Stephen Pam said granting it would negate the principle of equity.
Rivers Governor Nyesom Wike has signed into law the bill that empowers the state to collect VAT and on Wednesday told representatives of companies at a meeting in Port Harcourt the need for them to obey the law.
Lagos House of Assembly has done the second reading of its own VAT bill and asked its Finance Committee to put the finishing touches and report back to plenary.
Senate Committees express concern
Senate Joint Committees working on the 2022-2024 Medium Term Expenditure and Fiscal Strategy (MTEF) expressed concerns over the development on September 3 but FIRS Chairman Muhammad Nami allayed the fears.
When Joint Committee Chairman Solomon Adeola asked Nami why he did not speak on the court ruling, he said: “I did not deliberately mention the issue because doing so would be subjudice since it is already pending before the Court of Appeal.”
Nami presented revenue projections of the FIRS for 2022, 2023, and 2024.
A document he submitted to the joint panel obtained by The PUNCH shows that the FIRS seeks N2.44 trillion VAT in 2022, N2.67 trillion 2023, and N2.94 trillion 2024.
N2.44 trillion target in 2022
· Non-import VAT – N1.83 trillion
· Nigerian Customs Service (NCS) import VAT – N610.45 billion
N2.67 trillion target in 2023
· Non-import VAT – N2 trillion
· NCS import VAT – N668.31 billion
N2.94 trillion target in 2024
Non-import VAT – N2.2 trillion
NCS import VAT – N668.31 billion
Finance Act 2020
VAT is charged on the supply of goods and services in Nigeria, including those imported, except items exempted in the VAT Act.
The Finance Act 2020, which took effect on February 1, 2020, raised VAT from 5 per cent to 7.5 per cent.
Total VAT collected by the FIRS in the 36 states and the Federal Capital Territory (FCT) is shared among the three tiers of government – federal 15 per cent, states 50 per cent, councils 35 per cent.
