By Jeph Ajobaju, Chief Copy Editor
All the 36 states have combined to sue the federal government to the Supreme Court for failing to remit N176.067 billion stamp duty revenue into their accounts between 2015 and 2020.
The Attorneys General of the states, who filed the lawsuit SC/CV/690/2021, named federal Attorney General and Justice Minister Abubakar Malami as the sole defendant.
States, not Abuja, should collect stamp duty, they argue
Per Vanguard, the states contend that they are constitutionally vested with the authority to administer and collect stamp duties on all transactions by individuals and persons in their territories, not the federal government.
They asked the Supreme Court to determine:
“Whether having regard to the provisions of Section 4(2) of the Stamp Duties Act Cap. S8 of the Laws of the Federation of Nigeria read in conjunction with the provisions of Section 163, items 58 and 59 of the Second Schedule part I and items 7 (a) and (b) of the second Schedule part II and other provisions of the Constitution of the Federal Republic of Nigeria, 1999 (as amended), the defendant (Malami) could claim, retain, distribute or in any other manner deal with the monies or sums collected as stamp duties on individual persons transactions within the respective states of the plaintiffs without reference to, concurrence of, input or agreement of the plaintiffs?
“Whether having regard to the mandatory provisions of Section 4(2) of the Stamp Duties Act Cap. S8 Laws of the Federation of Nigeria (LFN), the plaintiffs (all the state attorneys) are not the sole authority to administer and collect stamp duties on all transactions involving individuals/persons within their respective states?
“Whether or not states are entitled to 85% of all stamp duties collected on electronic money transfer levy, on electronic receipts or electronic transfer for money deposited in deposit money banks and financial institutions, on any type of account to be accounted for and expressed to be received by the person to whom the transfer or deposit is made in the plaintiffs’ respective states.”
What states want from the Supreme Court
The states want the Supreme Court to declare that they are the sole authorities constitutionally entitled to administer and collect stamp duties on all transactions by individuals in their respective states.
They also seek:
“A declaration that the defendant is not entitled to collect, administer, or keep the proceeds of any stamp duties on transactions involving individuals within the respective states of the plaintiffs or any manner interfere with the Plaintiff’s right and authority in the administering the provision of Section 4(2) of the Stamp Duties Act Cap. S8 Laws of the Federation of Nigeria.
“A declaration that the plaintiffs are entitled to all the sums of money collected by the defendant as stamp duties through whatever source or means in their respective states from 2015-2020 and thereafter till the time of the judgment of this honourable court with respect to individual persons’ transactions.
“A declaration that the plaintiffs are entitled to 85% of all stamp duties collected on electronic money transfer levy, on electronic receipts or electronic transfer for money deposited in deposit money banks and financial institutions, on any type of account to be accounted for and expressed to be received by the person to whom the transfer or deposit is made in the plaintiffs’ respective states.
“An order of perpetual injunction restraining the defendant, by himself, privies, agents or any persons by whatever name or howsoever called from appointing anyone for the purpose of collecting Stamp Duties on individual persons’ transactions within the respective states of the plaintiffs henceforth.
“An order of the court directing the defendant to pay over to the Plaintiffs all the sum of monies amounting to One Hundred and Seventy Six Billion, Sixty Seven Million, Four Hundred Thousand Naira (N176,067,400,000) representing ascertained and admitted collected stamp duties on individual persons’ transactions within their respective states for the period of 2015- 2020 and thereafter till the time of the judgment of this honourable court or any other sum as the plaintiffs may be found entitled by the honourable court.”
The apex court has not fixed a date for the matter to be heard.
Vanguard reports the views of Afenifere and other groups and individuals on the collection of stamp duty and Valued Added Tax (VAT) as follows:
Jare Ajayi (Afenifere National Publicity Secretary)
“The rulings by Justice Stephen Dalyop Pam of the Federal High Court, Port Harcourt on August 9 and on September 6 have earned the judiciary in Nigeria an epaulet as an institution that is not only capable of ensuring justice but is actually working on deepening federalism in the country.
“The manner of distributing VAT revenue is patently unfair, unjust and is pitched against the hardworking while rewarding the indolent.
“Lagos State which generates as much as 55 per cent of this revenue receives less than 10 per cent while most states where less than 5 per cent is generated get the same amount that Lagos gets. It is quite distasteful.
“The sum collected by the FIRS is shared among the three tiers of government, with the Federal Government taking 15 per cent, states 50 per cent, local governments 35 per cent.
“From the foregoing, it would be seen that the federal government is taking undeserved larger chunk because when 50 per cent is shared among the 36 states, what each state gets is a paltry sum. Same for 774 local government councils that share 36 per cent.
“We call on the state governments to use the opportunity provided by these landmark judgments to explore other areas that the Constitution empowers them to assert themselves as federalists.
“In other words, they should step up actions that will liberate the states from the stronghold of the federal government that has turned Nigeria into a Unitary State – in contradistinction to the federal spirit prescribes by the Constitution.
“They should be rest assured of Afenifere’s support as they give vent to power devolution and entrenchment of true federalism in Nigeria.
“Areas in which the states need to assert themselves include agriculture, health, education, electricity, physical planning, title registration, registration and production of vehicle number plates and casino licensing, etc, as Lagos State government did in the past.
“To us in Afenifere, the attempt by the federal government to establish so called Farm Estates in all the 109 Senatorial Districts is another way of imposing the rejected cattle colony and RUGA on Nigerians.
“It is also another way of defying the federal spirit of the Constitution as lands are vested in the state governors.
“If the governors granted the lands being asked for, cattle colonies would be established in these estates as revealed in the view expressed by the Executive Secretary of the National Agriculture Land Development Agency (NALDA), Paul Ikonne.
“States should reject this attempt particularly since the farm estates NALDA is using as an excuse to grab lands for the federal government are familiar territory for many states especially in the South West that inherited farm estates from the defunct Regional Government of the late Obafemi Awolowo.
“As for the fear of possible multiple taxation that collection of VAT by states may occasion, we suggest that a roundtable discussion can be held on this thorny aspect.
“Finally, we call on the FIRS to resist the temptation to keep appealing the judgment that empowers states to collect local taxes as such a step is another assault on the federal system that we are supposed to be running.”
Gbenga Owokalade (Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN) President)
“The bulk of the people who make life easy in Lagos, they are not Lagosians. They came from other states. So, maybe it will help us to even distribute the population to the right places.
“So people who have also migrated to Lagos because we think that Lagos is more prosperous, it is a matter of going back to our different states and ensure that we put in place those same methodology that will ensure that our states also become more viable.
“There is no state that is not endowed. What we have created for us as a nation is that we have allowed the easy way out to run our lives and that is where we have found ourselves.
“VAT is basically a sales or consumption issue that is basically supposed to sit with the state but for whatever reason, the federal took it up and was now being shared among all state governments. And to an extent, it has become one of the strongest bases of Gross Domestic Product (GDP) growth in Nigeria.
“It is beyond the fact of winning a court case. It is a function of what is the import of that judgement on the Nigerian nation.
“Several times people have talked about fiscal federalism and all of those things and there have been arguments here and there but the judgement is speaking to the heart of some of these issues.
“Why will you collect resources from an area and that area does not enjoy the bulk of that thing and then you share out?
“Some of these challenges that Nigerians are facing are because some of these things don’t sit properly so before you know it, it becomes controversial.
“If my state is generating such an amount, why should I not be encouraged to hold on to that, to impact well on my state where that resource is being gotten from? Why should I be shortchanged when it comes to defending some of those issues?
“I have also heard people have also said states don’t have the capacity. I think that is the worst argument I have ever heard. Those who practice at the federal level who handle it at FIRS are human beings and they come from states.”
Chinyere Almona (Lagos Chamber of Commerce and Industry (LCCI) Director General)
“The first concern of the Chamber is the confusion that businesses face as to who is in charge of VAT collection.
“This is not healthy for the business environment. Companies may soon be subjected to harassment from the FIRS and the states’ revenue services demanding the same tax.
“Businesses may also be subjected to a cumbersome process by the states that may not already have the required operational and transactional structure to collect VAT.
“Whatever happens, there is a need for more accountability and more judicious use of tax revenues at the federal, state, and local government levels. Also, we need to deploy enhanced technology in tax administration to guarantee proper accountability, monitoring, and evaluation.
“LCCI also expects that the collection agency empowered by the law should assume the responsibility of investing in critical infrastructure that would support a conducive business environment.
“There should be proper accountability and acknowledgment for collected VAT revenues by the states to avoid double tax payment by businesses if at any time in the future the authority to collect VAT returns to the FIRS.
“Companies should not be subjected to unnecessary hurdles and be made to pay the same tax twice by different agencies.”
Benson Enikuomehin (legal practitioner who specialises in legal drafting)
He told The PUNCH:
“Governor Nyesom Wike of Rivers State raised a fundamental issue on Wednesday [September 8].
“He said in some states, liquor consumption is allowed and people take and pay tax on this liquor. There are states in the North where the consumption and sale of liquor are prohibited.
“But when the revenue from VAT is to be shared from liquor, the Northern states come to the table and begin to lick their tongues and ask for the money to be shared.
“Let those who like liquor take the proceeds from it.
“I am sure that before the matter will ultimately end at the Supreme Court, this government may have been out of power. I have respect for the judges at the appellate court. There is a judgment in favour of the Rivers State Government and the state government should enforce it.
“If Lagos State and other states enact laws (on VAT), let the federal government challenge them in court. But while the challenge is going on, the (VAT) law, as it is, will remain until it is set aside, until the court says it is contrary to the Constitution or any other law passed by the National Assembly and until that time, the law so passed by the various states will remain the law of the land.
“The items on the Exclusive Legislative List are too many. I think the federal government should be concerned with currency, things that have to do with relationships with other countries, that is, passport, aviation and citizenship.
“What is the federal government doing with agriculture, water resources and road maintenance and some others like that? There are certain items that should be removed.
“Why should the federal government build prisons in states? The state governments should be able to take care of that. The federal government can handle railways and quarantine.
The military has not done us well; unfortunately, those who have ruled us were military generals. Until we have people who understand what to do, Nigeria will be where it is for a very long time.
“So for restructuring, I don’t see anything happening under this government. This government will never consider it. What [former] President [Goodluck] Jonathan handed over to Buhari is gathering dust; this was what people sat down together to discuss at a national conference.
“The President is looking for grazing routes in 2021. Which routes? From which place to which place? We have not had enough routes for railways and roads but you want to create routes for cows, for individuals who are doing their business.”