By Jeph Ajobaju, Chief Copy Editor
Lagos, which generates N500 billion Value Added Tax (VAT) yearly, says it will not back down from its VAT bill as the court fight spearheaded by Rivers has opened its eyes to the unconstitutionality of Abuja collecting consumption tax in any state.
VAT is a consumption tax on goods and services. The current rate is 7.5 per cent.
“Lagos has not got its own fair share of VAT. The state has always been at the forefront of the battle for true federalism.
“The verdict of the court, coming at this time, will strengthen the position of the Lagos State government that Nigeria truly deserves true federalism as one of the pillars of our democracy,” Lagos Information Commissioner Gbenga Omotoso told The PUNCH.
The VAT bill scaled second reading in the state House of Assembly on Monday along with the bill on open grazing.
Assembly Speaker Mudashiru Obasa said the VAT bill “is an opportunity for us to emphasise again on the need for the consideration of true federalism,” adding that it is an opportunity for Lagos to meet funding challenges.
Ekiti and Osun, two of the other five South West states that collectively generate N300 billion VAT yearly, say they are still studying the situation before making their move. Likewise Bayelsa in the South South and Benue in the North Central.
Kogi (North Central) is not considering collecting VAT because it is small.
But Akwa Ibom (South South) and Adamawa (North East) have aligned themselves with Rivers State Governor Nyesom Wike to stop the Federal Inland Revenue Service (FIRS) from collecting VAT for the federal government.
Akwa Ibom House of Assembly said it would soon begin work on a bill that would enable the state to collect VAT.
Adamawa Media and Communications Director General, Solomon Kumangar, told The PUNCH in Yola that the collection of VAT by states is the only way to reduce their dependence on federal allocations.
On August 10, Justice Stephen Pam of Port Harcourt Federal High Court ruled that the Rivers State government has the powers to collect VAT in its territory.
The same court rejected on September 6 an application by the FIRS for a stay execution of the judgment. Pam said granting it would negate the principle of equity.
The FIRS had already appealed the case to the Federal Court of Appeal before the latest ruling of the lower court.
Also on Monday in Lagos, the House of Assembly did the second reading of the bill to empower state to collect VAT in its jurisdiction.
Adamawa – may join court case against FIRS
On Tuesday, Kumangar told The PUNCH that the court judgment is of interest to Adamawa and the state may join Rivers as an interested party in the suit against the FIRS.
He said Adamawa relies on federal allocations as it is overstretched by post-pandemic and post-insurgency recovery demands of rebuilding.
His words: “Anything to extend and improve on our IGR [internally generated revenue] is welcomed. So, we are keen on joining the River State Government should the federal government appeal the judgment, which granted Rivers State the right to collect VAT in its domain.
“Whatever will bring improvement to IGR is a welcome idea for an insurgency ravaged state like Adamawa.
“The truth is that the collection of VAT by the states is the only way to assist states which are heavily dependent on federal allocations to be able to wean themselves [off dependence] and meet their financial obligations to the citizens.
“So, if there are areas where revenues can be exploited and extended, surely the state government will welcome it. Surely it’s a case of interest to us and we would like to be joined.”
Akwa Ibom – begins work on VAT bill soon, targets oil firms
Akwa Ibom State House of Assembly Information Committee Chairman, Aniefiok Akpan, told The PUNCH that the Assembly would start working on the VAT bill as soon as possible.
“We will start working on the bill. I don’t know whether it is going to be an executive bill or the House will initiate it. A member has indicated interest in bringing the bill,” he said.
Governor Udom Emmanuel has expressed disappointment that the state is not collecting VAT from oil companies operating in its domain, home to one of the largest oil and gas reserves in Nigeria.
He expressed his disappointment to Federal Revenue Mobilisation, Allocation and Fiscal Commission (FRMAFC) officials who visited him at work in Uyo.
The team, led by FRMAFC Federal Commissioner Sunday Ayang, is on a sensitisation tour of the state.
Lagos – defends VAT bill
Omotoso told The PUNCH that Lagos would go ahead with its VAT bill, stressing that the court has dismissed the stay of execution application filed by the FIRS.
“The court said granting the FIRS prayer is like murder. They [the FIRS] went to court to say that the court should stay the execution while they appeal the judgment.
“The court’s position is that an appeal is not a stay of execution,” Omotoso insisted.
“I think Lagos has not got its own fair share of VAT. The state has always been at the forefront of the battle for true federalism.
“I think the verdict of the court, coming at this time, will strengthen the position of the Lagos State government that Nigeria truly deserves true federalism as one of the pillars of our democracy.
“This is a consumption tax, there is no point staying action on it.”
The state House of Assembly on September 6 did the first and second reading of the VAT bill and asked its Committee on Finance to report on it on back on September 9.
Below are the takes of some other states as reported by The PUNCH.
Ekiti – awaits legal opinion
Ekiti Finance Commissioner Akintunde Oyebode said the government would take appropriate steps on VAT after receiving legal opinion.
“We are seeking the opinion of the office of the Attorney General and Commissioner for Justice. When the office is done with a comprehensive legal opinion, it will guide our next step. That is where we are now,” he explained.
Benue – holds consultation
Benue Finance Commissioner David Olofu said the 36 states are still holding consultation on VAT collection.
He reiterated that Nigeria Governors’ Forum (NGF) Chairman and Ekiti Governor, Kayode Fayemi, has expressed the view of states on VAT and governors would make their position known after the judicial process has been exhausted.
Osun – awaits Supreme Court ruling
Osun Internal Revenue Service Chairman Gbite Ademikanra said: “Whatever happens to Rivers will affect Osun. What most of us will do is to wait for the Supreme Court’s pronouncement on the issue. Once the Supreme Court makes a pronouncement, it covers all sub-nationals.”
Bayelsa – studies court judgment
Bayelsa Information Commissioner Ayibaina Duba said the government has constituted a team to study the court ruling to understanding its implications for the state and the right action to take afterwards.
“We are trying to study the judgment and its implications for us. When we are done, we will come up with a position,” Duba explained.
Kogi – doesn’t consider VAT collection, because it is insignificantnificantnificantiie
Kogi Finance Commissioner Ashiru Idris said: “We are not considering it [VAT collection] as it is not our priority, because it will not add much to our internally generated revenue.”