The National Union of Local Government Employees has said that the 744 local government councils should collect the Value Added Tax and not the Federal Inland Revenue Service or state governments.
The NULGE President, Akeem Olatunji, who stated this in an interview with one of our correspondents on Sunday, said VAT collection would impact the communities and people more positively if collected by the third tier of government, The Publisher Nigeria learnt.
Olatunji stated this just as the Chairman of the Borno State Internal Revenue Service, Mohammed Alkali, said that not all states in the South could be self-sustaining as far as internally generated revenues were concerned.
He, however, stated that Borno State would boost its IGR if the courts give states the go-ahead to collect VAT.
On his part, Olatunji argued that VAT collection should be the responsibility of the local councils “since both companies and consumers reside within the LG areas.”
Justice Stephen Pam of the Federal High Court in Port Harcourt, the Rivers State capital, had on August 10, 2021, ruled that the Rivers State Government and not the FIRS should be collecting VAT and Personal Income Tax in the state.
Last Monday, the court also dismissed the FIRS application for a stay of execution, noting that the earlier order remained valid until set aside by a higher court of competent jurisdiction.
But a three-man panel of the Court of Appeal, on Friday, asked the parties to to maintain the status quo.
Justice Haruna Tsammani, who delivered the ruling of the appellate court, ordered that the “the status quo ante bellum” be preserved and adjourned the matter till Thursday, September 16, 2021 to enable the parties to file their response to the application filed by the Lagos State Government to join the suit.
Rivers and Lagos states have already enacted their VAT laws, while more states, including Ogun and Akwa Ibom, said they were ready to enact laws that would enable them to collect the tax in their states.
Some other states such as Edo, Ondo, Oyo and Taraba said they were still studying the ruling of the Federal High Court in Port Harcourt on the matter, while Delta State said it was consulting before it would take a position on the issue.
But responding to questions on the VAT controversy via SMS, Olatunji said, “We support the collection by the LGs since both companies and consumers reside within the LG areas for positive impact directly on the people and communities.”
But the Chairman of the BSIRS, Alkali, stated in an interview with The PUNCH, “If the court decides to give the states the liberty to collect VAT, we in Borno will gladly do so. But bear in mind, not all states in the South-South, South-West and the South-East can generate enough revenues to sustain themselves.
“Borno is doing relatively well in terms of internal revenue generation, which was enhanced by the implementation of the Harmonised Revenue Law in January 2021, compared to many states in the South. We commenced the collection of taxes in the state in January and the outcome is impressive. Remember, Borno borders three countries and people from these countries come into the state to do business; so, we are on the right track as far as revenue generation is concerned.
“I feel strongly that states will be far better off with the FIRS collecting the tax and keeping it in the harmonised Federation Account pool.”
We won’t oppose Lagos, Rivers, says Osun
On his part, the Osun State Attorney-General, Femi Akande, in a chat with one of our correspondents on Sunday, said whatever decision the state would take, it would not oppose Rivers and Lagos states.
“As a state, we have not made a collective decision whether to join or not. The decision, as you are aware, is not solely mine. But, certainly, it won’t be against Rivers and Lagos. At the appropriate time, our decision will be communicated to the press,” he stated.
A’Court order: We’ll go ahead with VAT implementation, says Lagos
The Lagos State Government, on Sunday, said it would go ahead with the implementation of its VAT law in spite of an order of the Court of Appeal that the parties should maintain the status quo.
It said it would continue with the implementation of the Value Added Tax Bill signed by Governor Babajide Sanwo-Olu on Friday.
On Friday, the Lagos State Government approached the Court of Appeal in Abuja to be joined in a suit filed by the Federal Inland Revenue Service to set aside the judgment of the Rivers State High Court, which granted power to the state to collect VAT.
The state Commissioner for Information and Strategy, Mr Gbenga Omotoso, however, said on Sunday that the state would continue the implementation of the VAT law pending when the court joins it in the suit.
“The Lagos State Government has asked to be joined in the matter that is in court. Until the court joins the state government, the process that we have embarked on will go ahead,” he stated.
But the Kano State Government said it was studying the situation before it would make a decision whether to support the FIRS or not.
The state Commissioner for Information, Malam Muhammad Garba, stated this in a telephone interview with The PUNCH in Kano on Sunday.
“Kano has not yet decided on whether to support the FIRS on the collection of VAT or the states as we are still studying the situation and we shall make our position known very soon,” the commissioner stated.
On its part, the Ebonyi State House of Assembly said it would consider issues around the VAT law that Rivers and Lagos states had passed.
The Chairman, Ebonyi State House of Assembly Committee on Information, Okechukwu Ali, stated in a telephone interview with one of our correspondents in Abakaliki on Sunday that the Assembly would look into the issues around VAT as championed by Rivers, Lagos and other states when it returned from recess.
“We are currently on recess. But we will look into the VAT issue when we are back from recess,” Ali stated.
Shun VAT controversy, Ekweremadu tells N’Assembly
Meanwhile, as members of the National Assembly prepare to resume on Tuesday after a two-month holiday, a former Deputy President of the Senate, Ike Ekweremadu, has advised his colleagues not to pass any legislation over the collection of VAT and Stamp Duties.
Both are currently subjects of legal tussles between some states and the Federal Government.
Ekweremadu gave the advice on Sunday in a statement by his Media Adviser, Uche Anichukwu, titled, ‘Feeding bottle federalism: Allow VAT legal battle run full course – Ekweremadu’.
The ranking senator also demanded an expeditious hearing of the VAT and stamp duties’ suits currently pending in the courts.
The FIRS had in a desperate bid to retain the sole right to the collection of VAT written to the National Assembly in July seeking the inclusion of VAT collection in the exclusive legislative list.
Ekweremadu recalled that he had for over a decade been warning the nation against what he termed “feeding bottle federalism.”
He said, “In April 2012, I delivered a lecture at the Osgoode Hall Law School, York University, Canada, titled ‘Nigerian Federalism: A case for a review’.
“On the occasion, I forewarned that Nigeria would surely run into stormy economic weather unless we reinvented our federalism, steering the country away from a military-imposed ‘feeding bottle federalism’ to one predicated on self-reliance, hard work, enterprise and resourcefulness.
“I think we should allow the Constitution and the laws of our land to be tested in the courts of law. It is untidy for the Presidency or its agency to come through the backdoor to seek legislative intervention in its favour on the same matter; that is prejudice.”