From Fred Itua, Abuja
The ongoing legal tussle over Value Added Tax (VAT) collection by the Federal Inland Revenue Service (FIRS) between some southern states and the Federal Government may shift to the National Assembly, when the lawmakers resume this week.
A Federal High Court in Port Harcourt, in a recent judgment, held that it was unconstitutional for the FIRS to collect VAT and personal income tax in Rivers State. The court ruled that Rivers State, and not FIRS, was authorised by the Nigerian Constitution to collect personal income tax. This happened as Lagos State House of Assembly also passed into law a bill empowering the state revenue board to collect VAT.
However, the Court of Appeal, Abuja, last Friday, ordered both states to maintain status quo in their VAT laws, pending the resolution of the legal dispute on the matter.
Daily Sun, however, gathered that the Presidency, in collaboration with FIRS, has concluded plans to hurriedly forward a bill to the National Assembly to amend the law and move VAT and other tax-related issues to the Exclusive Legislative List of the constitution. This amendment bill, it was learnt, was to hurriedly give legal teeth to FIRS to maintain the status quo in VAT collection in all states of the federation.
There were, however, fears on how the bill would scale through when the committees on finance in the Senate and House of Representatives are headed by Lagos lawmakers, Solomon Adeola and James Faleke, respectively.
“The move by the Presidency and FIRS to hurriedly send an amendment Bill may run into trouble if they’re unable to secure the needed 2/3 (24 state Houses of Assembly) to give nod to the transfer of VAT to the Exclusive Legislative List,” a source told Daily Sun.
However, Ike Ekweremadu, former deputy senate president, has cautioned the National Assembly against embarking on any legislation over VAT and Stamp Duties collection amid court litigation.
The Anambra lawmaker, in a statement said allowing the litigation to run its full course could be a major step towards strengthening the nation’s federalism.
“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. The ball is now in the court of the judiciary and all we should seek at this juncture is an expedited and courageous adjudication of the lawsuits.”
Ekweremadu recalled that for over a decade, he had been warning the nation against what he termed feeding bottle federalism in which states depend on redistributed resources of other federating units for survival, held that any constitution amendment to transfer VAT collection to the Exclusive Legislative List as reportedly requested by the FIRS, would amount to changing the goal post in the middle of a game.
The lawmaker, who chaired the constitution amendment process in the sixth, seventh, and eighth senate, asserted that since past legislative efforts to get things right had failed or been scuttled, it was natural and imperative to allow the judiciary to play its role in shaping the nation’s federalism.
“I commend governors Nyesom Wike and Babajide Sanwo-Olu as well as Rivers and Lagos Houses of Assembly for their courageous moves. It is by so doing that our constitution or laws can be tested and our federalism strengthened.”
Ekweremadu, whose doctoral thesis is on fiscal federalism, equally advised every state to look inwards to boost its revenues since every part of the country had what it takes to prosper
“The bottomline of the raging tax ‘war’ is that having unwittingly killed industry, having elevated our nation to an oil dependent economy, and consequent upon the collapse of oil price amid other sources of energy, our economy is virtually collapsing, the naira has crashed to an all-time low, and the nation has come to rely more and more on taxes. Inevitably, some states have now begun to question some practices they feel fly in the face of federalism and justice, among them the collection and distribution of VAT and other taxes. VAT is essentially a consumption tax and what states like Rivers and Lagos are saying in essence is that the federal government cannot continue to rob them of taxes paid on goods and services consumed in their states, some with environmental and social consequences that they have to deal with, but only to withhold as well as transfer a large chunk of such revenues to other states.
“The major takeaway from our ailing economy, collapse of the naira, and the VAT and stamp duty imbroglio is that our feeding bottle strand of federalism is no longer sustainable. We must diversify and expand our economy now; and there is no other way than to remake our federalism to enable states to harness and unleash their endowments and comparative advantages.
“Rather than begrudge states like Rivers and Lagos, all federating units should be encouraged and enabled to look inwards to reinvent themselves, boosting their respective competitiveness through improved security, human capital development, industry, and building of egalitarian and cosmopolitan societies to attract more investments and economically viable populations. That is how federations are meant to function,” he said.