Tag: VAT

  • Ayade absent as South South govs move to join suit against FG on VAT, launch own security outfit ‘very soon’

    Ayade absent as South South govs move to join suit against FG on VAT, launch own security outfit ‘very soon’

    Governors of the South-South have resolved that states in the region should join the suit filed by the Federal Inland Revenue Service (FIRS) challenging the collection of Value Added Tax (VAT) by states.

    This formed part of the resolutions reached at the meeting of the South-South Governors’ Forum held on Monday at the Government House in Port Harcourt, the Rivers State capital.

    Delta State Governor and Chairman of the forum, Ifeanyi Okowa, disclosed this while briefing reporters at the end of the closed-door meeting.

    While Rivers was initially the only respondent to the suit pending before the Court of Appeal, authorities in Lagos and Oyo states have already filed applications for joinder in the appellate court.

    Meanwhile, the forum deliberated extensively on regional and national issues and resolved to approve the establishment of a regional security outfit to be launched “very soon”.

    The governors appealed to the National Assembly to immediately review and amend sections of the recently enacted Petroleum Industrial Act.

    They explained that the amendment was necessary to give a clear definition of a host community and transfer the power to appoint the trustees to state governments.

    The forum also called on President Muhammadu Buhari to respect the law establishing the Nigeria Delta Development Commission (NDDC) by appointing a substantive board.

    They demanded that the report of the forensic audit of the agency recently submitted to the President be made public.

    On the management of the nation’s economy, the governors called for the relocation of the headquarters of the Nigerian National Petroleum Corporation (NNPC) and head offices of international oil companies to the states in the Niger Delta region.

    According to them, the request has since been made during a dialogue between stakeholders in the geopolitical zone and a Federal Government delegation led by the Chief of Staff to the President, Professor Ibrahim Gambari.

    Those who attended the meeting include the host, Governor Nyesom Wike, Governor Godwin Obaseki of Edo State, Governor Udom Emmanuel of Akwa Ibom State, and Governor Douye Diri of Bayelsa State.

    TheNewsGuru.com reports that Cross River State Governor, Ben Ayade who recently defected from the Peoples Democratic Party (PDP) to the All Progressives Congress (APC) was absent at the meeting.

  • Vat war: Time for mediation – Dele Sobowale

    Vat war: Time for mediation – Dele Sobowale

    By Dele Sobowale

    “The wrong war, at the wrong time and the wrong place.”

    General Omar Bradley, 1893-1981, America’s only five Star General.

    When the Kennedy and Johnson administrations got the USA more deeply involved in the Viet Nam war, General Bradley voiced the minority opinion among the military establishment. He was ignored. America suffered its first military setback then. Billions of dollars and lives – American and Vietnamese were lost before wisdom prevailed. History is replete with examples of wars started by politicians – which would later claim lives and properties.

    “Politics is war by other means…”

    Ask any Nigerian state Governor if he considers the country almost at war. He would probably be shocked that any sane person can ask such a question. He will most certainly deny it. The reaction is quite understandable. Most people think that a war has started when people start shooting. In reality, violent resolution of disputes follow total breakdown of peaceful resolution of the matters.

    The first “shots” were fired by the Southern Governors when they unanimously passed the No-grazing laws, state collection of the Value Added Tax and the demand for power rotation in 2023. An objective observer would read all these declarations as non-negotiable demands. The problem with issuing an ultimatum is that it gives the recipients no choice. They either accept or prepare for battle or issue their own conditions for peaceful co-existence. Unless cooler heads prevail, war follows.

    On September 27, 2021, the Northern Governors Forum, NGF, published their reply to only one of the three southern decisions. It amounted to “forget the Presidency in 2023”. At least that ball has now been sent back to the Southern Governors’ Forum, SGF. Nigerians wait to find out what the response will be. Noticeably, the two sides have discarded their political parties, religion, or ethnicity in this face-off. All Progressives Congress, APC, and Peoples Democratic Party are represented in the two camps. That makes it dangerous. Without realising it, the Governors have defined the war front for us.

    LET US REDUCE TENSION AND FACE OUR REAL THREATS

    “If you don’t intend having a compromise, you don’t negotiate at all.”

    Nelson Mandela, 1918-2013.

    Invariably, when politicians, reacting to the mob – believing that “the voice of the people is the voice of God” – have boxed themselves into tight corners, they need third parties to get them out. Our Governors have locked themselves in; they need mediators to get them and us out. The beauty of negotiated settlements and agreements brokered by third parties lies in the fact that nobody loses face. It is a win-win solution to stalemates. The central aspect of the process is compromise. No party gets everything; no party loses everything.

    VAT appears as the logical place to start the process of working out the series of compromises that could bring us back from the brink of war – which is not in the interest of all Nigerians. Despite the litigation; and perhaps because of it, we can still settle this matter amicably out of court. Let me quickly explain why settlement is better than confrontation.

    Nigeria is getting poorer; not richer. Climate change imperils our future as a nation if the advanced countries accelerate their efforts to reduce the consumption of fossil fuel – especially crude oil and its derivatives. As a nation we already are experiencing a “shrinking piece of cake” for sharing. It might get smaller rapidly. We need all of our collective ingenuity to escape the grinding poverty which will destroy us. We need each other now – more than ever.

    In September this year, the Federal Government, States and Local Governments shared N692 billionfor August. The Nigerian National Petroleum Corporation, NNPC, has already served notice of less contribution for October sharing. In 2014, the three tiers of government shared N720 billion in one month. The official exchange rate in 2014 averaged N250/US$1. So the revenue shared was $2.88 billion. The N692 billion shared last month, at N420/US$ was worth only $1.70 billion. That is our real predicament. The effort being placed on VAT redistribution merely seeks to decide who will cut the cake getting smaller. It won’t increase it.

    Perhaps, if we turn the problem around and look at it from this different angle, we might be able to lower the tension. Contrary to “the voice of the people”, the North is not the sole cause of our economic woes. We are all contributors.

    Furthermore, there is something fundamentally wrong with a proposal which will benefit only three states and impoverish thirty three, the FG, as well as the Federal Capital Territory, FCT. Like it or not, the capital of Nigeria is in Abuja. It still needs a lot of funds to serve us well – as long as we remain one.

    TIME FOR A POLITICAL SOLUTION

    Fortunately, we have had some experience with this sort of revenue sharing dispute before. When former Governor Victor Attah of Akwa Ibom State appeared to have hit a brick wall in his litigation for RESOURCE CONTROL; and militants were getting set to start wrecking oil production facilities in the state, a political solution rescued the country from oil and blood spilling. From there, the 13 per cent derivation principle emerged. It was not ideal; but it saved the situation. The country moved on. We have done it before; with goodwill on all sides we can do it again. Here is how.

    APPOINT 12 WISE AND PATRIOTIC NIGERIANS

    President Buhari should, as a matter of urgency, appoint twelve wise and patriotic Nigerians, preferably not active politicians – one from each zone. They should be given the assignment of mediating the VAT dispute; offer solutions and help to remove VAT from out list of problems creating tension nationwide.We have them. My “Principal Librarian”, Eric Teniola, has been publishing a series on the last of the Super-Permanent Secretaries – Chief Asiodu. I hope our Elder Statesman is still in fairly good health. Somebody like Asiodu would offer great advice which would take into consideration the needs of all Nigerians. “Beggar thy neighbour” cannot be the right solution to dwindling revenue. That might make regional or state sense. It will destroy the country if not amended. With open boundaries everywhere, the fortunate states will soon find themselves invaded by refugees from hunger and malnutrition from those deprived of the little they had before the change. A nation faced with imminent economic collapse cannot afford the luxury of internal warfare. The sooner the major leaders of this confrontation realise this, the better for all of us.

    LAST LINE: As I anticipated in my column a few weeks ago, the Organised Private Sector, OPS has waded into the VAT controversy. Expectedly, Nigeria’s business class are opposed to a change which will force them to be dealing with 38 tax authorities on VAT. Even those who were still trying to crawl when VAT was enacted years ago, can easily see how disruptive the entire thing will be. Cost of doing business will rise – at a time we want them to decline.

    This is surely an ill-wind which will blow nobody anything good.

  • VAT controversy: Appeal Court approves Lagos’ request to join Rivers’ suit against FG

    VAT controversy: Appeal Court approves Lagos’ request to join Rivers’ suit against FG

    The Court of Appeal in Abuja has granted a request by the Lagos State Government, seeking to join Rivers State in the appeal filed by the Federal Inland Revenue Service (FIRS).

    TheNewsGuru.com, TNG reports that the FIRS had filed an appeal at the appellate court to challenge the collection of Value Added Tax (VAT) by states.

    At the resumed hearing of the matter on Thursday, the court granted the request by Lagos and ordered all processes filed to be served on the Attorney-General of the state, Moyosore Onigbanjo.

    The case was later adjourned to October 7 and would be heard at the Appellate Court in Port Harcourt.

    On September 16, the court reserved its ruling on the application after Onigbanjo, a Senior Advocate of Nigeria (SAN), took his application for joinder in the suit.

    He had informed the panel of judges led by Justice Haruna Tsammani that Lagos was entitled to collect VAT, saying the VAT Act was approved by an order of a court, although it had been annulled.

    According to the attorney-general, states that are recognised by the Constitution to collect VAT and the Federal Inland Revenue Service (FIRS) is aware of that fact.

    He added that the principles for joinder of a party, seeking to be joined, must be a necessary party that has shown that its interest, legally and financially, would be affected.

    While Onigbanjo explained that the case of joinder sought was to prevent multiplicity of action, counsel to the Rivers State government and SAN, Ifedayo Adedipe, supported the application by the Lagos State government.

    But counsel to the FIRS and SAN, Mahmoud Magaji, opposed the application for joinder while relying on Section 243 of the Constitution.

    He stated that the Constitution does not support applications for joinder and Lagos State was not a party to the suit at the trial court.

  • VAT war: Oyo approaches court, to join in Rivers’ suit against FG

    VAT war: Oyo approaches court, to join in Rivers’ suit against FG

    The Oyo State Government has asked the Court of Appeal sitting in Port Harcourt, Rivers State, for joinder in the suit instituted by the Rivers State Government against the Attorney-General of the Federation in respect to the bid by the state to take over the collection of the Value Added Tax (VAT) from the Federal Government.

    The suit, instituted by the Attorney-General of Oyo State, Prof. Oyelowo Oyewo, is seeking an order of the Appellate Court to enable Oyo State to join the suit as an interested party.

    This was disclosed in a statement by the Chief Press Secretary to the state Governor, Taiwo Adisa on Wednesday.
    In the suit, the government of Oyo State is seeking two orders, viz: an order of the honourable court joining the Attorney-General of Oyo State as a respondent on the appeal with suit number FHC/PH/CS/149/2020 and appeal number CA/PH/282/2021, and any other order the Court may deem fit.

    According to the Attorney-General of Oyo State, the government of Oyo State was unaware of the suit between the Attorney-General of Rivers State and the Federal Inland Revenue Service at the Federal High Court until the judgement was delivered.

    Other grounds upon which the application was based include that the decision of the appellate court will affect the collection of VAT by the government of Oyo State, being one of the States which the judgement of the lower court recognised as entitled to collect VAT within its territorial jurisdiction.

    The Oyo State Government also indicated that the applicant (Attorney-General of the State) “represents the interest of the Oyo State government, whose interest in the collection of Value Added Tax within Oyo State will be impacted one way or another by any judgment delivered by this Honourable Court in this Appeal.”

    The grounds claimed by the Oyo State government include that: “the Applicant is a necessary party to this suit being a party who will be bound by the judgment of this Honourable Court in this Appeal.

    “The interests of the Applicant and that of the Respondent, in this case, are similar, being States within the Federal Republic of Nigeria.”

    In a 12-paragraph affidavit in support of the motion, which was filed by the Director of Civil Litigation in the chambers of the Hon. Attorney-General and Commissioner for Justice, Ministry of Justice, Oyo State, Olatunji Sunday Thomas, the government of Oyo State said that it is in the interest of justice that the Honourable Court grants the application, adding that the joinder would not prejudice the Appellants/Respondents.

    It stated that the state, being one of the 36 states of Nigeria, will be affected by the decision of the Appellate Court, adding that joining the state to the suit already instituted by Rivers State will help to avoid multiplicity of suits by the states against the Federal Government.

    In a motion on notice also attached to the proceedings already filed before the court, Oyo State said it relied on eight grounds and declared that the state is a necessary party to be joined since it has sufficient interest in the outcome of the appeal.

    The state further argued that after going through its processes, the Appellate Court will find that the application is necessary and that it has sufficient interest in the determination of the appeal as one of the states of the Federation.

    It quoted several legal authorities and concluded thus: “we, therefore, urge the honourable court to resolve the sole issue raised in this application in favour of the applicant and hold that the applicant is a proper, desirable and necessary party to be joined in this appeal.

  • MBJF rubbishes Northern Governors’ rejection of southern presidency, VAT

    MBJF rubbishes Northern Governors’ rejection of southern presidency, VAT

    The Middle Belt Journalists Forum, MBJF, has distanced itself from the Northern Governors Forum’s (NGF) position that the North should again produce the next president of Nigeria in 2023, stressing that it was against the already established understanding of rotational presidency in the country.

    MBJF also picks holes in the rejection by the NGF of the Port Harcourt High Court judgment, which empowers states to collect Value Added Tax from their states, instead of the Federal Inland Revenue Services, FIRS. According to the group, it is sub-judicial for the governors to discuss and even issue a communique on a matter that is still pending in court.

    The forum stressed that rotational presidency which is being canvassed by the Governors from the southern part of the Nigeria, is based on a political understanding that was reached many years ago, and which has fostered national peace, unity and political stability in the country, and so should not be jettisoned at this point by any group for their selfish political gains.

    The MBJF in a statement issued in Abuja on Tuesday and signed by its president, Jonathan Ipaa and National Secretary, Mrs Oikeke Igado-Kure, respectively, urged the governors and people of the Middle-Belt not to support the NGF’s position, which it described as a “selfish, self-serving, dangerous ostrich game that is inimical to national peaceful coexistence and capable of disintegrating the country.”

    “We condemn in strong terms the controversial position of the Northern Governors Forum NGF on the 2023 presidency and the Value Added Tax, which some Governors from the southern part are genuinely clamoring for and so we align ourselves with the Southern Governors’ Forum in their selfless and patriotic demands.

    “We view the Northern Governors Forum’s standpoint on the 2023 presidency as self-serving, unpatriotic, brazenly provocative and dangerously capable of overheating the polity at this point in time.

    “It is also unfortunate and regrettable that the NGF is chaired by Plateau State Governor, Simon Lalong, from the Middle-Belt, who we understand was the only governor from the zone that attended the meeting and who also was mandated to read the Kaduna Communique.

    “While we applaud the conspicuous absence of other Middle-Belt Governors from the Kaduna meeting, we urge Gov Lalong and his fellow Middle-Belt governors to re-strategize, retrace their steps and focus more on how to end the scourge of the foreign Fulani terrorists who have already encircled the entire Middle-Belt for the purpose of launching more daring genocidal attacks against the people obviously for the purpose of taking over their ancestral lands and turning them to IDPs.

    “The Middle-Belt which has over the years been made a sacrificial lamb in the course of Nigeria’s national unity without any commensurate national reward. should not be part of any attempt to cause further bloodshed in the country and further divide Nigeria by selfish politicians.

    “As patriots, we strongly subscribe to an uncompromising standpoint of national unity and cohesion, so the Middle-Belt should not support any agenda by any guise whatsoever. that seeks to deny other ethnic groups and geopolitical zones of the federation their right to occupy the highest office in the country.

    “The MBJF believes that it is of utmost national interest that the Middle-Belt (and all well-meaning Nigerians) should align with the South-West, South-East and South-South geopolitical zones to produce the next president of Nigeria in the interest of fairness, equity, equality, peaceful coexistence and national unity,” the statement said.

  • 2023 : Northern governors reject rotation of presidency, back FG’s on VAT

    2023 : Northern governors reject rotation of presidency, back FG’s on VAT

    Governors of Nigeria’s northern states have rejected the principle of a rotational presidency, saying it is against the constitution of the country.

    The governors also opposed the position of their southern counterparts on value-added tax (VAT).

    They stated this after a meeting of the Northern Governors’ Forum (NGF) on Monday in Kaduna.

    The chairman of the forum, Plateau State Governor Simon Lalong, issued a statement on the outcome of the meeting.

    He said “some Northern States Governors had earlier expressed views for a power-shift to the three geo-political zones in the South with a view to promoting unity and peace in the nation.

    “Notwithstanding their comments, the Forum unanimously condemn the statement by the Southern Governors Forum that the Presidency must go to the South.

    “The statement is quite contradictory with the provision of the Constitution of the Federal Republic of Nigeria (1999) as amended that the elected President shall:- score the majority votes; score at least 25% of the votes cast in 2/3 States of the Federation.

    “In the case of run-up, simple majority wins the election,” the statement said.

    The governors also deliberated on the controversy on the collection of Value Added Tax (VAT) on which Lagos and Rivers States have made laws.

    “As responsible leaders, while we are constraint by the fact that the matter is subjudice, we however for the purposes of educating the public make the following observations:

    “The judgement of the Federal high Court calls to question the constitutionality of VAT, withholding tax, education tax, Niger Delta Development Commission, National Information Technology Development Agency, 13% derivation, National Economic Development Council and many other currently levied and collected by the Federal Government of Nigeria, Federal Inlands Revenue Service.

    “Rivers and Lagos State Governments had enacted their own VAT laws and the Southern Governors Forum have expressed support for this course of action;

    “VAT is being confused by these State Government as a sales tax. If every state enacted its own VAT Law, multiple taxation will result in increases of prices of goods and services and collapsed in interstate trade. VAT is not a production tax like excise, but terminal tax which is paid by the ultimate consumer;

    “Another confusion is ignoring observation above and its ‘overall effect’. The reason Lagos account for our 50% VAT collection is because most of the telecommunication companies, banks, manufacturing and other trading activities have their headquarters in Lagos with the resultant and wrongful attribution of VAT

    “Until and unless the Supreme Court pronounces judgement on the substantive matter between Rivers State and Federal Government, the matter is sub judice and Northern States Governors Forum would respect this,” the statement said.

  • VAT, insecurity top agenda as Northern Governors, traditional rulers meet in Kaduna

    VAT, insecurity top agenda as Northern Governors, traditional rulers meet in Kaduna

    The Northern Governors’ Forum and traditional rulers from the region are holding an emergency meeting in Kaduna State.

    Top on the agenda at the meeting are issues relating to the Value Added Tax (VAT), insecurity and economic problems confronting the region.

    The meeting, which is taking place at the Executive Council Chamber of the Kaduna State Government House, is chaired by the Governor of Plateau State, Simon Lalong.

    Those in attendance include the governors of Katsina, Sokoto, Kaduna, Borno, Nasarawa, Jigawa and Gombe.

    The governors of Niger, Kogi, Benue, Niger, Zamfara and Taraba states are represented by their deputies.

    Also present are the Sultan of Sokoto and the Chairman of Northern Traditional Rulers Council, Abubakar Saad.

    The Shehu of Borno, the Emir of Zazzau, Nuhu Bamali, Estu Nupe, Emir of Kano and other royal fathers are also attending the meeting.

    In his remark, the host governor, Nasir El-Rufai said the northern region is facing severe economic and security challenges that require the convening of the emergency meeting between the governors and traditional rulers.

    According to El-Rufai, the forum will help chart a way forward to deal with these issues.

    While highlighting the agenda for the meeting, the chairman of the forum, Simon Lalong, disclosed that the governors will take a common position on VAT collection and the surrounding controversies.

  • Akwa Ibom joins VAT battle as Lagos insists on fiscal federalism

    Akwa Ibom joins VAT battle as Lagos insists on fiscal federalism

    The Lagos State Government on Thursday said its decision to demand for collection of Value Added Tax (VAT) was all about about fiscal federalism.

    Contrary to concerns of stakeholders, the state government said VAT collection would neither impoverish other states nor would the process be cumbersome.

    Commissioner for Information Strategy Gbenga Omotoso revealed this on Thursday on a programme on TVC monitored by TheNewsGuru.com, TNG.

    “Lagos has a solid case in the ongoing legal dispute as the crux of the disagreement is about equity, justice and fairness.

    “Whichever way it goes, it will also enrich our jurisprudence and enhance the way we see and relate to the law.

    “No matter what, Lagos will always stand for true fiscal federalism,” Omotosho averred.

    The commissioner noted that the volume of air, sea and road transport activities in Lagos puts pressure on the state’s infrastructure.

    He added that additional revenue from VAT would facilitate infrastructure development for faster movement of goods and services, as well as economic growth for the benefit of Lagos and other states since prices will fall.

    On the demand for a special status for Lagos, Omotoso described Lagos as a ‘giant that carries most of the burden of Nigeria on its shoulders and the engine-room of the nation’s financial and business activities.

    “Lagos must be empowered to play this role to the benefit of Nigerians”, he insisted.

    Omotoso noted that other states can partner with Lagos to generate more revenue or resources by taking advantage of its huge population and massive market to sell their agricultural produce and other products, while profits realised therefrom would be repatriated to create more wealth for farmers and other producers in such states.

    According to him, Lagos almost became an orphan following the movement of the Federal Capital Territory to Abuja in 1991, resulting in modest support from the Federal Government.

    He was confident there would be resources for more infrastructure and facilities in transportation, health, education, e.t.c, that will benefit Lagosians and others who troop in every day if the state is allowed to collect VAT.

    Omotoso added that the state will sensitise residents concerning its position on the debate.

    Governor Udom Emmanuel makes case for Akwa Ibom, gives kudos to Wike, Sanwo-Olu

    Meanwhile, the Akwa Ibom State Governor Udom Emmanuel also said states were entitled to collect VAT.

    He spoke on Arise TV News ‘Morning Show’ aired to mark the state’s 34th anniversary.

    According to him, it was wrong for the Federal Government to collect and share revenue from VAT because it is generated from businesses and activities in states.

    TNG reports that the Minister of Finance, Zainab Ahmed, had on Thursday asked all taxpayers to continue remitting VAT to the Federal Inland Revenue Service (FIRS).

    She said in an advertorial: “The ruling of the Court of Appeal employs all taxpayers in all the states to continue to collect VAT on behalf of the government in compliance with the VAT Act.”

    However, Governor Emmanuel explained that despite the huge oil and gas investments in the state, Akwa Ibom receives a paltry N2 billion from VAT.

    He backed his Rivers and Lagos states counterparts, Nyesom Wike and Babajide Sanwo-Olu, both of whom TNG had earlier reported to have signed their VAT bills.

    Emmanuel said: “If my brother state has gone to court, it is the same principle that we stand on. I think we are all in the same bucket, the same basket.

    “All the 36 states do not need to join at the same time. Today my brother in Rivers State has gone far enough.

    “I think the case has gone to the Appeal Court and there is also a stay of execution.

    “Let me allow the rule of law. But for states saying they do not need VAT, maybe they do not know the hidden treasure in VAT.

    “If today I sell a house in Uyo, or any other person sells a property, the value is enhanced because of the good roads, electricity, security and water I have created, and the value I have added to the property. Why should the VAT on the property not come to me 100 per cent?

    “Just look at the money I have spent on capital projects in the first quarter put at N143 billion, if you take 7.5 per cent of that, why should all not come to me?,” the governor asked.

  • FG insists FIRS must collect VAT

    FG insists FIRS must collect VAT

    The Federal Government has said the Federal Inland Revenue Service (FIRS) will continue to collect Value Added Tax (VAT) following the ruling of the Court of Appeal on the matter.

    The Attorney-General of the Federation (AGF) and Minister of Justice, Abubakar Malami made this known in New York while speaking on the disagreement over the collection of VAT between FIRS and Rivers Government.

    The chief law officer of the federation explained that the ruling of the Court of Appeal that FIRS and the Rivers Government maintain status quo, favoured FIRS.

    He said that it was Federal Inland Revenue Service (FIRS) that had been collecting the VAT before the dispute arose, over which the Rivers government approached the High Court.

    “The position of not only the Federal Government but indeed the judiciary is the fact that status quo associated with the collecting of VAT should be maintained,” Malami said.

    “And as far as the judicial system is concerned, the status quo as at the time the parties approached the court, it was the Federal Inland Revenue Service that was indeed collecting the value added tax.

    “So with that in mind, the Federal Government has succeeded in obtaining an order that establishes the sustenance of the status quo, which status quo is that the Federal Inland Revenue Service should continue collection.

    “This is pending the determination of the cases that were instituted by states, particularly the Rivers State Government and the Lagos State government. The cases are being determined by the court.”

    The Rivers government had urged the Supreme Court to set aside the Court of Appeal’s Sept. 10 ruling ordering it and FIRS to maintain status quo on the issue of VAT collection.

    A three-member panel of the Court of Appeal headed by Haruna Tsammani, issued the order being challenged at the Supreme Court by the Rivers government.

    The state also urged the apex court to disband the panel of the appelate court, which gave the interim order and ordered another one to be constituted to hear the case.

    “But one thing of interest is the fact that the Federal Government had indeed taken cognisance of the fact that where there exists a dispute between a State and Federal Government, it is the Supreme Court that should naturally have the jurisdiction to determine the dispute between the state and the federation.

    “And we are taking steps to consider the possibility of instituting an action before the Supreme Court for the purpose of having this matter determined once and for all,’’ Malami said.

  • Why is the OPS staying out of VAT dispute – Dele Sobowale

    Why is the OPS staying out of VAT dispute – Dele Sobowale

    By Dele Sobowale

    The Value Added Tax, VAT, dispute has taken centre-stage in the nation’s political agenda. Rivers and Lagos states have challenged the right of the Federal Internal Revenue Service, FIRS, to collect VAT exclusively. Rivers State dragged the FIRS to a Federal High Court, FHC, in Portharcourt and received a favourable decision in that regard. Other states have since joined the fray. That is most surprising. Only three states – Lagos, Rivers and Ogun readily stand to gain if the FHC’s decision is upheld all the way to the Supreme Court, SC. The wave of euphoria observed in the South is probably premature. In a matter like this, it is the final battle that counts. And, we are still a long way from that.

    Meanwhile, Nigerians, especially the Southern elite, never cease to amaze me. On several occasions such as this, when Southern interest is directly opposed to that of the North, we celebrate our temporary victories only to end up losing the decisive battle. I will urge those dancing in the streets, as well as those dancing naked in the market place, to go and sit down; look at the composition of the SC and tell me if they see a chance for victory there. I hate to spoil their party.

    Furthermore, I am amused that despite the fact that only three states will gain, indigenes of Southern states which will lose revenue are among those getting drunk in the celebration of a victory not yet assured.They include professors, Senior Advocates of Nigeria, columnists and Editors, who, while being half correct,that the principle of true federalism is being upheld,forget that it is the revenue the states will collecteventually that matters. Let any of our erudite elites or SANs go to the Main Market in his state capital and announce to the traders that he has brought good news. “The FHC has upheld fiscal federalism. Henceforth Lagos will receive N120 billion more per annum, but, our state will receive N10 billion less.” It is doubtful if he will leave the scene intact without police escort. True federalism is an abstraction. You cannot ask the people of your state to rejoice that they are going to lose money on account of a court judgment which favoured only three states. How does this decision favour Ebonyi or Ekiti? People should put on their thinking caps!!

    However, that is only a long preamble to the main issue today. There must be something wrong with the leaders of our private sector who behave as if this matter does not concern us. Nobody seems to notice that the struggle for revenue control is only about who will spend it; not if it will not be embezzled as usual. Nothing in that judgment forbids the state governments from appointing “consultants” to collect the tax and pocket half of it; or forbids the Governor from making his mother’s residence the “clearing house” for all contracts. The entire palaver is about whether FIRS or Governors should collect VAT.

    Yet, most of the revenue from which VAT is derived originates from the private sector. We are major stakeholders as individuals and as corporate entities. Noticeably, we were not consulted. The Organised Private Sector, OPS, under the leadership of Chief Ernest Shonekan, Chairman/Managing Director of the UAC of Nigeria, ably supported by Dr Omolayole of Lever Brothers, Chief Eze of John Holt among others, would not have kept quiet for so long. They could foresee trouble from miles away. They would have seen that this matter is setting us back about 30 years. It is going to add significantly to the cost of doing business; increase possibilities of tax avoidance and tax fraud, as well as, make tax audit a nightmare. For Nigerian businesses, tottering on the edge of collapse, this might be the final straw.

    So far, only the Institute of Chartered Accountants, ICAN, has counselled caution on this issue. What might be regarded as a legal victory could end up as the triumph of ignorance over practical fiscal sense. Accountants and the Sales/Marketing people will bear the brunt of the additional work load that this new measure will entail. So, it is only natural that ICAN should speak up first. Other managers in companies better raise their voices before the roof caves in on them. There are reasons for my concern for the private sector. I was a victim of taxes paid to large number of states and Local Governments in the 1970sto 1980s. Let me again repeat the history for our readers.

    There were twelve states in 1974 when I returned to Nigeria. Added to these were Lagos Federal Capital Territory; making thirteen tax authorities. Each had its own Sales Tax law – with which we complied as best as we could. In 1975, seven new states were created; bringing the number of tax authorities to twenty. The accounts department was forced to add fifty per cent more staff – just to cope with the increased workload. Each state reserved the right to send auditors, with or without notice, to audit the company’s accounts.

    In 1987, two more states were created. In addition, the Federal Capital Territory was already functioning. That brought the number of tax authorities to twenty three. In all these, the reader must remember that sales turnover was not increasing on account of states creation; it was the cost of computing and paying tax to them that was going through the roof. The year 1991 was a watershed. Nine more states were created to bring the number to 30. Long term employees in the accounts departments of many firms were working to the point of breakdown in order to keep up with sales tax accounts calculation and payments to be dispatched to 32 destinations.

    As can be expected, there were disputes between states and companies. In some cases, companies closed offices in some states to reduce the burden of preparing taxes; the states were often not in position to know if they were underpaid or not; negotiations occurred invariably favouring the firms and corruption set in.

    It was this unsustainable situation which prompted the search for a new method of generating and collecting sales taxes. Contrary to conventional wisdom, it was not the Federal Government alone which wanted VAT. Virtually, all the stakeholders wanted it. And only God knows what would have happened when on October 1, 1996, General Abacha created six more states – if VAT had not been adopted earlier. Those writing out of ignorance, castigating the FG for wanting to keep the states poor by collecting VAT, were probably not old enough, nor knowledgeable enough to know that the states voluntarily handed the assignment to the FG.

    To me, it is understandable why the states now want to collect VAT. I recollect going to Abuja shortly after the VAT Decree was signed by President Babangida to meet the first Director General. The budget for the next year was N5 billion for the entire country. Mr Zukogi (I hope that is the correct name because I am away from my records) lamented that he had been punished by his enemies. “Nigeria can never generate N5 billion in one year”, he declared. I disagreed. I told him that N20 to N30 billion was a strong possibility. He smiled derisively before saying, “You Americanas think everything is possible”.

    Certainly, there would no controversy over VAT today if all we generate is N30 billion a year. States would have been too eager to leave the FG with the burden of collection. N1.5 trillion is big enough to make everyone avaricious. But, the OPS must step forward now. It is our money they are fighting over. Better to pay one entity than 38. Damn it.

    P.S. Given the sharp division in the polity, it is easy to understand why some of us forget that the current FG, despite its faults, is also our own.

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