VAT-by-states-a-joke comment: Masari under fire, Akeredolu says FIRS planned amendment dead on arrival

Solomon Odeniyi and Deborah Tolu-Kolawole, Dennis Naku, James Abraham, Peter Dada and Raphael Ede

20 September 2021

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The Katsina State Governor, Aminu Masari, was on Sunday heavily criticised for dismissing moves by Lagos and Rivers states to start collecting the Value Added Tax directly.

Groups, including the Pan Niger Delta Forum, the Ohanaeze Ndigbo and civil rights groups, in separate interviews with The PUNCH, berated Masari over his comment on VAT.

They stated this as the Ondo State Governor and Chairman of the Southern Nigeria Governors’ Forum,  Mr Rotimi Akeredolu, on Sunday stated that the move by the Federal Inland Revenue Service to amend the VAT law would not succeed.

The  Federal High Court sitting in Port Harcourt had last month held that Rivers State had the constitutional right to collect VAT within its territory.

But the Court of Appeal  in its ruling on the appeal filed by the FIRS on September 10 ordered a stay of execution of the judgment of the Federal High Court.

On the same day, the Lagos State Government,  which had also made its own VAT law, asked the appeal court to join it as co-defendants in the appeal filed by the FIRS.

Besides Lagos and Rivers states, Ogun State is in the process of making its own VAT law.

Describing the moves as a joke, Masari, in an interview, stated, “VAT serves them and us. We provide the bulk of the market because without the rest of the states, what is Lagos or Rivers?

Free money has made states lazy, PANDEF replies Masari

But in its reaction, PANDEF described comments by  Masari  as irresponsible.

The National Publicity Secretary of PANDEF, Ken Robinson stated this while speaking to one of our correspondents.

Robinson wondered if Masari was also concerned with the business hazards that took place in Lagos and Rivers which he mentioned.

“Did he (Masari) consider the  businesses that take place and the business hazards in Lagos and Rivers that had chaotic traffic and the weight on the social amenities in these states?

“Did he not consider that because of the number of people in these states, there is also a burden on the states to meet the social needs of the people, to meet security needs of the people.

“The truth is that because Nigeria for long has been operating a faulty system, they are used to this faulty system and they are finding it difficult to come to reality that it cannot continue like this forever,” the PANDEF spokesman said.

While stating that PANDEF completely backed states collection of VAT, he stated that “For us the only compromise is to say that the derivation is presently 20 per cent. It should move up to at least 50 per cent.

“A situation where some states generate very little and get billions of naira every month from other states, while the states that are generating so much get reduced sum makes no sense at all.”

“They share our oil money. They take 80 per cent of our oil and give us 13 per cent. They also collect VAT and share it the same way.

“And because of this free money, states have become lazy. They have failed to look internally to generate revenue.”

On its part, the  Middle Belt Forum  lauded moves by some states to collect VAT.

The National President of the Forum,Dr Bitrus Pogu  who described the development as part of the much- talked-about restructuring, added that resorting to  ethnic sentiment would not stop the clamour  for Nigeria’s restructuring.

Describing Masari’s statement as “frivolous,” the Middle Belt President, in an interview with The PUNCH, said,  “With what Rivers, Lagos  and other states are doing about the issue of VAT collection, I believe that  our laws are being challenged and the result will make Nigeria better. The restructuring process in Nigeria is already ongoing and for the Governor (Masari ) to make such a statement, it is obvious  he did not take into consideration the fact that the citizenship and indigenship question in Nigeria has not been resolved. If the governor is talking about citizens of Nigeria versus indigenes of a particular place, then he needs to get clarification on those issues.

“As far as we are concerned, true federalism is taking shape. When Kano is destroying alcohol, didn’t they know that  VAT is also coming through alcohol sales? These are some of the issues that have to be addressed.”

Fiscal federalism must eventually come, Ohanaeze replies Masari

Ohanaeze Ndigbo, the Igbo apex socio-cultural organization,  expressed  its support for plans by  states to collect VAT.

The spokesman for  the apex Igbo body, Chief Alex Ogbonnia, who spoke to one of our correspondents,  said that Nigeria’s federal system made states lazy.

He said it would be difficult to determine whether northerners were more in the South than southerners in the North. .

“I am sure that people move to find means of livelihood here and there. From Benue, Sokoto, Maiduguri and so on, you will find a lot of Igbo, Yoruba and a lot of people from the North. So no person can claim that they have more of their people down here.

“Secondly, what we are doing now on the VAT, we are on the way to true federalism. We are on the way to true federalism which will eventually come whether we escape it, whether we postpone it.”

“Ohanaeze Ndigbo is in favour of what we call fiscal federalism, that is, that the state should have authority over its revenue and expenditure profile and pay royalty to the centre.”

VAT about true federalism, Lagos tells Masari

The Lagos State Government of Sunday said it would not take issue with the Kastina State governor on VAT.

The Lagos State Commissioner for Information and Strategy, Mr Gbenga Omotoso, in an interview with one of our correspondents, said, “Governor Masari’s is entitled to his opinion and we must respect that because that is the beauty of democracy.

“His Excellency, Governor Masari can say what he feels about the VAT debate, but as far as we are concerned in Lagos, the VAT matter is about true federalism, rule of law and a test of integrity for our democracy.”

VAT: FIRS’ seeking amendment at NASS won’t succeed, says Akeredolu

Meanwhile,  Akeredolu has said the move by the FIRS to go to the National Assembly on the issue of VAT would not yield any positive result.

Akeredolu, who spoke on an Arise TV programme monitored , on Sunday, said It was unconstitutional for the Federal Government to be sharing  VAT.

According to him, the law does not give power to the Federal Government to collect VAT and share to the states, arguing that  VAT should be under the state.

“The move by the FIRS to go to the National Assembly means we are on course and that something was wrong from the beginning. It is constitutional amendment they are pursuing and I can bet with you, it is dead on arrival because more states will support us to kill such amendment in the state assemblies.

The governor insisted that if the federal government was to collect VAT for states, it can only get percentage which the federal government can decide to share at the FAAC.

“You can only collect VAT on behalf of the states and hand their money over to them. You can only take percentage there for helping us to collect the money,” he declared.

The International Coordinator, Advocate for People’s Rights and Justice, Victor Giwa, said VAT collected from people residing in states was meant to be used to maintain facilities in the states and not meant to be shared with other states.

He said, “The whole idea of VAT is to allow people living in a state to reciprocate the services being enjoyed which in turn should be used to maintain facilities in such state. It is not meant to be shared among other states.

“What Masari said is because of the laziness on the part of state governors. What Masari needs to do at this moment is to look inward and see how to harness the resources of the state to become self-sufficient.

“That is why you see that many Nigerians are looking towards the Federal Government and not looking at the governors when even the governors are looking at the Federal Government and that is why there is no development in the states. What he said is out of place. “

The Convener, Centre for Liberty, Dare Ariyo-Atoye, also said VAT collection by states would encourage hard work among governors.

He said, “Saying that states should collect VAT is to encourage hard work. How will some states be working hard to sustain other states? It does not make sense.

“Governor Masari is even wrong for saying something like that. Let every state buckle up and work hard.”

In a related development, the Institute of Directors said VAT should be paid at source.

The President of the Institute, Dr Ije Jidenma stated this in Port Harcourt  Rivers State after its Annual General Meeting and valedictory speech report by the Chairman Port Harcourt Zone, Chidi Okoroh.

“VAT  is very important, IOD is an interested party  and  with the controversies ongoing, we expect meetings through webinars to discuss  ideas  and reach a consensus on  the way to go.

 “A Past President of the Institute and tax expert, Mr Emmanuel Ijewere, the Chairman Modified Value Added Tax Commission that birthed VAT , has said that much .

“It makes  general sense that where you get the goods and services, you pay VAT to that source. It is something we can eventually iron out by the time we get to the table and discuss. However, the case is now in court and is sub judice,” the IoD President stated.”

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