The Federal Government has said the Federal Inland Revenue Service (FIRS) would continue to collect Value Added Tax (VAT) following the ruling of the Court of Appeal on the matter.
FIRS had been locked in a legal tussle over VAT collection with Rivers and Lagos states governments after they enacted laws decentralising the collection of the consumption tax.
However, some states had also rallied in support of FIRS, kicking against the proposed disruption.
But the Attorney-General of the Federation (AGF) and Minister of Justice, Abubakar Malami, told the News Agency of Nigeria (NAN) in New York on Wednesday that the ruling of the Court of Appeal that FIRS and the Rivers Government maintain status quo favoured FIRS.
He said it was 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. 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.”
Rivers government had urged the Supreme Court to set aside the Court of Appeal’s September 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 appellate 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.
However, Governor of Akwa Ibom State, Udom Emmanuel, has said the decentralisation of VAT collection would favour every state in the country.
Speaking during a programme on Arise TV, he said opponents of the decentralisation of VAT collection cannot envision the hidden treasure it would bring.
“If my brother states have gone to court, we are all one and in the same basket. All the 36 states will not need to join at the same time. As of today, my brother in Rivers has gone far enough. I don’t rush to sign that into law. For now, let me allow the rule of law. Let’s allow the rule of law to take its course. Some states saying that this is not needed is probably because people don’t see the hidden treasure in VAT. There are so many things, and we’ve discussed this at so many fora.
“For example, If I sell a house in Uyo, and the value of the property is enhanced because of good roads, electricity and security that’s been provided by the state government and when VAT is taken out of that property, why shouldn’t that tax 100% come to me? Why should I take it to go and share?
“It’s the same thing everywhere, so those who are saying that VAT cannot favour everyone; it will favour every single state in this country. There’s no exclusion at all. Because it’s a consumption tax, and whenever there are human beings, there must be activities. And where there is activity, there must be consumption, and where there is consumption, VAT follows, which will lead to revenue.”