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Lagos Govt. turns down Northern states’ VAT appeal, pushes for collection 

By Monsurudeen Olowoopejo

The Lagos State Government has turned down appeals from northern states governments that it reconsider stance on Value Added Tax (VAT) collection, and has intensified plans to execute judgement granting states power to collect VAT, saying no booby trap will affect the tax collection.

It argued that the VAT law inexistence was no longer applicable across the country considering the implication and the unjust revenue allocation pattern adopted by the Federal Government.

The State Attorney-General and Commissioner for Justice, Moyosere Onigbanjo, indicated the state stance after some of their northern states counterpart appealed that Lagos and Rivers State reconsider their stance on the VAT collection.

Onigbanjo, on Wednesday, during a public hearing at the State House of Assembly on ‘A Bill for a law to impose and charge VAT on certain goods and services provided for the administration of the tax and other related matters’, stressed that the government was poised to execute judgement delivered by the Federal High Court in Rivers.

Onigbanjo, while was responding to a representative of civil society organizations, Adeola Samuel, who cautioned the State Government over the execution of the judgment in favour of Rivers State, said, “The judgement on VAT law is not valid only in Rivers State. Any state in Nigeria stands to benefit. Your statement is not correct on the position of the law.

“The National Assembly does not have power on VAT, that is what brings us where we are today. The position as it is today, concerning the VAT law, is no longer applicable in Nigeria. I respectfully disagree with your position sir,” the Commissioner for Justice added.

Earlier, Samuel had argued that the execution of the judgement by the Lagos State Government was a booby trap that could make it failed in its implementation process within the state.

According to him, “There is a booby trap except if Lagos wants to overlook it. The doctrine of covering the field will have to be applied. If the law is passed as it is, there will be a lot of litigations.”

The activist cited a judgement where it was declared that an individual or organization cannot benefit from a judgement that one is not part of during proceedings.

While addressing newsmen shortly after the hearing, the Chairman of the House Committee on Finance, Rotimi Olowo said, “it will make no sense if all money accruable to us in Lagos State is taken by the Federal Government. Lagos is working hard and we are sweating but getting less.”

He argued that there was pressure on the State Government to provide infrastructure and that the proposed law on VAT would bring about a holistic development across Lagos.

A Federal High Court in Rivers State presided over by Justice Stephen Dalyop Pam, had issued an order of perpetual injunction restraining the Federal Inland Revenue Service (FIRS) and the Attorney General of the federation, both first and second defendants in the suit, from collecting, demanding, threatening and intimidating residents of Rivers State to pay to FIRS, personnel income tax and Value Added Tax.

Justice Pam made the assertion while delivering judgement in Suit No. FHC/PH/CS/149/2020, filed by the Attorney General for Rivers State (plaintiff), against the Federal Inland Revenue Service (first defendant) and the Attorney General of the Federation (second defendant).

The Court, which granted all the eleven reliefs sought by the Rivers State Government, stated that there is no constitutional basis for the FIRS to demand and collect VAT, Withholding Tax, Education Tax and Technology levy in Rivers State or any other State of the Federation, being that the constitutional powers and competence of the Federal Government is limited to taxation of incomes, profits and capital gains which does not include VAT or any other species of sales, or levy other than those specifically mentioned in items 58 and 59 of the Exclusive Legislative List of the Constitution.

The judge dismissed the preliminary objections filed by the defendants that the Court lacks jurisdiction to hear the suit and that the case should be transferred to the Court of Appeal for interpretation.

Justice Pam, who also dismissed the objection raised by the defendants that the National Assembly ought to have been made a party in the suit, declared that the issues of taxes raised by the State government are issues of law that the court is constitutionally empowered to entertain.

He declared that after a diligent review of the issues raised by both the plaintiff and the defendants, the plaintiff has proven beyond doubt that it is entitled to all the eleven reliefs it sought in the suit.

The court agreed with the Rivers State Government that it is the State and not FIRS that is constitutionally entitled to impose taxes enforceable or collectable in its territory of the nature of consumption or sales tax, VAT, education and other taxes or levies, other than the taxes and duties specifically reserved for the Federal Government by items 58 and 59 of Part 1 of the Second Schedule of the 1999 constitution as amended.

 

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