The ongoing feud between the states and Federal Government as to who is empowered to collect value added tax (VAT) hit a brick wall on Tuesday as the National Assembly rejected a proposal seeking to shift the collection of VAT from the concurrent to the exclusive legislative list, effectively leaving the decision to the Supreme Court which is hearing the matter.
A Federal High Court had last year ruled that states had the powers to collect VAT. However, the Federal Government opposed the ruling and continued to collect VAT while it projected that it will collect N2.2tn in 2022 through the Federal Inland Revenue Service.
The administration of President Muhammadu Buhari also incorporated VAT collection in its Finance Act 2021 and included it in its 2022 budget, a move that put the government on a collision course with the Southern Governors’ Forum.
Also, the Federal Inland Revenue Service was reported to have lobbied the National Assembly by sending a proposal to the House of Representatives seeking to move VAT collection to the exclusive list. Although the tax agency denied this claim, the National Assembly accepted the proposal and sent it to its constitutional amendment committee.
On Tuesday, the National Assembly, voted on 68 amendments recommended by the Joint Senate and House of Representatives’ Special Ad Hoc Committee on the Review of the 1999 Constitution.
44 senators vote against VAT on exclusive list, 41 in favour
A Bill for an Act to Alter Part I of the Second Schedule to the Constitution of the Federal Republic of Nigeria, 1999 to include Value Added Tax on the exclusive legislative list failed at the upper legislative chamber
A total of 95 senators registered to vote and 85 voted. While 41 voted in favour of VAT being collected exclusively by the Federal Government, 44 voted against it while no one abstained. In the end, the bill failed because it did not meet the minimum 73 votes.
In the House of Representatives, about 209 lawmakers voted to retain VAT on the concurrent list while 91 voted for it to be placed on the exclusive list.
LASG, A’Ibom hail N’Assembly
Reacting to the development, the Lagos State Government, which is a party to the suit before the Supreme Court and has passed a law on VAT collection, said the National Assembly deserves commendation.
The Commissioner for Information, Mr. Gbenga Omotoso, said any decision that would promote federalism should be commended.
He added, “I think the lawmakers have done well. If they have said now that the states have the right to collect VAT, it is good because that has been the question that the judiciary has been asked to answer, and if the Lagos State Government and some other state governments are pushing for this, at the National Assembly it is wisdom.
“It is the right way to go. I think they deserve kudos; they deserve applause because in my own view, it is a ‘no victor, no vanquished’ situation. It is good for democracy. It is a victory for the rule of law. It is a victory for equity, for justice. It is a victory for what is right as against what is not right.”
In a similar vein, the Akwa Ibom State Government said it was in support of any move that would expedite the country’s move towards true federalism.
The Commissioner of Information and Strategy, Ini Ememobong, described the National Assembly act as a move in the right direction.
He said “The state government, like other forward looking private and corporate citizens, is supportive of every attempt to increase the speed of our travel to true federalism. This act by the National Assembly is a march in the right direction. The government of Akwa Ibom State led by Governor Udom Emmanuel has been at the lead of this advocacy and therefore welcomes this development.”
VAT needs further review – Gombe
However, the Gombe State Government, which had previously kicked against states collecting VAT, said on Tuesday that the issue of VAT collection still needed to be reviewed further.
The Commissioner for Information, Julius Ishaya, said the latest development is more complex than a lot of people understand.
Ishaya who made this disclosure to one of our correspondents said, “For us aside from passing it as a law, there will be a need for states to sit down and sort out things.
“For instance VAT is value added tax on goods and services. If you buy airtime, instead of it being done at the organisation’s head office, it is meant for them to separate it to know cards used around the Gombe area and remit the VAT to the state unlike what was obtained in the recent past.
“That is the complicated issue, there is more than meets the eye but it is not a simple thing as people expect. We will increase our productivity and other economic activities to make sure we attract value addition.” he said.
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