September 08, (THEWILL) – Rivers State’s Governor Nyesom Wike has insisted on taking over the collection from the Federal Government the collecting of the Value Added Tax (VAT) in his jurisdiction.
However, Gombe State’s Commissioner for Finance and Economic Development, Muhammad Magaji, wants the Rivers and Lagos governments to reconsider their stance on stopping VAT remission to the common Federation purse for redistribution to the 36 states and Abuja.
Wike spoke on Wednesday while addressing representatives of oil companies and business owners in the state at a stakeholders’ meeting in Port Harcourt, the state capital.
The Federal High Court sitting in Port Harcourt in its August judgement, as per a suit marked FHC/PH/CS/149/2020, held that the Rivers State Government had the powers to collect VAT within its territory.
Several states like Lagos have bought into that judgement and begun to erect legislative and administrative structures to execute the judgement.
The Governor warned the companies and business owners not to remit their VAT to the FIRS but to the Rivers Inland Revenue Service (RIRS).
He said: “I don’t want you to fall prey to the people who think they can use force to take our money.
“If you want to take advantage and say you don’t know who to pay, it is a lie, you know.
“From this September, we will start collecting our VAT.
“We will not look back but seal up the premises of such companies.”
An application by the Federal Inland Revenue Service failed, on Monday, to get the High Court in Port Harcourt, Rivers State, which delivered the judgment to stay its execution.
Justice Stephen Pam threw out the FIRS application on the ground that granting it would negate the principle of equity.
VAT, a consumption tax paid on goods and services, stands at the rate of 7.5 percent in Nigeria.
Speaking at the stakeholders’ meeting on Wednesday televised live, Wike lamented the injustice in the VAT represented in the country.
He said Rivers generated N15 billion in June 2021 but got N4.7 billion from VAT proceeds, while “Kano produced N2.8 billion in June and Kano also got N2.8 billion. Sometimes you don’t want to believe these things exist.
“People say that let heaven not fall but sometimes I believe that heaven should come down so that everybody will rest…. When we do the right thing, heaven is at peace. So, the right thing must be done at all times.”
Complaining about the rhetoric of the tax agency that payers should despite the court ruling and maintain status quo, while continuing to remit VAT to it as usual, Wike said it amounted to bullying.
He warned: ‘I will shut FIRS offices in Rivers if the bullying continues.
“Rivers State is challenging FIRS from collecting VAT in Rivers State. I am not challenging FIRS from collecting VAT in Abuja. Let it be understood. The law says Rivers must collect VAT in the state.
“The Federal Government surreptitiously lobbied to amend the Constitution to place VAT collection under the Exclusive Legislative List.
“We have challenged it and we have no apologies to anybody.
“You don’t bully states like us. FIRS should be very careful. I have the political will to do a lot of things. If they continue to bully us, I will take all their offices in the state.”
Speaking at the opening of the Technical Workshop on Development of the Medium-Term Sector Strategy (MTSS) for the state, Magaji pleaded with Southern governments to be their “brothers’ keepers” in sharing the VAT proceeds.
According to Magaji, only three of the 36 states could survive without support from the Federal Government, and for states to control all its home resources would trip off a dangerous trajectory that would endanger the Federation.
Magaji said: “The VAT issue will have adverse effects not only on Gombe state but almost all the states of the federation. I was part of the discussion a few weeks ago by all commissioners of finance across the country.
“The realisation was that only Lagos, Rivers and probably Delta states would be able to pull through without this VAT being administered centrally, and it is our appeal that we all put sentiments behind and work towards a federation that is one, by being our brothers keepers and ensuring that what is pull together at the centre is distributed to be able to balance resources across the country.
“Don’t forget that the oil producing states collect only 13 percent derivation, so if you say every state will take whatever resources it has, that means we are starting a very dangerous trajectory that will not augur well for the Federation called Nigeria.”
