The minority caucus in the Senate has thrown its weight behind moves by Lagos and Rivers states to commence the collection of their Value Added Tax.
This is as the dispute between the Federal Inland Revenue Service and some states over the collection of Value Added Tax seems to be taking a new turn by the day as two more states, Ogun and Akwa Ibom, say they are ready to enact laws that will enable them to collect the tax in their states.
The leader of the caucus, Senator Enyinnaya Abaribe, in an interview on Friday described the moves by the two states as a good development. Abaribe spoke as a ranking senator.
George Sekibo, who is the Chairman of the Senate Committee on Navy, said southern senators would oppose FIRS’ request for an amendment to the constitution.
The FIRS in a desperate bid to retain the collection of VAT across the country had written to the National Assembly to seek the inclusion of VAT collection in the exclusive legislative list. It also requested the federal lawmakers to approve for it the establishment of the Federal Revenue Court of Nigeria.
Nesmen on Wednesday obtained the letter, signed by the Executive Chairman of the FIRS, Muhammad Nami, and dated July 1, 2021. The letter, with reference number FIRS/EC/CWREP/0416/21/037, was addressed to the Chairman of the Constitution Review Committee, who is also the Deputy Speaker of the House of Representatives, Idris Wase.
But the Minority Leader insisted that there should be no controversy over the issue because no law empowered the FIRS to collect VAT in Nigeria.
Abaribe said, “There should not be any controversy. Rivers and Lagos states are right. VAT collection by FIRS is not in the constitution. Also, it affirms fiscal federalism which Nigerians have been clamouring for.
“Let states now put on their thinking cap and be creative in enhancing their revenue bases. It’s a good development.”
Speaking further, Sekibo argued that the FIRS was going against the constitution and that its action would be null and void.
He said, “I know we are amending the constitution now, I dare the committee to bring it to the floor of the Senate, it will die because they will not get the required two-thirds to pass it.
“Even if they manage to get it at the National Assembly level, they will not get it at the state level and if we don’t support it in southern Nigeria, the FIRS proposal will die.”
Sekibo wondered why northern states could not collect tax on their cattle instead of depending on VAT realised from the sale of alcohol when they see the product as taboo.
“Every state specialises in different types of trade. In the North, there is nothing wrong if we can regulate the sale of cows and collect VAT on that and then use the proceeds to provide basic amenities for the people,” he argued.
He added, “The Federal Government has no business collecting VAT because it is not in the constitution (for them to do so). The issue of taxation is in the concurrent list and not on the exclusive legislative list.
“Most of the VAT payment comes from the sale of alcohol. In Rivers, for instance, VAT on alcohol is heavy. In Rivers and most of the southern states, people consume alcohol. You cannot generate VAT proceeds from alcohol and share it with people who even by their own religion condemn alcohol consumption.
“By collecting part of the proceeds from alcohol, are they not indirectly drinking alcohol? My thinking is that you abhor it, you don’t like it. You should not use money from it as well. It is a logical argument. The stand of Rivers and Lagos states on it is good for this country.”
Another ranking senator, and a strong member of the Senate minority caucus who spoke on condition of anonymity, berated the FIRS for writing to the National Assembly on the issue.
The lawmaker, who is also a member of the Constitution Review Committee of the Senate, promised to mobilise his colleagues to reject the request of the tax agency.
The senator said, “That letter, I can assure you, is dead on arrival. How can FIRS write the National Assembly on a matter that is pending before the court?
“It is our tradition in the National Assembly not to legislate on any issue that is pending before a court of law. So, the FIRS’ request is dead. We will resist its inclusion in the ongoing amendment to the constitution.
“This is a new development. We urge the judiciary to live up to its expectations because we are already achieving true federalism, which we have been preaching all these years.”
Attempts to get the position of the majority caucus in the senate failed as several calls put across to the Senate Leader, Senator Yahaya Abdullahi, were not answered. The Kebbi North senator had yet to reply to the text message sent to his mobile at the time of filing this report.
Similarly, some senators from the three northern geopolitical zones, who were contacted by one of our correspondents, declined comments on the issue.
The senators, who spoke on condition of anonymity, maintained that since the case was pending before a court of competent jurisdiction, discussing it on the pages of the newspapers would be subjudice.
A senator from the North-East however told newsmen, “I don’t believe we should share income from tax generated by the Federal Government. I believe it should be a sovereign fund so that it could be used for the federation and not be shared among the states.
“Every state should generate its own resources and spend it. Anything coming from the federation should be used for the federation.”