Governor Nyesom Wike of Rivers state has ordered the immediate implementation of the Rivers State VAT Law 2021 which gives the state’s revenue agency to collect VAT within its jurisdiction.
Wike in a statement on Monday after a High Court rejected the Federal Inland Revenue Service (FIRS) plea to stay execution on the law said the federal government cannot continue to rob Peter to pay Paul.
Recall that the governments of Lagos and Rivers states recently expressed their readiness to begin the collection of Value Added Tax in accordance with the judgment of a Federal High Court in Port Harcourt, which ruled that states, and not the Federal Inland Revenue Service, should be collecting VAT and Personal Income Tax.
Prior to the court judgment, however, the FIRS, an agency of the Federal Government, had the responsibility of collecting VAT on behalf of the 36 states of the federation and the Federal Capital Territory. The sum collected is then shared among the three tiers of government, with the Federal Government taking 15 per cent, the States 50 per cent; local governments 35 per cent.
In the statement, Wike said with the failure of the FIRS to frustrate the enforcement of the State’s Law on VAT following decision of the Federal High Court to dismiss its application for stay-of-execution of the judgement, the way is now clear for the administration and enforcement of the Rivers State Value Added Tax Law 2021 across the entire State until otherwise decided and set aside by the Superior Courts.
“It is important to reiterate the fact that we did no wrong in exercising our legal right under our constitutional democracy to stop the continuing breach, denial and curtailment of the constitutional right of States to lawfully impose and collect value added and other related taxes within jurisdiction to the exclusion of the Federal Government.
“It is therefore very unfortunate that some State Governors led by that of Katsina State are vainly conspiring to truncate this progressive reality in favour of the inequitable status quo so that the Federal Government can continue to rob Peter to pay Paul as the nation’s self-imposed tax master-general.
Meanwhile, the Federal Inland Revenue Service (FIRS) has urged taxpayers not to panic over the recent court ruling by the Federal High Court sitting in Port Harcourt on Value Added Tax (VAT), directing taxpayers to continue to honour their tax obligations under the VAT act to the agency.
In a statement issued by the Special Assistant to the Executive Chairman of FIRS on Media and Communications, Johannes Wojuola, FIRS said the court stated clearly that until the Court of Appeal, or even the Supreme Court, determines the matter, taxpayers were required to continue to comply with their VAT obligations within the status quo framework.
“The Federal High Court ruling should not breed any confusion as to the obligations of taxpayers. Taxpayers must continue to comply with the Value Added Tax Act pending the final determination of appeal. Taxpayers must continue to honour their tax obligations under the VAT Act. Failure to do this would put them on collision course with the law.’’