Northern Governors Oppose Rivers, Lagos On VAT Collection

The Northern Governors Forum (NGF) has taken opposing direction to their Southern counterparts on the raging Value Added Tax (VAT) controversy, pitching their support for the central collection by the Federal Inland Revenue Service (FIRS).

The Northern governors at their Monday meeting in Kaduna with Emirs and Chiefs resolved that the collection of value-added tax (VAT) by states will cause an increase in prices of goods and services as well as create interstate trade barriers.

This resolution runs contrary to the views of the Sothern governors some of whom have enacted laws to empower them to collect VAT.

Legal battle on the collection of VAT by either states or the Federal Inland Revenue Service (FIRS) has been an ongoing issue since August 2021 when a Federal High Court in Port Harcourt issued an order restraining FIRS from collecting VAT and personal income tax (PIT) in Rivers state. It, therefore, places the power to do that on the state’s revenue agency,

The ruling which provided the basis for both Rivers and Lagos to enact laws to impose and charge VAT on businesses has thus been put on hold by the ruling of an Appellate Court that ordered the two states to maintain status-quo antebellum (to maintain the situation as it existed before) over the collection of VAT.

Notwithstanding, the two states have asked the supreme court to allow them to appoint a manager/receiver to collect VAT pending the determination of the appeal but which the Supreme Court opposed. Allowing such by the apex court would have tactically set aside the Appeal court order regarding the case

Rising from their meeting, however, the Northern Governors forum under the leadership of Simon Bako Lalong, the governor of Plateau state stated that VAT is being confused by these State governments as a sales tax.

“If every state enacted its own VAT Law, multiple taxations will result in increases of prices of goods and services and collapse in interstate trade”.

They argued that VAT is not a production tax like excise, but a terminal tax that is paid by the ultimate consumer.

“The reason Lagos account for our 50% VAT collection is that most of the telecommunication companies, Banks, manufacturing and other trading activities have their headquarters in Lagos with the resultant and wrongful attribution of VAT.

“Until and unless the Supreme Court pronounces judgement on the substantive matter between Rivers State and Federal Government, the matter is sub judice and the Northern States Governors Forum would respect this.”