Northern Governors Kick Against Move To Domicile VAT Collection In States

Governors of 19 northern states have kicked against the collection of Value Added Tax (VAT) by state governments.

The governors took this position after rising from an emergency meeting to discuss the controversy surrounding VAT collection at the Sir Kashim Ibrahim House, Kaduna, on Monday.

Chairman of the forum and Governor of Plateau State, Simon Lalong who read the resolutions after the meeting, said the move started by the Lagos and Rivers State governments would lead to multiple taxations and result in increase in the price of goods and services as well as the collapse of inter-state trade.

The governors held that VAT was not a production tax but a terminal tax paid by the end-consumers, adding that “the reason Lagos accounts for 50 percent VAT collection is because most of the telecommunication companies, banks, manufacturing and other trading activities have their headquarters in Lagos, with the resultant and the wrongful attribution of VAT.”

The forum, however, stated that until the Supreme Court pronounces a judgement on the substantive matter between the Rivers State government and the Federal Inland Revenue Service (FIRS), the matter is subjudice and it would respect the position of the court.

Earlier, the Northern Elders’ Forum had in a statement by its spokesman, Hakeem Baba-Ahmed, described the VAT controversy as a wake-up call for Northern Governors to develop their resources and depend less on allocation from VAT.

It will also be recalled that a Federal High Court sitting in Port Harcourt had ruled that Rivers State had the legal right to collect VAT accruable to the state.

However, the FIRS has appealed the ruling, and the appellate court directed all parties to maintain the status quo and refrain from taking action that would give effect to the judgement delivered by the Federal High Court, pending the hearing and determination of the suit.

It is worthwhile to note that the Lagos and River State houses of assembly have since passed bills empowering the state government to collect VAT in their states.

Governor Babajide Sanwo-Olu of Lagos State had recently signed the bill into law.