By Charles Okoh
The recent upheavals generated by the bold move by Governor Nyesom Wike of the Rivers State to contest the right of the Federal Inland Revenue Services (FIRS) to continue collection of Value Added Tax, has brought to the fore several issues that are germane to the success or otherwise of the nation. The current skewed federal structure is largely responsible for the stunted growth of the nation. For those who mean well, the parasitic structure we operate as a federation cannot be in the ultimate interest of the nation.
The Rivers State Government had obtained the judgment of the Federal High Court, Port Harcourt Division (coram Hon. Justice Stephen D. Pam, J.,) delivered in Suit No. FHC/PH/CS/149/2020 (Attorney General Rivers State v. Federal Inland Revenue Service & Anor) on 9th August, 2021 upholding the constitutional authority and competence of the Rivers State Government to impose, charge, demand, and collect VAT on taxable goods and services within Rivers State and declaring that the Federal Government through the FIRS has no power to impose and collect VAT within the state.
The court
also issued an order of perpetual injunction restraining the Federal Inland
Revenue Service and the Attorney-General of the Federation, both first and
second defendants in the suit, from collecting, demanding, threatening, and
intimidating residents of Rivers State to pay to FIRS, Personnel Income Tax
(PIT) and Value Added Tax (VAT).
The
FIRS, in a desperate bid to stop the state government through a motion on
notice, also filed an application before the same Federal High Court, Port
Harcourt, to stay execution of the earlier court judgement vesting the power to
collect Value Added Tax, VAT, within Rivers State on the state government and
not FIRS.
However,
Governor Wike following all the established and appropriate mechanisms of
Legislative due process which culminated in the signing of the Bill into Law,
stayed action on the commencement of collection of VAT until the application
for stay of execution filed by the defendants had been determined at the
Federal High Court.
Justice
Stephen Pam, in declining, said granting the same would negate the principle of
equity. The judge declared that the FIRS application was refused and dismissed
in the light of the fact that all subsisting law concerning the collection of
VAT stands in favour of the Rivers State government. According to the learned
trial Judge, granting the prayers of FIRS would amount to the court reversing
its judgment which the court cannot do, and accordingly dismissed the
application.
Meanwhile,
even while the FIRS appeal had not been ruled on, the agency went on as though
the decision of the Appeal Court would not count for much when it on August 22
directed taxpayers in the country to continue to pay VAT to the agency to avoid
facing penalties for failing to do so.
Abdullahi Ahmad, FIRS
spokesperson said, “We wish to inform the general public that, before the
above-mentioned steps taken by the Government of Rivers State, FIRS had lodged
an appeal against the above judgment and had also filed an application for stay
of execution of the judgment as well asking the Court for an injunction pending
determination of the appeal. All parties to the suit are aware that both
applications were heard on the 19th and 20th August, 2021 and are awaiting the
decision of the Court.
“Given that the Court of Appeal is yet to rule on the Appeal
from the Judgement of Federal High Court and that the Federal High Court is yet
to deliver a ruling on FIRS’s applications for stay of execution and
injunction, members of the public are advised to continue to comply with their
Value Added Tax obligations until the matter is resolved by the appellate
courts.”
On September 10, the Court of Appeal sitting in Abuja, ordered
both Rivers and Lagos states to maintain status quo pending the determination of
the appeal of FIRS. It ordered all the parties that have subjected themselves
before it to “refrain from taking any action to give effect to the judgement of
the Federal High Court”, which gave Rivers State Government the right to
collect VAT revenue, instead of the FIRS.
The desperate FIRS, like all Federal Government agencies, are quick to accept judgements that favour them and would disregard those against them.
So much for the judicial legalese as it concerns this epic battle between the
Rivers State government and FIRS. With the Lagos State government and some
other states seeking to be joined in the suit, it will be interesting to see
how all these end as it may well be the much needed clincher we seek to help us
as a nation resolve the conundrum why many states are getting poorer and they
do not seem to bother to seek ways of generating resources from the enormous
deposits of God Almighty on us as a country.
The so-called federation we operate has continued to stifle
growth and development. It has ensured states return to Abuja every now and
then for handouts. Sadly, this grant by the FG to the states is reducing at an
alarming rate and rather than thinking ourselves out of the box, we seem
contented in digging ourselves further into the dungeon of adversity,
deprivation and poverty.
VAT is a consumption tax paid when goods are purchased and
services are rendered. It is charged at a rate of 7.5 per cent. What this means
is that a state that is not constantly encouraging or seeking new ways of boosting
growth of businesses and development would pay dearly for it.
It is unlikely that Kano State, for instance, would unleash
Hisbah police after businesses it claims are against the tenets of Islam, if it
realizes that VAT from beer consumption forms a major revenue of the state,
more so, when Nigeria is supposed to be a secular state; or who does not know
that the so-called Sharia practised in states of the north is
politically-motivated? Or who does not know that creation of more states and
local governments to the north at the expense of the south is just so that they
get more in the distribution of national resources?
Kano that had a tradition of being a cosmopolitan society where
many non-indigenes had lived in the past in peace and made fortunes is now
chasing away businesses all in the name of Sharia and is driving this misnomer
to the level of banning the use of mannequins by traders.
Who will not feel bad that same Kano, with 44 local governments
from which it benefits unduly from federal allocation would look away and
encourage the destruction of the investments of Nigerians, especially when it
is realized that the same state has no qualms about collecting revenues
generated from other states where those same businesses are encouraged?
Wike, while lamenting the injustice in the country said Rivers
generated N15bn in June 2021 but got N4.7bn while “Kano produced N2.8bn in June
but Kano also got N2.8bn. Sometimes you don’t want to believe these things
exist.”
Those opposed to the decision of Rivers, Lagos and others,
rather than try to convince us why this skewed arrangement should persist have
mainly resorted to blackmail rather than proffering superior arguments to the
debate.
The argument of the Kogi State Governor, Yahaya Bello, who said states should
be their “brother’s keeper” by supporting each other, is an attempt to whip up
cheap sentiments and portray the other states as not being caring and selfish.
Ironically, it is Governor Bello and his likes who have not been their
brother’s keepers by not addressing the real issues bedeviling the states and
seeking ways to prosper the nation.
To be sure, Nigerians love themselves and would be more than
willing to look out for one another, but truth be told, the faulty structure we
currently have does not work and will never work, until we begin to look inward
and seek local solutions to peculiar problems. Until all governors are made to
develop and prosper their states, this beggarly approach to nation-building
will not take us anywhere. You can’t build a nation without equity, fairness
and justice.
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