JUST IN: Lagos Generates Over N500bn VAT Annually Says Speaker

September 8, 2021

The Speaker, Lagos State House of Assembly, Mudashiru Obasa, on Wednesday, disclosed that Lagos State generates an excess of N500 billion in Value Added Tax, VAT form annually.

Meanwhile, the State Attorney-General and Commissioner for Justice, Mr Moyosere Onigbanjo (SAN), said, the state government is poised to execute judgement granting states the power to collect VAT, saying no booby trap will affect its implementation.

The duo spoke on Wednesday, a public hearing at the State House of Assembly, Alausa, Ikeja, on ‘A Bill for the law to impose and charge value Added Tax on certain goods and services provided for the administration of the tax and other Related Matters.’

Recall that a Federal High Court in Rivers State presided over by Justice Stephen Dalyop Pam, had issued an order of perpetual injunction restraining the Federal Inland Revenue Service (FIRS) 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 VAT.

The Speaker, represented by his deputy, Wasiu Eshilokun, in his address, said: “Hitherto, the responsibility of collecting VAT is assumed by the Federal Government, through the Federal Inland Revenue Services, FIRS. This, I reckon is against the messages and spirits of the true federalism that our fathers fought for and that we are currently agitating.

“Lagos States feel financially strangulated and unfairly treated by the Federal Government in her administration and appropriation of receipts of VAT.

“Lagos state for instance, generates the excess of 500 billion in VAT form. If we goby generation trend, in tandem with the N2.4 trillion forecasted by the FIRS, Lagos state will be contributing about 55 per cent of the total VAT collectables in the entire country.

“But what do we get in return, some paltry sum. This injustice and inequity are part of the premises that some of the extant agitations are founded.

“Thankfully, the judiciary through the Federal High Court of Portharcout Division came to the rescue of the nation and assuaged the fears of teeming Nigerians in her judgement.

“It is in the light of this judgement the Lagos State’s seeks by proposing to practicalize this her bill rights for a law that will enable the state to collect VAT that will ensure the state could thereby create a complete true developmental federalism goals.”

Onigbanjo, while, responding to a representative of civil society organizations, Mr Adeola Samuel who cautioned the state government over the execution of the judgment in favour of Rivers State, said the state government would soon sign the VAT law in the state.

Samuel had stated that the execution of the judgement by the Lagos State Government was a booby trap that would make it failed in its implementation.

According to him, “There is a booby trap except if Lagos wants to overlook it. The doctrine of covering the field will have to be applied. If the law is passed as it is, there will be a lot of litigations.”

He cited a judgement where it was declared that an individual or organization cannot benefit in a judgement that one was not joined.

In a swift reaction, Onigbanjo said, “That judgement on VAT law is not valid only in Rivers State. Any state in Nigeria stands to benefit. Your statement is not correct on the position of the law.

“The National Assembly does not have power on VAT, that is what brings us where we are today. The position as it is today the VAT law is no longer applicable in Nigeria. I respectfully disagree with your position sir.”

While addressing newsmen shortly after the hearing, the Chairman of the House Committee on Finance, Rotimi Olowo said, “it will make no sense if all money accruable to us in Lagos State is taken by the Federal Government. Lagos is working hard and we are sweating.”

He maintained that there is a lot of pressure on the State Government in terms of infrastructure, saying with the proposed law on VAT in the state, would bring about holistic development in the state.

Justice Pam made the assertion while delivering judgement in Suit No. FHC/PH/CS/149/2020, filed by the Attorney General for Rivers State (plaintiff), against the Federal Inland Revenue Service (first defendant) and the Attorney General of the Federation (second defendant).

The Court, which granted all the 11reliefs sought by the Rivers State Government, stated that there is no constitutional basis for the FIRS to demand for and collect VAT, Withholding Tax, Education Tax and Technology levy in Rivers State or any other State of the Federation, being that the constitutional powers and competence of the Federal Government is limited to taxation of incomes, profits and capital gains which does not include VAT or any other species of sales, or levy other than those specifically mentioned in items 58 and 59 of the Exclusive Legislative List of the Constitution.

The judge dismissed the preliminary objections filed by the defendants that the Court lacks jurisdiction to hear the suit and that the case should be transferred to the Court of Appeal for interpretation.

Justice Pam, who also dismissed the objection raised by the defendants that the National Assembly ought to have been made a party in the suit, declared that the issues of taxes raised by the State government are issues of law that the court is constitutionally empowered to entertain.

He declared that after a diligent review of the issues raised by both the plaintiff and the defendants, the plaintiff has proven beyond doubt that it is entitled to all the eleven reliefs it sought in the suit.

The court agreed with the Rivers State Government that it is the State and not FIRS that is constitutionally entitled to impose taxes enforceable or collectable in its territory of the nature of consumption or sales tax, VAT, education and other taxes or levies, other than the taxes and duties specifically reserved for the Federal Government by items 58 and 59 of Part 1 of the Second Schedule of the 1999 constitution as amended.