Government Not Family Business…Gombe, Others Learn Hard Truth As Rivers, Lagos Bench FIRS, Initiate New VAT Regime

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Government Not Family Business…Gombe, Others Learn Hard Truth As Rivers, Lagos Bench FIRS, Initiate New VAT Regime

Government Not Family Business…Gombe, Others Learn Hard Truth As Rivers, Lagos Bench FIRS, Initiate New VAT Regime
September 12
16:37 2021

• It’s every man for himself as Gombe’s finance commissioner, Muhammadu Magaji, urge states to be their brothers’ keepers

Brothers may burden each other to death. They may, at some point, rip apart, plough through, as alcoholics tend to do, the deep, tightly woven fabric of affection that was some part of the filial threads of their emotional ties and the soul of the brotherhood.

Had Muhammadu Magaji understood this fact, he would be more convincing in his plea to the Rivers and Lagos State governments to reconsider their resolution on collecting value-added tax (VAT) in their states.

Speaking for Gombe State at a technical workshop, Magaji, the Commissioner of Finance and Economic Development in the state, urged Rivers and Lagos States to be their brothers’ keepers.

A Federal High Court in Port Harcourt, Rivers’ capital, had placed a restraining order on the Federal Inland Revenue Service (FIRS) from collecting VAT in Rivers and directed the state government to take charge of the duty.

Following the court judgement, Lagos asked FIRS to stop issuing demand notices for VAT payments in the state. Nyesom Wike, Rivers governor, went ahead to sign a bill on VAT collection into law. Wike also informed businesses that payment to the state government would commence in September.

Lagos followed suit in passing a VAT bill, which has scaled the first and second reading at the state assembly.

However, FIRS still insists that taxpayers must continue to honour their tax obligations under the VAT Act until the court of appeal or supreme court gives a final verdict on the issue.

The commissioner urged both sides to put sentiment aside and their brothers’ keepers.

He said, “The VAT issue will have adverse effects not only on Gombe state but almost all the states of the federation. I was part of the discussion a few weeks ago by all commissioners of finance across the country.”

“The realisation was that only Lagos, Rivers and probably Delta states would be able to pull through without this VAT being administered centrally, and it is our appeal that we all put sentiments behind and work towards a federation that is one, by being our brothers’ keepers and ensuring that what is pull together at the centre is distributed to be able to balance resources across the country.

“Don’t forget that the oil-producing states collect only 13 per cent derivation, so if you say every state will take whatever resources it has, that it means we are starting a very dangerous trajectory that will not augur well for the federation called Nigeria.”

If this really is the truth about most states in the country, then Nigeria needs to readdress the crucial issues of state creation, fiscal governance and the peculiar industry needs of each state.

Pundits argue that the current practice whereby the Federal Government collects the largest chunk of VAT for subsequent redistribution to the states has outlived its usefulness. It has been rendered obsolete, unjust and regressive especially in a clime whereby several states feed off the hard-earned revenue of the very few solvent states including Rivers, Lagos States.

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