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.