The battle over who should get the right to collect Value Added Tax (VAT) has deepened as the Court of Appeal sitting in Abuja, the nation’s capital stopped Lagos and Rivers States from collecting VAT, pending the outcome of the suit filed by the Federal Inland Revenue Service (FIRS).
The court also ordered the reversal of an earlier judgment of a High Court sitting in Rivers State. The Rivers court had empowered the state government led by Governor Nyesom Wike to collect taxes.
Justice Haruna Simon Tsanami, who presided over the Appellate Court, also ordered the non-implementation of the law passed by Rivers State House of Assembly which was assented to by Governor Wike.
Justice Tsanami, in specific terms, granted status quo ante (previously existing mode of operation) in favour of the FIRS and against the respondents.
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Reacting to the development, observers have criticized the FIRS for waging war against the states. According to them, the situation will lead to:
- An imbalance in the distribution of allocation to states because some states generate lower taxes compared to Lagos and Rivers.
- The burdens of some other states will be shouldered by others.
- Infrastructural deficit will be a regular conversation because states that generate higher revenue from tax and get lower allocations are not able to deliver in the area of infrastructure.
The Appeal Court order to strip Rivers State and Lagos of the power to collect taxes has since seen Governor Wike launch an attack at the Kano State Government, saying that the Kano Government destroys the businesses of people yet receives allocations from such businesses.
He said this in reference to the recent destruction of bottles of alcohol worth millions of Naira in the state by the state Hisbah police. But, the Kano Government receives allocations that contain money from people that sell alcohol in other states.
