Northern Governors Uncomfortable With VAT Removal From FAAC – Sule

Nasarawa State  Governor Abdullahi Sule has said that the Northern Governors are not against President Bola Tinubu’s tax bills but are uncomfortable with the removal of the Value Added Tax (VAT) from the Federal Account Allocation Committee (FAAC).

Governor Sule said there were so many good things about the tax reforms that Mr. President is proposing. Still, he explained that the northern governors were uncomfortable with the proposed removal of Value-Added Tax (VAT) from the Federation allocation.

He stated this while launching an innovative tax digital code initiated by the Nasarawa State Board of Internal Revenue Services (NSBIRS) on Thursday in Lafia.

He said, “Let me clarify: we are not against the tax reforms.  There are so many good things about the tax reforms that Mr. President is putting forward. We just selected an item out of the tax reforms. We are discussing the VAT, which would be removed from the FAAC.

“That is why we are calling for a review of that position. When you take the VAT out of FAAC, you take 60% of that to derivation. Other people are introducing consumption.

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“Let me clarify: we are not against the tax reforms.  There are so many good things about the tax reforms that Mr. President is putting forward. We just selected an item out of the tax reforms.

We are discussing the VAT, which would be removed from the FAAC.

“That is why we are calling for a review of that position. The moment you take the VAT out of FAAC, you take 60 per cent of that to go to derivation. Other people are introducing consumption.

“For people like us, who once as a managing director of some of the biggest companies, I paid VAT. I was paying taxes, and I knew how it was paid. I see where some of these goods are consumed. If you now turn around and say, it’s now at the point of consumption; then I can even educate somebody for a whole day about consumption because people don’t even understand the issue.

“A typical example I can give you from two industries in which I have worked as CEO. As MD of African Petroleum, I had a customer from Maiduguri who would order 200 trucks and he would pay me for 200 trucks.  If you say you will go by consumption, you will charge the VAT of the 200 lorries to Maiduguri.

“But in reality, at the distribution point, he would now tell me to bring only 10 trucks to Maiduguri.  After that, he will start distributing them from Ilorin to Sokoto. This will make it difficult for you to understand consumption.

“If you say it is at the point of derivation, then all the corporate headquarters collected for the 200 trucks are in Lagos. Which means I pay in Lagos. Whichever way you pick, you are going to default.”