The stakes could not be higher for all the 36 states in the legal tussle between the federal government and the governments of Rivers and Lagos over the right to collect the Value Added Tax (VAT), a consumption tax presently collected by the Federal Inland Revenue Service (FIRS), supposedly on behalf of the states.
Yet, a vast majority of state governors are choosing to remain on the sidelines until the Supreme Court decides, rather than take a risky political stand on the issue that is currently before the Court of Appeal.
According to a tally by LEADERSHIP Sunday, only five states are willing to come out publicly against the collection of VAT by the states.
10 are either openly in support or secretly siding with Rivers and Lagos. Other than those waiting for a Supreme Court verdict, LEADERSHIP Sunday has categorised as undecided those states where officials and aides to the governors would not commit to a stand or were out of reach at the time of going to press, 21 in all.
The position of Gombe State government was quite clear that it is against VAT collection by states.
The director-general, Press Affairs, Government House, Gombe, Ismaila Uba Misilli, told LEADERSHIP Sunday: “The position of Gombe State government is the need to retain the existing collection and distribution of VAT centrally. This is to ensure a balance in the collection and refund system that ensures customers are not charged multiple times.
“Again, the present regime also ensures that 20 % derivation is given to states before the sharing based on other indices,” Misilli added.
Speaking with our correspondent in Jos on the VAT war between state governments and the federal government, Plateau State commissioner for Information and Communications, Hon Dan Manjang, simply said, “Let’s maintain status quo.”
According to him, the Plateau State government is comfortable with the present arrangement whereby FIRS collect VAT on behalf of the federal government. “We are comfortable with the present arrangement”, he added.
In a brief response on VAT collection, Governor Nasir el-Rufai’s special adviser on Media and Communications, Muyiwa Adekeye, said, “The Kaduna State government is a champion of true federalism, anchored on significant devolution of powers and responsibilities to the states.
“This includes fiscal federalism as an essential element of effective federalism. That is why Kaduna State has also focused intensely on expanding its internally-generated revenue. The el-Rufai government has almost quadrupled IGR to N50.7billion in 2020, from N13billion in 2015.”
“The Kaduna State Government is studying the VAT judgment to understand its details, impact and ramifications for effective revenue collection. The conclusions of this study will inform the next steps for the state,” Kaduna State government also said.
Facts also emerged that the Oyo State government may soon join Rivers and Lagos state governments on the collection of VAT.
The chief press secretary to Governor Seyi Makinde, Taiwo Adisa, told journalists in Ibadan that the state is only waiting for advice from the ministry of Justice.
According to him, only the ministry of Justice can advise the state government on what to do.
The governor’s aide insisted that the state was waiting for the results of the evaluation of the judgement before it could take any step.
Adisa added that the state was still evaluating the ruling of the court which held that the Rivers State government has the right to collect Value Added Tax (VAT) from organisations and individuals in the state.
He said, “If you look at what they are doing in Lagos and Rivers States, they domesticated the law.
“Rivers State went to court, they got a judgement, it passed through processes. Lagos State too has studied the judgement and has passed it into law.
“So, Oyo State is also taking delivery of the judgement and the ministries of Justice and Finance are evaluating the ruling.
“Oyo State will follow the process of the law based on the advice of the Ministry of Justice before it takes any step on the collection of VAT.”
On its part, the Osun State government said it would wait for the Supreme Court to decide on the issue of collection of VAT by the states.
The chairman, Osun Internal Revenue Service, Mr Gbite Ademikanra, in a chat with our correspondent, said initiating another court process on the matter might be termed abuse of judicial process.
Ademikanra said, “Whatever happens to Rivers will affect Osun. What most of us will do is to wait for the Supreme Court pronouncement on the issue. Once the Supreme Court makes a pronouncement, it covers all sub-nationals.”
For its part, the Imo State government stressed that since the VAT controversy has been suspended by the court, they will rather wait and see where the pendulum finally swings.
This position was made known by the state commissioner for Information and Strategy, Hon Declan Emelumba.
He told LEADERSHIP Sunday that the court was on top of the matter, adding that “let’s allow them come up with their final decision”.
It is not yet clear which way the Nasarawa State government would go on VAT collection.
Commissioner for Justice, Dr Abdulkarim Kana, said he had sent a memo to the governor but the governor was yet to make the position of the state public known.
Chief Press Secretary to Delta State Governor, Mr Olisa lfejika stated that the state is still studying the legal implications on the matter and will soon come up with a position which will make VAT beneficial to residents in the state.
The table below shows which states are in support, those against the collection of VAT by the states, and the ones still sitting on the fence: