A tax expert, Dr Kennedy Iwundu has said that the Nigerian constitution never stipulated who to collect VAT, adding that transaction taxes such as VAT and WHT were never mentioned in the exclusive and concurrent lists.
Iwundu stated this yesterday in Abuja while reacting to the recent ruling by the Federal High Court in Port Harcourt that Rivers State government should be responsible for VAT collection and not the Federal Inland Revenue Services (FIRS).
He said that the drafters of the constitution never anticipated the evolution of transaction taxes, adding that when the constitution was drafted, transaction taxes (VAT and WHT) were not familiar to Nigeria.
He suggested that “VAT should be on the concurrent list where both the federal and the state governments will be involved in the collection.”
He, however, proposed that the federal government should collect VAT from: “Cross border transactions (imports/exports of goods and services), multinational companies, non-resident companies, Hi-tech companies (Facebook, Google, etc), federal government contracts.”
He further suggested that states should be allowed to collect VAT from the following areas as Local companies (within their territories), enterprises and individuals (within their territories), state government contracts.
He also suggested that states who suffer environmental degradation of local industries should be the ones to enjoy VAT collected from those local industries.
Iwundu emphasized the need to strengthen our fiscal federalism is now where states should be able to pay salaries of their workers without depending on federal allocation.
According to him, “The FIRS should use the Joint Tax Board (JTB) as a platform to help states increase internal revenue collection capacity especially in the areas of personal income tax and stamp duties.
“I want to urge stakeholders to be patriotic in helping the Nigerian economy grow and stop playing politics when it comes to revenue collection and allocation.”