MEMBERS of Nigeria’s Northern State Governors’ Forum (NSGF) are meeting in Kaduna today to debate the vexed issue of value added tax (VAT) that has become a hot potato over the last week as southern states have won the legal right to localise it.
Up until now, VAT has been paid into the federal coffers but in August, a high court issued an order restraining Nigeria’s Federal Inland Revenue Service (Firs) from collecting Vat and personal income tax in Rivers State. In its judgement, the court directed the Rivers State government to take charge of the collection of both taxes.
Following the court’s judgement, Governor Nyesom Wike of Rivers State signed the VAT Law No. 4 of 2021 on August 19 into effect. Following suit, Governor Babajide Sanwoolu of Lagos State also signed a VAT law into effect after it was passed by the Lagos State House of Assembly and now the National Assembly has begun debating a bill to make the development federal.
Alarmed by the development, which could strip northern Nigeria of millions of dollars, the NSGF has called an emergency meeting to debate the matter. Hosted by Governor Nasiru El-Rufai of Kaduna State, the meeting will be presided over by the NSGF chairman Governor of Simon Lalong of Plateau State.
Abubakar Malami, Nigeria’s attorney-general is insisting that states have no right to handle VAT as it is on the exclusive legislative list, meaning that only the National Assembly had the power to make laws on VAT. However, other senior lawyers like Mike Ozekhome and Ifedayo Adedipe, dispute this saying VAT is on the residual list and is strictly within the purview of state governments.
Meanwhile, Professor Danladi Atu, the NSGF coordinator and secretary to the Plateau State government, said: “The northern governors will be meeting in Kaduna and I’m sure one of the items on the agenda is about the issue of VAT. You will get to know the position of the northern governors on the issue because I’m sure their resolution will be made public after their meeting.”
Ogun State has also started the process of passing a bill on VAT in its House of Assembly. While some stakeholders including the 17 southern governors support the position of Lagos and Rivers states that states should collect VAT, some northern governors, including Governor El-Rufai oppose it.