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Reactions trail VAT collection by states

By Adekola Afolabi

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A Senior Advocate of Nigeria, Adekola Olawoye and a Constitutional lawyer and Rights Activist, Dr Tunji Abayomi, have said it is the state governments that should be collecting VAT, and not the federal government.
However, the Chairman, Nigerian Bar Association, (NBA), Akure Branch, Rotimi Olorunfemi, disagreed saying collection of Value Added Tax (VAT) should be the prerogative of the Federal Government.
There have been raging controversies over who should collect the Value Added Tax(VAT) otherwise known as Consumption Tax between state and federal governments.
The Southern Governors rising from their meeting in Enugu, the Enugu state capital last Thursday supported the position that collection of VAT falls within the powers of the states.
Already, two States, Rivers and Lagos States have signed the collection of VAT into law in their respective states, arguing that collection of VAT should be their responsibility, and not the Federal Government.
In separate telephone interviews with two legal luminaries, Adekola Olawoye, SAN, and Dr. Tunji Abayomi, the duo who explained that they would not want to speak on the matter because it is now a subject of litigation, however agreed that it is the responsibility of each states to collect its own VAT, and not the Federal g Government.
Olawoye noted that it was a misnomer from the beginning for states to accept that kind of arrangement, insisting that, “on consumable goods, let state collect VAT on each item that is being consumed and purchased in her own domain.
“They sell beer in Lagos and VAT is paid on it, then you take it to where alcohol is an abomination and they will distribute the VAT. The governments of states that make law that nobody should consume alcohol, and if they see anybody consumes alcohol they destroy it, but they are sharing VAT from alcohol being sold in Lagos, what kind of hypocrisy is that.
“It has just begun, the matter is in court now, let us see where the wind will blow. But basically, each individual state should collect its VAT and let us forget the lopsided arrangement. Are we operating a Unitary Government? I don’t understand.
“This is just a beginning of many things to come. We have been saying it, let us restructure this country. Restructuring is the solution to all these issues. The state should be independent for God’s sake. Hitherto, the states were sleeping and snoring but suddenly, they woke up from their slumber and that is what we are seeing now” the Senior Advocate of Nigeria emphasised.
On his part, Dr Tunji Abayomi, who noted that it is true that the Constitution identifies the taxes to be collected by the federal government, however, said VAT is not part of it.
He stated further that VAT, being a consumption tax within a state, is not within the perogative of the federal government, hence it is unconstitutional for the federal government to collect it.
“This is the issue we have been arguing that the Federal system that we have now is more Unitary than Federal in that it takes away the authorities of the Federating States. In reality, it is the Federating States that should devolve powers to the Centre.
“To the contrary, in our Federal system, it is the Federal Government (the Centre) that gives powers to the states, this is contrary to the logic of Federalism”, Abayomi added.
The Chairman, Nigerian Bar Association (NBA), Akure Branch, Rotimi Olorunfemi, shared different views when he said the VAT is being guided by Tax Act which is within the perogative of the Federal Government.
He, however, said he did not know why the makers of the 1999 Constitution failed to include VAT in the Constitution, now making it subject of controversy.
Olorunfemi also argued that, by virtue of the Federal High Court which ruled in favour of Rivers State Government, it is unconstitutional for either state or federal governments to collect Value Added Tax because it is not contained in the 1999 Constitution.

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