VAT: Wike Warns FIRS against Sabotaging Rivers in Administering Tax Laws

By Blessing Ibunge

Rivers State Governor, Nyesom Wike, has warned the Federal Inland Revenue Service (FIRS) against sabotaging the state government to freely administer its own tax and other related laws in the state.

Governor Wike gave the warning in a broadcast on Monday in Port Harcourt, while reacting to a Federal High Court ruling, which dismissed FIRS’ move to stop the state government from collecting Valued Added Tax (VAT) pending the determination of the matter in court.

Earlier Monday, Justice Stephen Pam of the Federal High Court sitting in Port Harcourt, had dismissed a suit by the FIRS seeking to stop the state government from commencing with the collection of VAT.

FIRS, in suit no FHC/PHC/149/2021, had approached the court seeking a stay of execution on the earlier judgment of the court that stopped FIRS from collecting VAT as it was constitutionally the role of the state government.

The FIRS had, following the judgment against it, sought the High Court to stop the state government from executing the judgment.

In his ruling, Justice Pam said granting the application would negate the principle of equity.

Pam noted that inasmuch as the state government and the state legislature have enacted a law in respect of the VAT, courts were bound to obey the laws.

He noted that the state government and the state House of Assembly have duly enacted Rivers State Value Added Tax No. 4, 2021, which makes it a legitimate right of the state to collect VAT.

The judge said the law remained valid until it has been set aside by a court of competent jurisdiction, adding that the law enacted by the state legislature remained valid

Pam further said that granting the prayers of FIRS would amount to committing murder, noting that the prayers cannot stand and dismissed same.

However, in his broadcast, Governor Wike stated that the Rivers State Government is in charge of the state and would not allow a further collection of tax from corporate bodies and businesses operating in the state by the federal government agency.

The governor added that FIRS has failed in its attempt to frustrate the enforcement of the state’s law on VAT with the Federal High Court’s dismissal of its application for stay-of-execution of the judgment.

He frowned upon the reports of FIRS bulling cooperate bodies and business entities in the state for refusing to pay their tax to the agency.

Wike said: “Following the recent judgment of the Federal High Court, Port Harcourt, which upheld the constitutional right and authority of state governments to impose, collect and utilize value added taxes (VAT) within their respective territorial jurisdictions, the Rivers State Government enacted the Rivers State Value Added Tax Law 2021 to regulate the effective administration of VAT in Rivers State.

“As expected, the federal government, through the Federal Inland Revenue Service (FIRS), disagreed and filed an appeal coupled with a request for stay-of-execution of the judgment before the Federal High Court.

“While the appeal was pending and without any stay-of-execution of the subsisting judgment, the FIRS went about to bully corporate bodies and business entities from paying the VAT to the Rivers State Government even when they knew that an appeal does not serve as a stay neither was there anything to stay in a declaratory judgment.

“As a mere agency of the federal government without any political authority the effrontery and impunity exhibited by the FIRS against the Rivers State Government was ill-advised and highly provocative.

“However, being a government that believes in the rule of law, we decided on our own to suspend the enforcement of the Rivers State VAT Law 2021 pending the outcome of the FIRS’s application for stay-of-execution.

“Today, the FIRS has failed in its attempt to frustrate the enforcement of the state’s law on VAT with the Federal High Court’s dismissal of its application for stay-of-execution of the judgment.

“It is important to reiterate the fact that we did no wrong in exercising our legal right under our constitutional democracy to stop the continuing breach, denial and curtailment of the constitutional right of states to lawfully impose and collect value added and other related taxes within jurisdiction to the exclusion of the federal government.

“And in doing so, our singular and progressive objective was to contribute to the advancement of fiscal federalism by enabling the federating states to explore and exploit their potential and capacity for generating greater internal revenues with which to fund their development goals and reduce the outdated over-reliance on pitiable Federal allocation and other handouts.

Noting that some states with presently low economic activities and ethically restrictive social policies with economic implications may be adversely affected for now, the governor said: “But, this is not our own making. Like the right to derivation, this is also a constitutional prescription, which we all swore as political leaders to respect and defend as the supreme law of the land.”