Lagos Assembly Passes VAT, Open Grazing Prohibition Bills

*Adamawa, Kogi mull value added tax laws
*Port Harcourt ruling path to true federalism, says Afenifere

Segun James and Kemi Olaitan in Ibadan

Lagos State House of Assembly has passed the state’s Value Added Tax (VAT) bill into law. The Assembly also passed the bill banning open grazing of cattle in the state.

If Governor Babajide Sanwo-Olu signs the passed VAT bill into law, as required by the Nigerian constitution, Lagos would become the second state, after Rivers, to have a VAT law that empowers it to collect the tax.

THISDAY learnt yesterday that Adamawa and Kogi states were in the process of drafting bills to authorise them to also start collecting the consumption tax.

There is presently an on-going legal battle between the Federal Inland Revenue Service (FIRS) and Rivers State on the matter. This follows FIRS’s appeal of a Federal High Court judgement in favour of Rivers State in a case the state had instituted to challenge the federal revenue agency’s power to collect VAT.

The pan-Yoruba socio-political organisation, Afenifere, yesterday threw its weight behind the VAT ruling by a Federal High Court sitting in Port Harcourt. Afenifere called the landmark judgement a decision in the direction of true federalism.
Similarly, a former President of the Nigerian Bar Association (NBA), Onueze C. J. Okocha, SAN, commended Rivers State Governor Nyesom Wike for challenging impunity with respect to the collection of VAT.

However, in Lagos, following the passage of the anti-open grazing bill, Miyetti Allah, the association of herdsmen in Nigeria, vowed that the price of cattle in the state would quadruple if the bill was signed into law.

Following the passage of the VAT and open grazing ban bills, Speaker of the Lagos State House of Assembly, Dr. Mudashiru Obasa, directed Acting Clerk of the Assembly, Mr. Olalekan Onafeko, to transmit clean copies of the bills to Sanwo-Olu for assent. Obasa commended his colleagues for their desire for peace and progress of the state.

“I thank you all for this historic exercise,” Obasa said.
The Assembly held separate public hearings on the bills on Wednesday, with stakeholders overwhelmingly supporting the draft laws.
The VAT bill titled, “Lagos State Value Added Tax Law: A Bill for a Law to Impose and Charge Value Added Tax On Certain Goods And Services, Provide for the Administration of the Tax and for Related Matters,” empowers the state to charge VAT at the rate of six per cent on the value of goods and services in the state. It also states, “The value of taxable goods and services shall be determined in the following ways: where the supply is for money consideration, its value shall be deemed to be an amount which with the addition of the tax chargeable is equal to the consideration.”
The bill further states that revenue accruing from VAT would be shared on a ratio of 75 per cent to 25 per cent between the state government and the Local Government Council Areas.

The proposed law empowers the Lagos State Internal Revenue Service (LSIRS) to administer and implement the law and account for money collected in accordance with the law.

Port Harcourt Ruling Path to True Federalism, Says Afenifere

Afenifere declared support for the VAT ruling by a Federal High Court in Port Harcourt, advising the federal government to stop actions and policies impeding the practice of true federalism in Nigeria.

The group, in a statement issued yesterday by its National Publicity Secretary, Jare Ajayi, commended the Rivers State government for initiating the legal process on VAT. Ajayi said the rulings by Justice Stephen Pam of the Federal High Court, Port Harcourt, on August 9 and September 7 had earned the judiciary in the country an epaulet as an institution not only capable of ensuring justice but also actually working on deepening federalism.

Pam had while delivering judgment on August 9 in Suit No. FHC/PH/CS/149/2020, filed by the Attorney General of Rivers State (plaintiff), against the FIRS (first defendant) and the Attorney General of the Federation (second defendant), said allowing the federal government, through the FIRS, to continue to collect VAT would be negating the spirit of the federal system of government that the country was supposed to be running.

The judge reiterated that position in the ruling of September 7.
Afenifere lauded the judge, saying the manner of distribution of VAT revenue, before the judgement, was patently unfair, unjust and did not favour the hardworking while rewarding the indolent.

According to Ajayi, “For instance, Lagos State, which generates as much as 55 per cent of this revenue, receives less than 10 per cent, while most states where less than five per cent is generated get the same amount that Lagos State gets. It is quite distasteful.
“The sum collected by the FIRS is shared among the three tiers of government, with the federal government taking 15 per cent, states 50 per cent, and local governments 35 per cent.

“From the foregoing, it would be seen that the federal government is taking undeserved larger chunk because when 50 per cent is shared among the 36 states, what each state gets is a paltry sum. Same for 774 local government councils that share 36 per cent.”

He called on the state governments to use the opportunity provided by the judgment to explore other areas that the constitution empowers them to assert themselves as federalists.
Ajayi said states should step up actions that would liberate the them from the stranglehold of the federal government that had turned Nigeria into a unitary state – in contradistinction to the federal spirit prescribed by the constitution.

He stated in advice to the states, “They should be rest assured of Afenifere support as they give vent to power devolution and entrenchment of true federalism in Nigeria. Areas in which the states need to assert themselves include agriculture, health, education, electricity, physical planning, title registration, registration and production of vehicle number plates, and casino licensing etc., as Lagos State Government did in the past.
“To us in Afenifere, the attempt by the federal government to establish so called Farm Estates in all the 109 senatorial districts is another way of imposing the rejected cattle colony and RUGA on Nigerians.

“It is also another way of defying the federal spirit of the constitution, as lands are vested in the state governors. If the governors granted the lands being asked for, cattle colonies would be established in these estates as revealed in the view expressed by Prince Paul Ikonne, the Executive Secretary of the National Agriculture Land Development Agency (NALDA).
“States should reject this attempt, particularly, since the farm estates NALDA is using as an excuse to grab lands for the federal government ‘are familiar territory for many states, especially, in the South-west, that inherited farm estates from the defunct Regional Government of late Chief Obafemi Awolowo.”

On the fear of possible multiple taxation that collection of VAT by states may occasion, Ajayi called for a roundtable discussion on the thorny aspect.
The pan-Yoruba organisation, nevertheless, called on the FIRS to resist the temptation to keep appealing the judgement that empowered states to collect local taxes, stating that such a step is another assault on the federal system that the country should be running.

VAT: Okocha Lauds Rivers Govt for Challenging Impunity

Former President of the Nigerian Bar Association (NBA), Onueze C. J. Okocha, SAN, commended the Rivers State governor, Nyesom Wike, for challenging ‘constitutional impunity’ with respect to the collection of VAT. Okocha stressed that the effort of the Rivers State ggovernment to seek and secure the right interpretation of the constitutional provision had motivated other sub-nationals to explore their rights as enshrined in the constitution.
Okocha, who spoke on a television programme in Port Harcourt, reiterated that the Federal High Court’s declarative ruling reaffirmed that Rivers State was empowered to collect VAT within its jurisdiction. He said the Rivers State Government VAT law, No. 4 of 2021 that was recently assented by Wike was in sync with the country’s constitution.

Okocha stated, “Rivers State Government went to court against Federal Inland Revenue Service (FIRS) and won the case. FIRS later filed an appeal in the Court of Appeal, but returned to the Federal High Court to demand a stay of execution, but the court refused the application and dismissed it.”
Okocha said, though the case was at the Court of Appeal and at the instance of FIRS, it could be a long winding legal battle that would get to the Supreme Court.
He said, “The law now is that Rivers State Government is entitled to collect Value Added Tax(VAT) in Rivers State. Any other state can make its laws on Valued Added Tax, (VAT). You know that a law of another state cannot be applicable to another state. I heard that the Delta State Government is passing a similar law, too.”