‘Enough of the shenanigans,’ as Wike directs state’s Revenue Service to ensure total implementation of VAT law

[By VICTOR NZE]

Governor Nyesom Wike has directed full implementation and enforcement of the recently-signed state’s Value Added Tax Law 2021 enacted to regulate the effective administration of VAT in the state.

Following the enactment of the Rivers VAT law, the Federal Inland Revenue Service (FIRS) had challenged the law as it filed an appeal before the Federal High Court for a stay of execution on the initial judgement.

Speaking during a statewide address to the people and residents of Rivers state, monitored by Oracle Today, Monday, Governor Wike said the delay to commence full collection of VAT after having signed it into law was due to the FIRS appeal for stay-of-execution before the Federal High Court.

It would be recalled that last August, the Federal Inland Revenue Service (FIRS) was ordered to stop demanding and collecting value-added tax (VAT) and personal income tax (PIT) across Nigeria.

A Federal High Court presided by Justice Stephen Pam in Port Harcourt, gave the directive on Monday, August 9, stating that the law does not back FIRS authority above state governments.

FIRS, tax agency (first defendant) and the Attorney General of the Federation (second defendant) had been dragged to court by the Rivers State Government over 11 reliefs, which includes collection of VAT and PIT.

The state said it is the only authorised collector on behalf of the Federal Government, as well as its agency according to provisions in Part II (concurrent legislative list) of the Second Schedule of the 1999 constitution as amended.

Before Justice Pam gave the ruling, FIRS had demanded a transfer of the case with suit No. FHC/PH/CS/149/2020 to the Appeal Court, objecting that the FHC has no jurisdiction to hear the suit.

The judge dismissed the objection, stating that FIRS is not constitutionally empowered to demand and collect VAT, withholding tax, education tax and technology levy in any state in Nigeria.

Subsequently, Governor Wike signed into law the Rivers State Value Added Tax Law 2021 to regulate the effective administration of VAT in Rivers State, last week.

However, Wike in his statewide speech, Monday, flayed the conduct of the FIRS in seeking to force collection of VAT in the state despite a court injunction nullifying its powers to do such.

“As we all know, following the recent judgement 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 judgement, 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 judgement.

“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 judgement.

The governor, therefore, directed Rivers State Revenue Service (RSRS) to ‘ensure the full and total implementation and enforcement’ of the VAT law.

“And with today’s judgement the way is now clear for the administration and enforcement of the Rivers State Value Added Tax Law 2021 across the entire State until otherwise decided and set aside by the Superior Courts.

“Consequently, I hereby direct the Rivers State Revenue Service (RSRS) to ensure the full and total implementation and enforcement of this law against all corporate bodies, business entities and individuals with immediate effect.

“All corporate bodies, business entities and individuals are advised to willingly, truthfully and promptly comply with their tax obligations under this law to avoid the full weight of the stipulated sanctions, including having their business premises sealed-up.

“Let me warn that the Rivers State Government is fully in charge of the State and will not tolerate any further attempt by the FIRS to sabotage or undermine our authority to freely administer our tax and other related laws in our own State. Those who play with fire risks having their fingers burnt. Enough of the shenanigans.

“I wish to further assure every resident that we shall as usual make effective use of the expected proceeds from this tax to accelerate the development of our State and improve the wellbeing of everyone,” the governor stated.

On attempts by fellow state governors to discredit Rivers for enacting the VAT law, Wike who admitted that ‘some states with presently low economic activities and ethically restrictive social policies with economic implications may be adversely affected for now,’ however, added: “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.”

According to Governor Wike, fiscal federalism remains the right path to economic self-reliance and sustainability for all our States and the benefits derivable from this case by all the states in the long run far outweigh the immediate revenue loss that some states may presently suffer.

“All that is required is for all of us to wear our thinking caps as elected Governors to collectively fight for the greater devolution of resources, responsibilities and powers to the federating States.

“It is therefore very unfortunate that some State Governors led by that of Katsina State are vainly conspiring to truncate this progressive reality in favour of the inequitable status quo so that the Federal Government can continue to rob Peter to pay Paul as the nation’s self-imposed tax master-general. 

“For us in Rivers State, we will continue to ensure and project our constitutional rights to access all possible resources we can take hold both within and outside our geographical boundaries to advance the progress of our State,” he stressed.