‘Don’t interfere in states/FIRS legal tussle over VAT,’ Ekweremadu urges colleagues

Ahead of Tuesday’s resumption of plenary, former Deputy President of the Senate and senator representing Enugu West district at the 9^th Assembly, Ike Ekweremadu has urged his colleagues at the National Assembly not to interfere in the ongoing legal tussle between some states of the federation and the Federal Inland Revenue Services (FIRS) over the value added tax (VAT) collection rights.

While the Rivers State Government is directly in the legal fight with the FIRS for right to control its VAT collection and distribution, Lagos is seeking to be joined as Respondent in the dispute at the courts, even as the FIRS has already obtained an order from the Appeal court in Abuja, last Friday, for all parties to the dispute to maintain status quo till September 16, this year.

Rivers and Lagos states Houses of Assembly have passed laws empowering state agencies to collect VAT, just as their various governors have also assented to the laws.  

Commenting on the development that has now pitched the FIRS and some state governors in the north on one side, against Rivers, Lagos states alongside others like Benue, Ogun and Adamawa, on the other side, Senator Ekweremadu urged his colleagues at the Upper Chamber to allow the litigation play out it course, saying it is federalism at work.

Ekweremadu asked his fellow senator not to embark on any legislation over the collection of the Value Added Tax and Stamp Duties until the present legal tussle has been concluded at the courts.

Members of the National Assembly are set to resume this Tuesday after a two-month holiday.

Ekweremadu who offered the advice on Sunday in a statement by his Media Adviser, Uche Anichukwu, titled, “Feeding bottle federalism: Allow VAT legal battle run full course – Ekweremadu,” argued that by allowing the litigations to run the full course, it could be a major step towards strengthening the nation’s federalism.

“I commend Governors Nyesom Wike and Babajide Sanwo-Olu as well as the Rivers and Lagos Houses of Assembly for their courageous moves.

“It is by so doing that our constitution or laws can be tested and our federalism strengthened.

“In April 2012, I delivered a lecture at the Osgoode Hall Law School, York University, Canada, entitled ‘Nigerian Federalism: A Case for a Review.’

“On the occasion, I forewarned that Nigeria would surely run into stormy economic weather unless we reinvented our federalism, steering the country away from a military-imposed ‘feeding bottle federalism’ to one predicated on self-reliance, hard work, enterprise, and resourcefulness.

“This I believe, will catalyse national development and economic prosperity.

“Many others have also made related calls. Unfortunately, only a few people were interested in what we were talking about.

“Although we achieved a number of successes, perhaps my worst experience at the helms of the constitution amendment process was in the Seventh Assembly.

“We recorded the most elaborate amendments to our constitution, including the rearrangement of the Legislative Lists to devolve more powers to the subnational governments by moving certain items like Aviation, Railway, Power, Stamp Duties, among others to the Concurrent Legislative List. Unfortunately, the amendments were denied assent by the President.

“But as a lawyer and lawmaker, I know that case law or judicial precedent is also a veritable source of law.

“So, I think we should allow the Constitution and the laws of our land to be tested in the courts of law.

“It is untidy for the Presidency or its agency to come through the backdoor to seek legislative intervention in its favour on the same matter that is prejudice.

“The ball is now in the court of the judiciary and all we should seek at this juncture is an expedited and courageous adjudication of the lawsuits,” he said.

Continuing Ekweremadu said:  “The bottom line of the raging tax ‘war’ is that having unwittingly killed the industry, having elevated our nation to an oil-dependent economy, and consequent upon the collapse of oil price amid other sources of energy, our economy is virtually collapsing, the naira has crashed to an all-time low, and the nation has come to rely more and more on taxes.

“Inevitably, some states have now begun to question some practices they feel fly in the face of federalism and justice, among them the collection and distribution of VAT and other taxes.

“VAT is essentially a consumption tax and what states like Rivers and Lagos are saying, in essence, is that the Federal Government cannot continue to rob them of taxes paid on goods and services consumed in their states.

”Some are with environmental and social consequences that they have to deal with, only to withhold as well as transfer a large chunk of such revenues to other states.

“The major takeaway from our ailing economy, collapse of the naira, and VAT and stamp duty imbroglio are that our feeding bottle strand of federalism is no longer sustainable.

“We must diversify and expand our economy now, and there is no other way than to remake our federalism to enable states to harness and unleash their endowments and comparative advantages.

“Rather than begrudge states like Rivers and Lagos, all federating units should be encouraged and enabled to look inwards to reinvent themselves.

”They should be encouraged to boost their respective competitiveness through improved security, human capital development, industry, and building of egalitarian and cosmopolitan societies.

“This would enable them to attract more investments and economically viable populations.

“That is how federations are meant to function,” he added.