Rivers gov.,Wike signs VAT collection bill into law

Less than three weeks after the Federal Inland Revenue Service (FIRS) was ordered to stop demanding and collecting Value-Added Tax (VAT) and personal income tax (PIT) across Nigeria by a Federal High Court in Port Harcourt, the Rivers Governor, Nyesom Wike has formally signed into law the bill on its collection in the state.

Governor Wike who signed the recently passed bill by the Rivers State House of Assembly into law at Government House, Port Harcourt, Thursday, maintained that the judgment of the Federal High Court sitting in Port Harcourt had sufficiently addressed the alleged illegality perpetrated by the Federal Inland Revenue Services (FIRS).

“The Federal High Court sitting in Port Harcourt has addressed the illegality perpetrated by the Federal Inland Revenue Services (FIRS) on behalf of the Federal Government in the collection of VAT in states.

The governor also signed into law the Open Rearing and Grazing Prohibition Law No 5 of 2021; The Child’s Rights Amendment Law No 2 of 2021.

Others are the Residents Registration Agency Law No 6 of 2021 and the Naming and Renaming of Infrastructure Law No 3 of 2021.

Wike pointed out that when agencies of the Federal Government were allowed to illegally demand and collect taxes meant for states to collect, they strangulate the states financially and turn them to be beggars.

“But we (Rivers State) are standing on the part of history as representatives of the state to have taken the bull by the horn to challenge the illegality of the Federal Government through the Federal inland Revenue Services (FIRS).

“Of course, we are all aware that the states have already been strangulated.

“Most states depend on allocation from the federation account.

“States have been turned to beggars, hardly will any day pass that you will not see one state or others going to Abuja to beg for one fund,” Wike said.

He said no campaign of calumny or blackmail on the part of FIRS would make what was illegal to become legal, even as he dismissed FIRS’ report that 30 states would suffer if some states were allowed to collect VAT.

Wike added that FIRS should be concerned about establishing whose duty to collect VAT and the constitutionality of such a position before talking about who was going to suffer or not.

“In this state, we awarded contracts to companies and within the last month, we paid over N30bn to the contractors and 7.5 percent will now be deducted from that and to be given to FIRS.

“Now, look at 7.5 percent of N30bn of contracts we awarded to companies in Rivers State, you will be talking about almost N3bn only from that source.

“Rivers State Government has never received more than N2bn from VAT at the end of the month.

“So, I have contributed more through the award of contract and you are giving me less, what is the justification for it.”

It would be recalled that Justice Stephen Pam of the Federal High Court in Port Harcourt, gave the directive on Monday, August 9 ruled that the law does not back FIRS authority above state governments.

The 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.

However, FIRS had been making demands, threats and intimidating Rivers State residents to pay PIT and VAT.

Before Justice Pam gave the ruling, FIRS denanded 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.