Asks other states to see River VAT victory as federalism enabler
Faults Katsina State’s attempt to challenge the Rivers law
Tax experts predict long-drawn legal battle as other states follow suit
With double legal victory in quick succession, the latest being only hours ago (Monday September 6), the dismissal of FIRS ‘stay of execution’ application, Governor Nyesom Wike has quickly directed the Rivers State Revenue Service (RSRS) to ensure the full implementation and enforcement of the State’s Value Added Tax (VAT) Law.
In a quick broadcast to the state, shortly after the Federal High Court in Port Harcourt dismissed the application by FIRS, Governor Wike declared Rivers State is constitutionally empowered to collect VAT within its jurisdiction.
“The way is now clear for my administration to enforce the Rivers State Value Added Tax Law 2021, until otherwise set aside by a superior court. 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,” the Rivers governor confidently said.
He further assured residents that his administration shall make effective use of the expected proceeds from the tax to accelerate the development of the state, and improve the wellbeing of everyone.
He maintained that the benefits derivable from the judgement of the Federal High Court in Port Harcourt that empowered Rivers State Government to collect Valued Added Tax (VAT) within its jurisdiction, also extends to other states because it is their constitutional right and authority.
Wike explained that what Rivers government has done is to contribute to the advancement fiscal federalism, in which states can feel empowered to explore their potentials to generate internal revenue to address their development needs.
“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and capacity for generating greater internal revenues with which to fund their development goals and reduce the outdated over-reliance on pitiable federal allocation and other handouts. 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,” the Rivers chief executive said.
Some tax experts and legal experts who spoke to this newspaper, predicted a long-drawn legal battle pitching the federal government with its federating states. The experts also foresee a progression whereby other states would follow the Rivers’ example to institute legal action over their VAT collections.
Governor Wike noted that when the judgement was first delivered in favour of the Rivers State government, the federal government, through the Federal Inland Revenue Service (FIRS), disagreed and filed an appeal and sought a request for stay-of-execution of the judgment before the Federal High Court. And that while the appeal was pending and without any stay-of-execution of the subsisting judgement, FIRS went about to bully corporate bodies and business entities from paying the VAT to the Rivers State government.
“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,” he explained.
He faulted Katsina State governor, Aminu Bello Masari, for “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.”