Adamawa State which is the home state of Alhaji Atiku Abubakar a political rival of President Muhammadu Buhari has announced its preparedness to consider the stance of Rivers State Governor Nyesom Wike on the collection of Value Added Tax (VAT) in the state, making it the first northern state to show interest in the move.
The Director-General, Media and Communications, Adamawa State Government, Solomon Kumangar, emphasized that it will improve the northeastern state’s Internally Generated Revenues (IGR) and reduce its reliance on federal allocations.
This comes even as FIRS opposed the ruling, as it already filed an appeal against a judgment in favor of Governor Wike of Rivers State.
“Anything to extend and improve on our IGR is welcomed. So, we are keen on joining the River State Government should the Federal Government appeal the judgment, which granted Rivers State the right to collect VAT in its domain,” Mr Kumangar said.
The Director-General who explained that the state was overstretched by impact of COVID-19 and insurgency, said the court’s ruling on tax collection by states rather than the federal government will enable states with financial challenges to extend their IGR.
“Whatever will bring improvement to the IGR is a welcome idea for an insurgency ravaged state like Adamawa,” he reiterated.
He stressed that tax collection by states “is the only way to assist the states, which are heavily dependent on federal allocations, to be able to wean themselves and meet their financial obligations to the citizens.”
Mr. Kumangar further maintained that “if there are areas where revenues can be exploited and extended, surely the state government will welcome it. Surely it’s a case of interest to us and we would like to be joined.”
Meanwhile, Gombe State Governorhas admonished Governor Wike to reconsider his stance on tax collection, arguing that it will have adverse effects on his state and others.
“The VAT issue will have adverse effects not only on Gombe State but almost all the states of the federation,” according to the state’s Commissioner for Finance and Economic Creation, Muhammad Magaji.
On the other hand, Governor Aminu Masari said Katsina wants an appeal against the ruling by the court
The court, presided by Justice Stephen Pam, noted that the Rivers government and not the Federal Inland Revenue Service (FIRS) was authorized to collect VAT.
Mr. Wike subsequently signed into law the bill on VAT collection in the state. He has held a meeting with Banks and other companies to toe the line or be ready for a rough time.
In a jive aimed at Northern states and their continues destruction of alcohol, he said, “You can’t destroy beer in your state in the name of Sharia, yet share from VAT on beer from other states. It is hypocrisy. Free money has promoted laziness. If you want to be a governor grow your state’s economy.”
“You can’t contribute humongous numbers during elections that can’t translate to tax earnings for your state. If they can vote they should be able to work and pay tax,” Governor Wike added.
Wike told the Northern Governors to let their high population translate to high yield of VAT for them.
In another development, Lawan Ibrahim-Fagge, the spokesman of the Kano State Hisbah Corps, a religious police force in Nigeria's Kano state responsible for the enforcement of Sharia law, while the argument on VAT raged announced that two vehicles loaded with 5,760 cartons of assorted beer have been confiscated by them on the Kano/Madobi road and this has been generating reactions from people.
According to the statement, released on Wednesday, Hisbah officials confiscated the trucks in the early hours of Wednesday around 4 am. The statement, however, quoted the boss of the religious police, Ibn-Sina, saying that the board would strive to uphold the fight against drugs and other intoxicating substances among youths in the state.
The confiscation is coming amid ongoing controversy regarding the rights of state governments to collect Value Added Tax (VAT) and other local consumption taxes as against the normal modus operandi which ensures that such taxes are collected and given to the federation government through the Federal Inland Revenue Service, FIRS.
Reacting to Hisbah's action, most commenters maintained that the policy that would enable all states to collect VAT should be implemented to prevent any state that kicks against the sale of alcohol in their state from benefiting from VAT generated through sales of alcohol products.
Also, the Lagos State House of Assembly has commenced moves to enact a Value Added Tax law.
The Rivers Division of the Federal High Court in August held that the state government should take charge of VAT instead of the federal government, after Mr. Wike’s administration filed a suit seeking the power to do so, over illegality claims.