VAT LAW: WHY AKWA IBOM STATE SHOULD JOIN RIVERS AND LAGOS STATE.


VAT LAW: WHY AKWA IBOM STATE GOVERNMENT SHOULD JOIN RIVERS & LAGOS STATES
Obviously, it is no longer news that from the socio-political angle, the clamour for fiscal federalism, true federalism, is rife. It is widely viewed as an instrument of sustainable peace and unity as well as geographically spread rapid economic development in Nigeria. It is high time the culture of states leaning on revenue distribution from the centre ended. The power of VAT collection should be restored to states as a step in the right direction. Let the states be enabled to look inwards and activate their potentials in commerce and industry

The recent decision of the Federal High Court in Attorney General of Rivers State Vs Federal Inland Revenue Service, has received more commendations from the Nigerian populace than not. Consequently, it has tickled the pens and awoken the dogma of well-meaning Nigerians.
Recall that in October 2019, the Federal High Court, Lagos Division, in the Registered Trustees of Hotel Owners and Managers Association of Lagos v. A. G. Federation & Others, while considering the validity of the Hotel Occupancy and Restaurants Consumption Law of Lagos State, upheld the powers of the Lagos State Government to charge and collect Consumption Tax from hotels, restaurants and event centres within the state.
The court held that based on the Constitution and the Taxes and Levies (Approved List for Collection) Act, the power to impose consumption tax was a residual power within the exclusive competence of states. It restrained the FIRS from imposing VAT on goods and services consumed in hotels, restaurants and event centres as this was already covered by the Lagos State Law.The court proceeded to declare sections 1,2,4,5 and 12 of the VAT Act as being inconsistent with section 4(2),(4) (a) & (b), (7)(a) & (b) of the Constitution and consequently unconstitutional and invalid.
Verily, VAT is a consumption tax, and you cannot consume in proxy. One cannot, even by common sense, eat Moi moi in Akwa Ibom on behalf of somebody in cross River. So, VAT should be location-specific, which is the intention of the Constitution. See : Items 58 and 59 of the Exclusive Legislative List of the Constitution.

IndeedAlthough, unlike Rivers State, that has passed a bill, which was signed into law by Governor Nyesom Wike, to enable it collect VAT, Akwa Ibom State has not given a formal legal backing to collecting VAT in the state.
The decision of the Federal High Court in Attorney-General of Rivers State v. Attorney-General of the Federation that the VAT Act is unconstitutional is the law for now, much as the right of appeal up to the Supreme Court is open., Hence, the government of Akwa Ibom through its House of Assembly, should as a matter of expediency enacty.

A stitch in time saves nine!
This is good for Democracy.

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