The Federal Government’s plan to retain the collection of Value Added Tax (VAT), has hit a brick wall.
Recall that a Federal High Court last, year, ruled that states had the powers to collect VAT.
Notwithstanding, the Federal Government opposed the ruling and; continued to collect VAT. It is projected that it will collect N2.2tn in 2022 through the Federal Inland Revenue Service.
President Muhammadu Buhari, incorporated VAT collection in the Finance Act 2021 and, included it in the 2022 budget.
However, this move put the government on a collision course with the Southern Governors’ Forum.
Also, the Federal Inland Revenue Service allegedly lobbied the National Assembly. by sending a proposal to the House of Representatives; seeking to move VAT collection to the exclusive list.
National Assembly accepted
But on Tuesday, the National Assembly rejected the proposal that sought to shift the collection of VAT from the concurrent to the exclusive legislative list; leaving the decision to the Supreme Court.
It voted on 68 amendments recommended by the Joint Senate and House of Representatives’ Special Ad Hoc Committee on the Review of the 1999 Constitution.
Meanwhile, a Bill for an Act to Alter Part I of the Second Schedule to the Constitution of the Federal Republic of Nigeria, 1999; to include Value Added Tax on the exclusive legislative list; failed at the upper legislative chamber.
95 senators registered to vote, and 85 voted. While 41 voted in favor of VAT being collected exclusively by the Federal Government, 44 voted against, no one abstained.
In the end, the bill failed because it did not meet the minimum 73 votes.
From the House of Representatives, about 209 lawmakers voted to retain VAT on the concurrent list; while 91 voted for it to be placed on the exclusive list.
Reacting to the development, the Lagos State Government, which is a party to the suit before the Supreme Court, said the National Assembly deserves commendation.
Information Commissioner, Mr. Gbenga Omotoso, said any decision that would promote federalism should be commended.
“The lawmakers have done well. If they have said that the states have the right to collect VAT, it is good; because that has been the question that the judiciary has been asked to answer.
“It is the right way to go. I think they deserve kudos, it is a ‘no victor, no vanquished’ situation. It is good for democracy. It is a victory for the rule of law.
Similarly, the Akwa Ibom State Government said it was in support of any move that would expedite the country’s move towards true federalism.
Ini Ememobong, the Commissioner of Information and Strategy, described the National Assembly act as a move in the right direction.
Kicked against States collecting VAT
Gombe State Government said the issue still needed to be reviewed further.
Commissioner for Information, Julius Ishaya, said the latest development is more complex than a lot of people understand.
“ VAT is a value-added tax on goods and services. That is a complicated issue.
We will increase our productivity and other economic activities to attract value addition.”