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VAT Imbroglio: Wike’s Defiance and uppity FIRS.

VAT Imbroglio: Wike’s Defiance and uppity FIRS.

For the first in as long as I can remember, the public discourse on how to steady this wobbling ship and revive this house of cards that is Nigeria is premised on the profound issue of true federalism and not some odious and retrogressive deliberation of grazing routes and establishment of Navy base in an arid enclave.

Social media and other spaces of public engagement have been thrown into a frenzy after the pugnacious governor of Rivers State, Nyesom Wike, steered the hornet’s nest with his move to block the collection of Value Added Tax (VAT) by federal inland revenue (FIRS) in the state. He averred that the collection of VAT is the responsibility of the state and the constitution empowers each state to collect vat in their domain. He added that the collection of VAT by FIRS amounts to illegality.

Of all his argument against the collection of VAT, the most compelling and instructive one is the sharing of revenue that accrued from VAT collected on alcoholic drinks from states in the south to Northern states that banned the consumption of alcohol. The sheer lack of introspection and sober reflection on the part of 12 northern states that ban the consumption of alcohol but see nothing wrong in gleefully collecting revenue generated from alcohol in other federating units down south, is another testament to the ingrained and long-standing hypocrisy and duplicity of the North.

Wike’s defiance and insistence on doing the right thing might just be the kind of mentality we need to herald a paradigm shift, upset the applecart, and usher in the kind of drastic changes that have been elusive in our sociopolitical and economic arrangements. 

Recall that the federal high court sitting in Port Harcourt issued an order restraining FIRS from collecting VAT and Personal Income Tax (PIT) – directing the Rivers state government to take charge of the collection. The FIRS wasn’t oblivious to the fact that its collection of VAT from states is illegal as the constitution does not grant its such fiscal power.

Justice Stephen Dalyop Pam, in his ruling, noted that the “Rivers state government through the State Assembly has duly enacted Rivers State Value Added Tax No. 4, 2021, which makes it a legitimate right of the state to collect VAT. 

As if on cue, no sooner had the High Court in Port Harcourt delivered its judgment in favor of Rivers state than Lagos state began the legislative process of domesticating collection of VAT in the state. Governor Babajide Sanwoolu assented to the State Value-Added Tax Bill last week after its passage by the House of Assembly. 

However, the action of the FIRS since the VAT Imbroglio began has been disgraceful and uncharitable, despite knowing that the arrogation of power to collect VAT to itself is unconstitutional. Its directive to stakeholders to maintain the status quo and continue payment of VAT to its despite the judgment of the competent court of jurisdiction stopping its from doing so amounts to contempt of court. In a saner clime where laws are laws, heads will be rolling in the legal department of FIRS and people may find themselves behind the bars. 

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But then, FIRS flagrant disregard for a court order is not a one-off anomaly. It’s is a metaphor for the contemptuous disposition of Buhari’s administration towards the judiciary, a development that has deeply eroded the gains of our relatively fledgling democracy. 

What must be said here and now is that, in our new checkered journey to restructuring and true federalism, a federal agency that’s not constitutionally empowered to determine the fiscal framework of the entire country cannot run roughshod over another arm of government — the judiciary.

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