By Kassim Omomia, Ben Ogbemudia and Cajetan Mmuta
There seems not to be an end in sight to the legal imbroglio between the federal government and the states over the collection of Value Added Tax (VAT) as more states are planning to enact laws to empower them to collect VAT on certain goods and services in their respective states, instead of the Federal Inland Revenue Services, (FIRS).

This is coming despite the ruling by the Court of Appeal in Abuja on Friday that Rivers and Lagos states, which already enacted laws to collect VAT in their states, should stay action on the matter pending the determination of the appeal for a stay of execution filed before it by the FIRS.

A judge of the Federal High Court in Port Harcourt, Rivers State, Justice Stephen Pam, had on August 10, 2021, ruled that the plaintiff, Rivers State, and not the FIRS, should be collecting VAT and Personal Income Tax in the state.

Rivers State enacted the law after a landmark ruling by the Federal High Court and Lagos State Government followed suit as Governor Babajide Sanwo-Olu last Friday signed the VAT bill into law.

Following the development, there are indications that the Rivers and Lagos state governments will stick to their guns while the Court of Appeal will resume hearing on the matter on September 16.

Already, Benue State Governor, Sam Ortom, has directed the state’s Attorney-General to look dust-up his books and see the position of the law as regards the collection of VAT.

Before Ortom’s directive, two more states, Ogun and Akwa Ibom, have indicated their intention to enact laws that will enable them to collect the tax in their states.

Edo, Ondo, Oyo, and Taraba have said they were still studying the ruling of the Federal High Court in Port Harcourt on the matter, while Delta State has said it was consulting before taking a position on the issue.

FIRS on a wild goose chase
A former Deputy President of the Senate, Senator Ike Ekweremadu, has lent his voice to the raging issue even as he advised the National Assembly not to embark on any legislation over the collection of VAT and Stamp Duties.

He noted that allowing the litigation to run the full course could be a major step towards strengthening the nation’s federalism.

Ekweremadu added that he had for over a decade been warning the nation against what he termed a “feeding bottle federalism” in which some states depend on redistributed resources of other federating units for survival.

The high-ranking lawmaker held that any constitutional amendment to transfer VAT collection to the Exclusive List, as reportedly requested by the Federal Inland Revenue Service, FIRS, would amount to changing the goal post in the middle of a game.

He bared his mind in a statement by his media adviser, Mr. Uche Anichukwu, on Sunday.

The lawmaker, who chaired the constitution amendment process in the Sixth, Seventh, and Eighth Senate, asserted since past legislative efforts to get things right had failed or been scuttled, it was natural and imperative to allow the judiciary to play its role in shaping the nation’s federalism.

He said, “I commend Governors Nyesom Wike and Babajide Sanwo-Olu as well as the Rivers and Lagos Houses of Assembly for their courageous moves. It is by so doing that our constitution or laws can be tested and our federalism strengthened.

“But as a lawyer and lawmaker, I know that judicial precedent is also a veritable source of law. So, I think we should allow the Constitution and the laws of our land to be tested in the courts of law. It is untidy for the Presidency or its agency to come through the backdoor to seek legislative intervention in its favour on the same matter that is prejudice. The ball is now in the court of the judiciary”, he concluded.

A lawyer and lecturer at the Nnamdi Azikiwe University, Awka, Anambra State, Igwe Chika, has, however, urged the National Assembly to renegotiate the sharing formula on the VAT proceeds.

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According to him, “The National Assembly should renegotiate the sharing formula for VAT where the producing states take a major share of the proceeds of VAT and it should be included in the exclusive list”.

Another senior lawyer based in Abuja, Sam Zibiri, a Senior Advocate of Nigeria (SAN), alluded to the August 9, 2021, Federal High Court Judgment between A.G. RIVERS STATE v. FIRS and AG. FEDERATION, in which the court held that the National Assembly lacks the constitutional powers to enact any law to collect any tax outside of stamp duties, taxation of incomes, profits, and capital gains.

He submitted that the federal government is not empowered to impose any form of sales tax including VAT, stating that the court declared the taxes and levies (approved list for collection) Act as null and void for being inconsistent with the 1999 Constitution.

SAN disagree with raging issue
However, a SAN, Jibrin Okutepa, has a dissenting view on the raging issue.

According to him, VAT Act 2004 as amended in 2020 is a valid Act of the National Assembly and any law made by any state which conflicts with that Act is void.

He said before the VAT Act came into being in 1993, most of the political actors steering the controversies now were either actively involved or were privy to the making of that law stressing that the law has been with us in our federal operations.

He noted that until the 1999 Constitution as amended which gives the federal government the powers to legislate on tax matters, any action the states take that conflicts with the provisions of the Constitution will continue to be voided.