Gombe State government pleads with southern states to reconsider move making VAT a local tax

GOMBE State government has appealed to governors of Nigeria's 17 southern states to reconsider their recent decision to make Value Added Tax (VAT) a state source of revenue as they need to be their brother's keeper.

Up until now, VAT has been paid into the federal coffers but last month, a high court issued an order restraining Nigeria's Federal Inland Revenue Service (Firs) from collecting VAT and personal income tax in Rivers State. In its judgement, the court directed the Rivers State government to take charge of the collection of both taxes.

Following the court’s judgement, Governor Nyesom Wike of Rivers State signed the VAT Law No. 4 of 2021 on August 19. Following suit, Governor Babajide Sanwoolu of Lagos State has also begun the process if collecting VAT locally.

Alarmed at the impact this will have on the economies of the 19 states of northern Nigeria, the Gombe State government has appealed to southern states to set emotions aside and become their brothers’ keepers in sharing the VAT produced in their respective jurisdictions. Muhammad Magaji, the Gombe State commissioner for finance and economic creation, made the appeal at the start of a Technical Workshop on the development of the state’s Medium-Term Sector Strategy.

Mr Magaji said: “The VAT issue will have adverse effects not only on Gombe State but almost all the states of the federation. I was part of the discussion few weeks ago by all commissioners of finance across the country.

“The realisation was that only Lagos, Rivers and probably Delta states would be able to pull through without this VAT being administered centrally. It is our appeal that we all put sentiments behind and work towards a federation that is one, by being our brothers’ keepers and ensuring that what is pull together at the centre is distributed to be able to balance resources across the country.”

He added that it would be a very bad development that would not augur well for the country if every state will ask for control of its resources. Mr Magaji said: “Don’t forget that the oil producing states collect only 13% derivation, so if you say every state will take whatever resources it has, that it means we are starting a very dangerous trajectory that will not augur well for the federation called Nigeria.”