The proposed administration of the Value Added Tax (VAT) by the states is an idea whose time has come.
This is the verdict of some experts on the quest by Lagos and Rivers state governments to administer the VAT.
Speaking in separate interviews with The Nation, the experts are of the view that the administration of the VAT by the states will boost their internally generated revenue.
Founding president, Association of National Accountants of Nigeria (ANAN), Omooba Olumuyiwa Sosanya, said the judgment of the Federal High Court in Rivers is a landmark one with implications for the administration of VAT going forward.
He described the verdict as a divine intervention “because we have been talking of federalism and unfortunately, we have a system that is lopsided whereby every state has to look up to the federal government to run their economy.
“The Nigerian constitution allows for each of the states to make laws to run their economy. But unfortunately, we’re still running a unitary government which was the system put in place by the army. Fortunately, we have had a civilian government in the last 20 years but I don’t know why it is difficult for them to put things properly. So this judgment, I think one can call it a revolution to restructure this country.”
Going down memory lane, the renowned accountant recalled that when the Sales tax law was promulgated by then President Ibrahim Babangida in August 1993, the law was not particular about who should administer the VAT but the Federal Inland Revenue Service (FIRS) took advantage of the situation at the time because the country was under a military rule.
While noting that the VAT has helped to shore up the revenues of countries like France where it was first raised and subsequently in British and other advanced economies, Sosanya however argued that Nigeria’s experience has been anything but pleasant.
“As at 2002, I suggested that the VAT law should be centralised whereby all the states will administer the collection and this will bring in more taxpayers into the net of the VAT. But unfortunately, the powers that be at the top refused to look into it. Even as late as 2019 before the passage of the 2020 budget, I presented a memorandum to the National Assembly when the VAT was increased from 5% to 7.5%. I suggested at the time that once the states are allowed to operate their own VAT, they will find it convenient to reduce the VAT lower than what is being charged by the FIRS. So, I’m happy that more states have joined the bandwagon after Rivers such as Lagos State and other states would join. And I don’t envisage anything different by the Supreme Court. The thing is that the VAT law as an established law is not entrenched in our constitution so each of the states can make laws suitable for them because it is not in the Exclusive List. All the states need to do is to go to their State House of Assembly to enact laws. In fact, most people making comments against the state collection, their arguments are misplaced and rooted in ignorance.”
Credit: thenationonlineng.net
