Government of Gombe state has asked Lagos and Rivers governments to reconsider their resolution on collecting value-added tax (VAT) in their states.
This request was made by the Gombe state commissioner for finance and economic development, Muhammad Magaji at the technical workshop on the medium-term sector strategy (MTSS) for the state.
Recall that a federal high court in Port Harcourt had placed a restraining order on the Federal Inland Revenue Service (FIRS) from collecting VAT in Rivers and directed the state government to take charge of the duty.
Following the court judgement, Lagos asked FIRS to stop issuing demand notices for VAT payments in the state.
Rivers state governor, Nyesom Wike went ahead to sign a bill on VAT collection into law.
Wike also informed businesses that payment to the state government would commence in September.
Lagos followed suit in passing a VAT bill, which has scaled the first and second reading at the state assembly.
Meanwhile, FIRS still insists that taxpayers must continue to honour their tax obligations under the VAT Act until the court of appeal or supreme court gives a final verdict on the issue.
Magaji said Lagos and Rivers, including other states considering the movement, should put sentiment aside and become their brothers’ keepers in sharing the VAT generated in their respective states.
According to him, only three states in the country could survive without support from the federal government due to the dwindling revenue from the federation account.
“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 a few weeks ago by all commissioners of finance across the country,” Magaji said.
“The realisation was that only Lagos, Rivers and probably Delta states would be able to pull through without this VAT being administered centrally, and 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 center is distributed to be able to balance resources across the country.
“Don’t forget that the oil producing states collect only 13 percent 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.”