VAT: FG heads to Supreme Court, Reps consider bill to back states

• FG: Collection of VAT by FIRS remains
• Lagos: VAT collection will not impoverish other states
• Reps: We are ready to revisit 5% oil firm profit share to host communities
• Oil-producing communities badly hurt by PIA, says A’Ibom gov
As more reactions trail the controversy over the collection of Value Added Tax (VAT), the Federal Government has moved to find a permanent resolution to the disputes by approaching the Supreme Court on its final determination, while it insisted, yesterday, that the Federal Inland Revenue Service (FIRS) will continue to collect the tax.

Following the ruling of the Court of Appeal on the matter two weeks ago ordering parties to the VAT dispute to “maintain status quo ante bellum,’ the Attorney-General of the Federation (AGF) and Minister of Justice, Abubakar Malami, told the News Agency of Nigeria (NAN) in New York that the ruling favoured FIRS.

He said it was FIRS that had been collecting the VAT before the dispute arose, over which the Rivers State government approached the High Court.

“The position of not only the Federal Government, but indeed the judiciary is the fact that status quo associated with the collection of VAT should be maintained,” Malami said.

It would be recalled that the Rivers State government had urged the Supreme Court to set aside the Court of Appeal’s September 10 ruling. A three-member panel of the Court of Appeal headed by Haruna Tsammani, issued the order being challenged by the Rivers government.

The state also urged the apex court to disband the panel of the appellate court, which gave the interim order and order another one to be constituted to hear the case.

“But one thing of interest is the fact that the Federal Government had indeed taken cognisance of the fact that where there exists a dispute between a state and the Federal Government, it is the Supreme Court that should naturally have the jurisdiction to determine the dispute.

“And we are taking steps to consider the possibility of instituting an action before the Supreme Court for the purpose of having this matter determined once and for all,’’ Malami said.

IT, however, emerged, yesterday, that the House of Representatives is considering a legislation that will back states to collect VAT and as well control the resources domiciled in their place.

The bill is titled ‘An Act to Alter 39, Part 1 of the Second Schedule of the 1999 Constitution as Amended to Substitute and Move the Item from the Exclusive Legislative List to the Concurrent Legislative List’, which is co-sponsored by Hassan Usman Sokodabo and John Dyegh.

In a document sighted by The Guardian, the bill stipulates that: “The Constitution of the Federal Republic of Nigeria, 1999, is hereby altered as set out in Item 39, part 1 of the Second Schedule of the Principal Act, altered by substituting the item and moving it from the Exclusive Legislative List, to the Concurrent List.

“Thus, item 39, Part 1 of the Second Schedule of the Constitution to be moved to the Concurrent Legislative List now to read: States Government shall manage their resources, mines and minerals, including oil fields, oil mining, Value Added Tax (VAT), geological surveys as well as natural gas.

“Fifty per cent of the total revenue accruable from the minerals shall be retained by the state where the minerals are derived. Thirty per cent shall be credited to the Distributable Pool Account, while the remaining 20 per cent shall be credited to the Federation Account.”

This development is set to upturn the applecart, as it will further strengthen the states in its dispute with the Federal Government, already being spearheaded by Rivers and Lagos.

As the controversy rages with court litigations, a source confided in The Guardian that governors in support of states collecting the revenue are behind the latest move by lawmakers to back the states.

“Of course, the governors have representatives at the National Assembly, so what is wrong with them asking their lawmakers to back them up in their quest for self sustainability,” a source who craved anonymity said last night.

Allaying fears of some state governors, the Lagos State government has assured that collection of VAT by the state will not impoverish other states in the federation and make collection cumbersome, but that the ongoing legal dispute was about instituting true fiscal federalism.

The Commissioner for Information and Strategy, Mr Gbenga Omotoso, said this while speaking on TVC’s current affairs programme, ‘Your View’. He said Lagos had a solid case in the ongoing legal dispute concerning VAT collection between the Federal and state government.

The Commissioner, while noting that the crux of the disagreement was about equity, justice and fairness, expressed hope that it would also enrich the country’s jurisprudence and enhance the way citizens see and relate with the law.

“Lagos has a solid case as the crux of the disagreement is about equity, justice and fairness. Whichever way it goes, it will also enrich our jurisprudence and enhance the way we see and relate with the law. No matter what, Lagos will always stand for true fiscal federalism,” he said.

The Commissioner pointed out that the volume of air, sea and road transport activities in Lagos put pressure on the state’s infrastructure, pointing out that additional revenue from VAT would facilitate infrastructure development for faster movement of goods and services, as well as economic growth for the benefit of not only Lagos, but other states at affordable cost.

Meanwhile, the House of Representatives yesterday expressed its readiness to reconsider the five per cent profit share of oil firms to be allocated to host communities in the oil rich Niger Delta region.

Spokesperson of the House, Mr Benjamin Kalu, dropped the hint while briefing reporters at the National Assembly yesterday. He disclosed that the House would surely accommodate the demand of aggrieved stakeholders in the Petroleum Industry Act (PIA) amendment bill being considered by the National Assembly.

Recall that the Senate endorsement of three per cent profit share of oil firms to be allocated to the host communities scaled through the conference committee report as against the five per cent agreed upon by the House of Representatives in the Petroleum Industry Bill (PIB) signed into law by President Muhammadu Buhari earlier in the year.

Kalu said aggrieved persons who felt the three per cent profit share approved for the host communities in the PIA is too small are free to take advantage of the opportunity to amend the PIA by sending in their proposals for consideration.

“Nothing stops the parliament from putting in their own amendment proposal, which if the parliament finds merit in their proposition, we will consider it alongside the consideration of Mr President.”

This is as the governor of Akwa Ibom State, Udom Emmanuel, yesterday, called on the Federal Government to review the PIA to reflect the demands of oil-producing communities in the country. He urged the government to increase the three per cent oil companies’ operating expenses approved for host communities by the law to five per cent.

Speaking on Arise TV’s ‘The Morning Show’, the governor said he would not whip up any sentiment to further incense the protesting oil-producing communities.

President Buhari signed the controversial PIB into law on August 16. The law aims to drive investment in the oil industry, turn the loss-making, government-run Nigerian National Petroleum Corporation (NNPC) into a transparent, profit-driven firm, and an institution that guarantees investors’ confidence. It is also targeted at evolving a framework for the oil and gas industry.

While the law gives three per cent of NNPC’s operating expenses to the oil-producing communities, it approves the deployment of 30 per cent of the organisation’s profits into oil prospecting.

Though the government has explained that what would go into the host communities could be more than the current budget of the Niger Delta Development Commission (NDDC), opinion leaders in the South-South are sad with the development. Governor Emmanuel expressed hope that the Federal Government would allow the wish of the communities to prevail in the Act.

“If I want to speak about the PIA in public, I might go a little bit harsh or sound a little bit sentimental. But, it hurts us badly as oil-producing communities that we got a paltry three per cent. What was the essence of going round, collecting memoranda that were not even considered at all?

“It hurts us so badly, and there is a whole lot of agitation down here. Our people are not happy. I must let the whole world know that,” he said.

Buhari had requested an amendment to the Act in a letter read at the Senate plenary on Tuesday, but the amendment the President sought did not capture the communities’ agitations.

(The Guardian)