Southern Nigeria Governors Meet, Insist on States Collecting VAT

The Nigerian Southern Governors Forum rose from a prolonged closed-door meeting on Thursday in Enugu with a resolve not to drop the ball on critical issues that affect the South. They agreed, among other things, to commence the collection of Value Added Tax (VAT) in their various states.

The southern governors reiterated their demand that the next president of the country should come from the South, in line with the principles of equity, justice, and fairness.

The resolutions came as the Federal Inland Revenue Service (FIRS) opposed a request by Lagos State to be joined as an interested party in the agency’s appeal against a Federal High Court judgement that opposed the agency’s collection of VAT in Rivers State.

In a related development, a report revealed that eight in 10 residents of Lagos State, representing the majority of the residents, had thrown their weight behind the Babajide Sanwo-Olu government and the state House of Assembly on the passage and signing into law of the VAT Law and the prohibition of open grazing Act.

The southern governors’ meeting was a follow-up to earlier meetings held in Delta and Lagos states, where the governors reached conclusions to ban open grazing to curb increasing farmer-herders crisis, and demand restructuring of the country, and introduction of state police.

In a communiqué issued at the end of the meeting, which was attended by nine governors and seven deputy governors from the region, Chairman of the forum and Ondo State governor, Rotimi Akeredolu, said the state governments had the power to collect VAT within their territories. Akeredolu noted that the collection of VAT by various state governments would boost economic growth and promote development.

The forum expressed satisfaction with states in the region that had successfully implemented the anti-open grazing law in line with the decision reached during the southern governors’ meeting in Delta State. The forum called on other states in the region that were yet to implement the decision to do so expeditiously, as according to Akeredolu, it represented the aspirations of the people in the region.

The governors, in the communiqué, “expressed satisfaction with the rate at which the states in the southern Nigeria are enacting or amending the anti- open grazing laws, which align with the uniform template and aspiration of southern governors and encouraged the states that are yet to enact this law to do so expeditiously.

“Encouraged the full operationalisation of already agreed regional security outfits; which would meet, share intelligence and collaborate, to ensure the security and safety of the region.

“Reaffirmed its earlier commitment to fiscal federalism as resolved at the inaugural meeting of the Forum held on Tuesday, 11th May 2021 at Asaba, Delta State, and emphasised the need for the southern states to leverage the legislative competence of their respective states Houses of Assembly as well as representation in the National assembly to pursue its inclusion in the Nigerian Constitution through the on-going constitution amendment.

“The meeting resolved to support the position that the collection of VAT falls within the powers of the states.”

The forum also said, “There is the need for the southern states to leverage the legislative competence of their respective state Houses of Assemblies as well as representation in the National Assembly to pursue its inclusion in the Nigerian constitution through the on-going constitutional amendment”.

The communiqué said the forum aligned with the larger Nigerian Governors’ Forum on the handling of the issues around the Petroleum Industry Act (PIA) as well as ownership of the Nigerian National Petroleum Corporation (NNPC).

The governors present at the meeting were Ifeanyi Ugwuanyi of Enugu State; Nyesom Wike of Rivers; Emmanuel Udom of Akwa Ibom; Babajide Sanwo Olu of Lagos State, and Ifeanyi Okowa of Delta.

Others were Akeredolu of Ondo; Adegboyega Oyetola of Osun; Douye Diri of Bayelsa, and Dapo Abiodun of Ogun.

Deputy governors present were Mr. Bisi Egbeyemi of Ekiti; Mr. Rauf Olaniyan of Oyo; Dr. Kelechi Igwe of Ebonyi; Chief Ude Oko-Chukwu of Abia; Mr. Philip Shuaibu of Edo; Prof. Ivara Esu of Cross River and Prof. Placid Njoku of Imo.

Meanwhile, FIRS on day opposed the request by Lagos State to be joined as an interested party in its appeal challenging the judgement of a Federal High Court that had ruled against collection of VAT in Rivers State by FIRS.

A three-member panel of the Court of Appeal in Abuja had last week adjourned to Thursday, the consideration of an application by Lagos State for joinder after it held that Lagos may be affected adversely if the state was not heard before decisions were made in the matter.

Justice Stephen Pam of the Federal High Court in Port Harcourt had in a judgement on August 9 held that the Rivers State government, and not the FIRS, had the right to collect VAT and Personal Income Tax in the state.

Pam, in the judgement, restrained the Attorney General of the Federation and FIRS (1st and 2nd defendants) from collecting VAT in Rivers State and directed the Rivers State government to take charge of the duty.

As a result of the court’s decision, the Lagos State government commenced moves to stop the collection of VAT by the FIRS in the state.

However, having failed to stay the judgement of the Federal High Court, FIRS approached the appellate court to challenge the judgement. The service also applied for two orders – the first seeking to stay the execution of Pam’s Judgment and the second, an interlocutory injunction restraining Rivers State from collecting VAT in the state.

But because of the request of Lagos State, the two applications could not be taken, as the court said priority should be given to the Lagos application for joinder.

When the matter came up yesterday, counsel to the appellant, Mr. Mahmoud Magaji, vehemently opposed the request by Lagos State, claiming that the state has not shown how its interest would be jeopardised if not allowed in the matter. Magaji further faulted the application on the grounds that it breached section 243 (1),(a), (b) of the 1999 Constitution, which forbids a respondent from challenging the judgement.

He urged the panel to dismiss the application for lacking in merit.

However, the processes filed on behalf of the AGF, through his counsel, Tijani Gazali, also in opposition to the Lagos application, were struck out on the ground of being incompetent, having been filed out of time.

Earlier, while moving the Lagos application, the Attorney General (AG) of Lagos State, Mr. Moyosore Onigbanjo, submitted that Lagos had vested interest in the VAT collection, adding that the decision of the court would affect the state when delivered.

Onigbanjo noted that FIRS, in its appeal against the judgement of Pam, made some allegations against it, saying it would be in the interest of justice for it to be allowed to join in the appeal to ventilate its defense.

“From the contents of the appellant’s affidavit, Lagos has been made a necessary party in the appeal by some references to It and for it to be bound by the final decision, it is in its interest that It should be allowed to make defense to allegations against it,” Onigbanjo said.

Similarly, counsel to Rivers State, Mr Ifedayo Adedipe, SAN, in adopting his processes, aligned himself with the submission of Onigbanjo and urged the court to join Lagos as a party in the appeal.

After parties concluded their arguments for and against the joinder application, Magaji urged the court to reiterate its order on status quo ante bellum made last week, restraining Rivers and Lagos from collecting VAT in their respective states.

Reacting, Rivers and Lagos states urged the appellate court to rather appoint a Receiver or Manager for the purpose of collecting and keeping VAT collected in the interim.

The two states, in addition, argued that the order of status quo ante bellum be put on hold in view of the appeal filed against it at the Supreme Court.

Adedipe, arguing orally, urged the court to exercise its power under Order 4 Rule 6 of the Court of Appeal to appoint a Receiver or Manager to take custody of the VAT in the interest of justice to parties in the matter.

Onigbanjo, in addition, urged the appellate court to restrain FIRS from further collecting the tax and replace it with a Receiver or Manager that would act for parties locked in the legal battle.

He said FIRS, apart from collecting the tax, had been sharing it among the 36 states and the Federal Capital Territory FCT, despite the pendency of the legal tussle, adding that recovery of the shared fund would be difficult if the court upheld the judgement of the trial court.

Responding, the presiding judge, Justice Haruna Tsammani, asked the two states to make their request formal by putting it in writing. Tsammani further announced that the judgement of the panel on the joinder application had been reserved to a date that would be communicated to parties.

Alex Enumah in Abuja, Gideon Arinze in Enugu and Peter Uzoho in Lagos

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