Eminent lawyers, in their reactions to the escalation of the dispute over VAT collection in Nigeria, agree that the stakes are high for the Federal Inland Revenue Service and various state governments fighting in court unless an urgent political solution is embraced, reports Festus Akanbi
As Nigerians await the decision of the Court of Appeal for a way out of the logjam created by the objection of the Federal Inland Revenue Service (FIRS) to an earlier decision of a Federal High Court sitting in Port Harcourt, Rivers State, which gave the state a go-ahead to collect VAT in its jurisdiction, eminent lawyers said the time has come for all the parties to opt for a political solution.
The Federal High Court in Port Harcourt, the Rivers State capital, had in a judgment declared that the FIRS had no constitutional backing to collect VAT in the state, thereby clothing the Rivers government with the power to do so.
However, the federal revenue agency was dissatisfied with the trial court’s verdict, and subsequently approached the Court of Appeal to stay execution of the decision.
More States Join Agitation for VAT Collection
The dispute escalated last week when the South-south Governors’ Forum declared support for states’ collection of VAT as ordered by a Federal High Court in Port Harcourt. The forum, comprising governors of the six Niger Delta states of Rivers, Edo, Bayelsa, Akwa Ibom, Cross River, and Delta, made the declaration after a closed-door meeting at Government House, Port Harcourt.
According to a communique read by the Delta State Governor, Ifeanyi Okowa, the South-south states are to join Rivers State in the legal tussle. It could be recalled that Lagos State had recently expressed its readiness to join Rivers State in the case.
On the other hand, the opposing side which will be led by the Attorney General of the Federation (AGF), Abubakar Malami, will include the FIRS, and the governments of Adamawa, Plateau, and Kaduna states.
Although the AGF is already a defendant in the appeal, it was gathered that the Federal Ministry of Justice under the AGF has opted to be part of the appellant in the matter to enable it to argue effectively in support of FIRS.
The decision of the three states is coming on the heels of a communiqué released last week by the Northern State Governors’ Forum, where they expressed dissent with the VAT laws of Lagos and Rivers states, as well as the anti-open grazing laws of the Southern states.
As a measure of their seriousness in winning the battle to control the collection of VAT in their respective states, some states have put machinery in motion to set up their tax laws in a way to give them the power to collect VAT in their domains just like Rivers State.
Recently, the Speaker of Ogun State House of Assembly, Olakunle Oluomo, disclosed that the Assembly had started working on the bill.
Similarly, the Akwa Ibom State House of Assembly said it was studying the judgment to enable it to come up with a bill on it.
The Chairman, House Committee on Information, Mr. Aniefiok Akpan, said the Assembly was looking forward to having a meeting with the chairman of the state Internal Revenue Service, after which it would come up with the bill.
In Delta State, the Commissioner for Finance, Mr. Fidelis Tilije, told newsmen recently that the state had begun reviewing relevant laws and would soon make an informed decision after serious consultations. Some other states said they are still studying the Rivers judgment before they announce the next line of action.
Resolving the Controversy
As the fear of a protracted legal battle looms, calls for a political solution to the crisis are coming from eminent Nigerians including lawyers. Legal titans like Chief Mike Ozekhome (SAN), Mr. Ebun Olu-Adegboruwa (SAN), and a Lagos-based lawyer and human rights activist, Mr. Jiti Ogunye pointed out that no matter the decision of the Court of Appeal, the ongoing legal battle cannot resolve the controversy over VAT collection in Nigeria.
However, while the duo of Olu-Adegboruwa and Ogunye voted in favour of a political solution which they said is the most appropriate given the tendency of the court case to drag till the end of the current political dispensation, Ozekhome described the legal battle as good for the nation’s democracy.
Olu-Adegboruwa: Political Solution is Time-saving
Speaking on a live television programme, monitored in Lagos during the week, Adegboruwa commended all the parties in the disputes, especially the affected state governors for approaching the court for the settlement of the disputes instead of taking laws into their hands.
He, however, expressed doubts on the ability of the court to settle the VAT dispute, saying a political solution will be more effective and time-saving. “About the matter that is pending in the court, I’m afraid that the dispute between the states and the Federal Inland Revenue Service cannot be resolved through a four-room of the current case pending in the court of appeal because the prism of that case is limited to the judgment of the Federal High Court in Port Harcourt and you will remember that a lot has happened since that judgment was delivered.
“The judgment was in respect of the capacity of Rivers State or FIRS to collect VAT. But since that case was filed and judgment was delivered, Rivers State has proceeded to promulgate a law, ditto for Lagos State which, has also promulgated a law. Those laws are not before the court of appeal, because those laws were made after the judgment and the court of appeal is not a court of trial to hear cases afresh or as a court of the first instance.
“So whichever way the Court of Appeal judgment goes in respect of the dispute as to VAT will not affect the laws that have been properly promulgated by the houses of assembly of Rivers and Lagos states. “
The Senior Advocate maintained that what concerns the ordinary man on the street is what the proceed of the taxes are used for and not who collects the taxes.
He said, “But to us as common people, our interest is not about who collects VAT, but what the government, whether federal or state used the proceeds of the collection for. Do we see the impact on the lives of the people? The debate of revenue collection should be taken to its relevance and usefulness to the ordinary people of Nigeria, not this debate between the federal and state governments on who collects it.
“We should start questioning the leaders as for the use of the tax being collected from the people of Nigeria and then put them to account in terms of the project executed, in terms of the promises made to the people of Nigeria whether they have been fulfilled or not. For me, a political solution is desirable instead of using this motion to be joined in the case as a way of proving to the people of their respective states as a way of fighting for them. Beyond the ground-standing, in the name of looking for popularity, the parties in the dispute should sit down in seeking a political solution because it is in the interest of Nigerians that this dispute is not prolonged beyond what we see now.
“By the time the states bring their applications to join, I don’t see this case determined before the next general election in 2023. In which case, politicians will only be taking us for a ride instead of addressing the nitty-gritty of the case,” Adegboruwa said.
Ogunye: We Must Look at What the Law Is
Ogunye, on his part, believes the case is simple regardless of how the parties concerned are presenting it. According to him, “The argument is that the power of the National Assembly, the powers of the federal government to collect/generate taxes are traceable to the power of the National Assembly to legislate on the generation of taxes. The power of the National assembly to legislate is contained in the so-called exclusive legislative list in the first part of the second schedule of the constitution.
“If you look at section 58 and section 59, the kind of taxes that can be generated by the federal government are stipulated and the argument is that once the consumption tax, the Value Added Tax is not stipulated, then the state can generate these taxes. Now those who opposed this insisted the status quo should continue. And even as they so argued, it is exposed that the federal government was rushing to the National Assembly to legislate so that the power to collect that tax can then be made exclusive to the federal government.
“Anyhow you want to look at it, the matter is now in court and the court will be called upon to look at what the law is as at today as against what the law ought to be as it’s being argued by a party to this argument. And if the court has to look at what the law is as of today, I reckon very much that the court will not do more or less than what has been done before in some cases …
“We must look at what the law is, it is not our duty to read the mind of the people and say this is what should have been estimated. If they have ruled, the legislator may do as they wish but what the court always does is to say what the law is at any point in time. If they think the path of political solution is the most appropriate, I will support that instead of belabouring the court and compelling it by the force of the matter they have submitted before it to get adjudication one way or the other.”
Ozekhome: Legal Salvos are Good for Democracy
However, Chief Ozekhome believes the legal salvos are good for democracy. This, according to him is because the judiciary remains the last hope of the common man and the arbiter in disputes.
“The case itself is a great agent of restructuring. It seeks to tear down the behemoth and unwieldy concentration of undeserved powers at the centre. It restructures our unitarianism into the proper federalism we are supposed to be. It prevents a situation where the baboon works and the monkey eats. It will be historical in the form of the onshore-offshore dichotomy case during the Obasanjo government. It enables states who believe they are entitled to VAT proceeds even without contributing to its production, to canvass their argument. Being the apex court, the Supreme Court will be a final imprimatur when the case surely comes before it from the present Court of Appeal, as it surely must. It is a groundbreaking case or historical proportions,” the senior advocate submitted.
