N1.64tn at stake, as Oyo joins Rivers, Lagos in suit against Nigerian govt over VAT collection

Oyo State Government has asked to join Rivers State in its suit against the Federal Government, following an application submitted to the Court of Appeal sitting in Port Harcourt, Rivers.

The state’s Attorney-General, Oyelowo Oyewo, made the request on behalf of Governor Seyi Makinde’s administration, citing avoidance of multiple court cases, as reason for the preferred joint suit.

The Lagos State governemnt has also filed an application recently to be joined in the same suit as an interested party.

In the application, Oyo State said it applied to join Rivers government’s suit because the state is one of the interested parties that will be affected by the court’s judgement.

This was made known by Taiwo Adisa, the Chief Press Secretary to Governor Makinde, on Tuesday. The statement reads;

“In the suit, the Government of Oyo State is seeking two orders, viz: an order of the Honourable Court joining the Attorney-General of Oyo State as a respondent on the appeal with suit number FHC/PH/CS/149/2020 and appeal number CA/PH/282/2021 and any other order the Court may deem fit.

“According to the Attorney-General of Oyo State, the government of Oyo State was unaware of the suit between the Attorney-General of Rivers State and the Federal Inland Revenue Service at the Federal High Court until the judgment was delivered.

“Other grounds upon which the application was based include that the decision of the appellate court will affect the collection of VAT by the government of Oyo State, being one of the states which the judgment of the lower court recognised as entitled to collect VAT within its territorial jurisdiction.

“Oyo State Government also indicates that the applicant, Attorney-General of the State, represents the interest of the Oyo State Government, whose interest in the collection of VAT within Oyo State will be impacted one way or another by any judgment delivered by this Honourable Court in this appeal,”

The state government said upon the court’s review of its application, it will see enough reasons to grant its prayer to join the VAT suit against the Federal Government.

What you need to know…. N1.64 trillion at stake

Ripples Nigeria had reported in August, that Rivers State filed a suit against the collection of Value Added Tax (VAT) by Federal Inland Revenue Service (FIRS) an activity it deemed illegal based on the Concurrent list of the constitution that grants state government the power to demand and collect such tax.

READ ALSO: Gov Makinde sends nominees for Oyo State electoral commission to Assembly

While the Federal High Court, Port Harcourt granted the prayers of Rivers State government, the Court of Appeal ordered the parties against taking any action on the lower court’s ruling – the case is now in the Supreme Court, as Rivers moves to dismiss the decision of the Court of Appeal.

If the decision goes in favour of the state governments, the FIRS will fail to meet its revenue target, as the tax agency and FG will lose about N1.64 trillion to the states, mostly those generating higher IGR.

Lagos, Rivers, Oyo, Ogun States are some of the beneficiaries considering their IGR contribution to the Federal allocation shared among states in the country.

Alcohol: The division between the Southern and Northern governors.

The call for state to demand and collect VAT is mostly gaining momentum among Southern states, as Northern state governors have spoken against their counterparts’ action.

If the decision goes in the way of the Southern states, the Northern region is set to also loss out as their consumption tax revenue is below what the federal allocation gets from the former.

The battle for VAT had been triggered by constant destruction of products like alcohol in the North, despite the region’s governors collecting tax revenue on consumption of alcohol in the southern part of Nigeria.

The Sharia law in the north forbids sale and consumption of alcohol, but the Federal government collects alcohol consumption tax in the south, then share with the north – this created division between the Southern and Northern governors.

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