Tax dispute: In Rivers, we are not at war with FG - Wike

Tax dispute: In Rivers, we are not at war with FG - Wike

Rivers State Governor Nyesom Wike has explained that his administration challenged the power of the Federal Government to administer the Value Added Tax (VAT) and related issues in court to safeguard the nation’s federal structure.

Wike said the current arrangement where the Federal Government dictates to states on virtually all issues violates the principles on which Nigeria’s federal system was negotiated.

According to him, the foundation of “our federalism” places both levels of government at par.

The governor spoke at a public lecture on “taxing powers in a federal system” held as part of activities marking the 60th birthday of a former Independent National Electoral Commission (INEC) Resident Electoral Commissioner (REC)), Ahmed Raji (SAN),  in Abuja at the weekend.

He was represented by the Attorney-General and Commissioner for Justice, Prof.  Zacchaeus Adangor (SAN).

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Other speakers, including Justices Peter Ige and Nnamdi Dimgba, suggested ways out of the tax management dispute.

Rivers State had secured a landmark court judgment that stripped the Federal Inland Revenue Service of the power to collect and administer VAT in the country.

FIRS and the Federal Government however, appealed the verdict and secured a stay of execution order against Rivers as well as Lagos State Government that was joined in the suit.

The development made the Rivers State Government to head to the Supreme Court for an order quashing the stay of execution.

Most Northern states and Ebonyi State in Southern Nigeria are in support of FIRS’ continued collection and management of VAT.

Dismissing the insinuation that his government was fighting the Federal Government, Wike said until the “fundamental principles of federalism are got right we will continue talking and talking and talking without result.”

He also disagreed with the keynote speaker, Prof. Abiola  Saani, on the tax system.

His words: “I have heard a lot of comments being made that we are fighting the Federal Government. There is no desire or intention on the part of the Rivers State Government to fight the Federal Government.

“But, we must realise that in a federal system, the states are not the house boys of the Federal Government. The principle of co-equality is fundamental in a federal arrangement.

“That is what leads us to the principle of autonomy. Autonomy leads you to fiscal autonomy and fiscal autonomy leads you to fiscal federalism.

“When you put all the principles together, what it means is that each level of government, whether federal or state is co-equal, because none derives its life from the other.  They both derive their lives from the Constitution.

“Because of that co-equality, every level of government is entitled to have access to sufficient revenue so that it can carry out its own responsibilities without subordinating its will to that residual authority.

“That is the fundamental principle of federalism and until we get it right we will continue in this journey of talking and talking and talking without result.

Wike said argued it is impossible for all the states to have a uniform approach to issues.

He said: “The taxing system you appear to capture is one that will do homogenisation and that certainly is not what we agreed upon at the constitutional conferences. And so, when you look at the constitution, and in matters of taxes, there is no ground for ambiguity, there is a specific donation of powers.

“Can we say that the Federal Government has the power to collect and impose those taxes that the court struck down in Port-Harcourt. Certainly not? So, for me, we need to resolve this issue through the court. That is what River State has opted to do.”

Wike, therefore, urged “many states as possible to join Rivers State in this new revival of the Nigeria federal arrangement, so that we can lay some of these issues to rest.”

Justices Ige of the Court of Appeal and Dimgba of the Federal High Court emphasised the need for a review of the nation’s tax laws and tax administration regime. to allow for a just and equitable allocation of tax resources.

Lead speaker, Prof. Sanni of the   University of Lagos, and a member of the House of Representatives, Ajibola Muraina, agreed with the two jurists.

Ige said: “I believe that with the appropriate backing of relevant laws, both at the federal and state levels, everybody will smile at the end of the day. And it will be better for the people of this country.

“So, without amendments to the Constitution of this country and amendment to the tax laws, we will all just be talking and there will be no way forward.

“So, I will entreat all of us that we beckon and make it compulsory for the National Assembly to rise to the occasion.   If they( Senators and House members) are faithful, if they are not acting ‘malafide’ against the interest of the people, it behooves them to rise to the occasion to make appropriate enactment that will distribute powers equitably between the states and the Federal Government, and all of us will be the better for it.

“This issue (the current disagreement) is setting us against ourselves, to fight ourselves, to see it as Yoruba, Hausa, Igbo confrontation. People are not looking at the law; they are looking at personalities and political gladiators involved.”

Dimgba said:  ”Taxing power has to follow legislative power because legislation is the compass by which the government has to navigate the legislation for which it wants to go.

“So, it cannot act capriciously even on issues of taxation. It has to be guided by legislative power. If a government does not have legislative power, it cannot have taxing power.

“When you look at things very well, I think the real energy investment is to be made in just trying to create/ design a tax revenue formula that is equitable, not only is equitable, it is just and equitable.

“For me, a tax revenue sharing formula that is equitable has to be one that balances two elements -the element of charity and the element of reward.

“If you don’t balance it, there is going to be a problem. The acceptable arrangement should be that which balances charity and reward.”

He frowned at the practice where government agencies collect certain levies and taxes where there are no clear legislative provisions for them. He mentioned the continued charge of N50 by banks on every transfer made by a customer despite extant pronouncements by courts declaring such as illegal.

Dimgba also faulted the practice where banks request a customer to pay three percent on every N500,000 lodgment in his/her bank account.

Sanni, a professor of Commercial tax, suggested an amendment to the constitution to encourage the development of the capacity of all levels of government and promote equity in the allocation of federal revenue to deal with the tax rancour in the country.