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Written by on September 13, 2021

The NULGE President, Akeem Olatunji

The National Union of Local Government Employees has said that the 744 local government councils should collect the Value Added Tax and not the Federal Inland Revenue Service or state governments.

The NULGE President, Akeem Olatunji, who stated this in an interview with one of our correspondents on Sunday, said VAT collection would impact the communities and people more positively if collected by the third tier of government.

Olatunji stated this just as the Chairman of the Borno State Internal Revenue Service, Mohammed Alkali, told The PUNCH that not all states in the South could be self-sustaining as far as internally generated revenues were concerned.

He, however, stated that Borno State would boost its IGR if the courts give states the go-ahead to collect VAT.

On his part, Olatunji argued that VAT collection should be the responsibility of the local councils “since both companies and consumers reside within the LG areas.”

Justice Stephen Pam of the Federal High Court in Port Harcourt, the Rivers State capital, had on August 10, 2021, ruled that the Rivers State Government and not the FIRS should be collecting VAT and Personal Income Tax in the state.

Last Monday, the court also dismissed the FIRS application for a stay of execution, noting that the earlier order remained valid until set aside by a higher court of competent jurisdiction.

But a three-man panel of the Court of Appeal, on Friday, asked the parties to maintain the status quo.

Justice Haruna Tsammani, who delivered the ruling of the appellate court, ordered that the “the status quo ante bellum” be preserved and adjourned the matter till Thursday, September 16, 2021 to enable the parties to file their response to the application filed by the Lagos State Government to join the suit.

Rivers and Lagos states have already enacted their VAT laws, while more states, including Ogun and Akwa Ibom, said they were ready to enact laws that would enable them to collect the tax in their states.

Some other states such as Edo, Ondo, Oyo and Taraba said they were still studying the ruling of the Federal High Court in Port Harcourt on the matter, while Delta State said it was consulting before it would take a position on the issue.

But responding to questions on the VAT controversy via SMS, Olatunji said, “We support the collection by the LGs since both companies and consumers reside within the LG areas for positive impact directly on the people and communities.”

But the Chairman of the BSIRS, Alkali, stated in an interview with The PUNCH, “If the court decides to give the states the liberty to collect VAT, we in Borno will gladly do so. But bear in mind, not all states in the South-South, South-West and the South-East can generate enough revenues to sustain themselves.

“Borno is doing relatively well in terms of internal revenue generation, which was enhanced by the implementation of the Harmonised Revenue Law in January 2021, compared to many states in the South. We commenced the collection of taxes in the state in January and the outcome is impressive. Remember, Borno borders three countries and people from these countries come into the state to do business; so, we are on the right track as far as revenue generation is concerned.

“I feel strongly that states will be far better off with the FIRS collecting the tax and keeping it in the harmonised Federation Account pool.”

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