Following the defeat of the Federal government’s agency, Federal Island Revenue Service (FIRS) at the court by the Governor Nyesom Wike-led Rivers State government over collection of Value Added Tax (VAT), other states are dusting their legislative and legal gowns to follow suit.
Consequently, the Akwa Ibom and Adamawa state governments on Tuesday aligned themselves with the move to stop the Federal Government from collecting Value Added Tax.
The Director-General, Media and Communications, Adamawa State Government, Solomon Kumangar, in an interview with one of our correspondents in Yola, the state capital, said that the collection of VAT by the states was the only way of reducing their dependence on federal allocations.
The Akwa Ibom House of Assembly, on its part, said it would soon begin work on a bill that would enable the state to collect VAT.
Similarly, Lagos said it would go ahead with the VAT bill, which passed second reading in the state House of Assembly on Monday.
But the governments of Ekiti, Osun and Benue states said they were still studying the situation before making any move.
The Federal High Court sitting in Port Harcourt in its judgment last month in a suit marked FHC/PH/CS/149/2020 held that the Rivers State Government had the powers to collect VAT within its territory.
The Federal Inland Revenue Service, on Monday, prayed the court to stay execution on the judgment.
But the presiding judge, Justice Stephem Pam, rejected the application, saying granting it would negate the principle of equity.
On Monday, the Lagos State Government toed the path of Rivers State as a bill to empower it to collect VAT scaled second reading in the state House of Assembly.
VAT is a consumption tax paid when goods are purchased and services are rendered. It is charged at a rate of 7.5 per cent.
On Tuesday, the Adamawa State Government told The PUNCH that the judgment was of interest to it.
Kumangar said the state government might seek to be joined in the Rivers State versus the FIRS VAT suit as an interested party.
He said Adamawa State, which is heavily reliant on federal allocations and overstretched by the impact of COVID-19 and post-insurgency recovery demands of rebuilding, saw the development in Rivers State as one of particular interest to it.
Adamawa State, according to him, welcomes the court ruling as another avenue for states struggling with financial problems to utilise, extend and improve their internally generated revenues.
