Fiscal federalism: Wike orders immediate collection of VAT in Rivers

 

.Court dismisses FG’s application for stay of execution

.Gov. threatens fresh lockdown as COVID-19 cases rise

 

Governor Nyesom Ezenwo Wike has directed the Rivers State Internal Revenue Service (RIRS) to ensure the full implementation and enforcement of the  State’s Value Added Tax (VAT) Law.

 

The governor’s directive follows the Federal High Court in Port Harcourt dismissal of an application by Federal Inland Revenue Service (FIRS) for a stay of execution over the court’s judgment that declared Rivers State as constitutionally empowered to collect VAT within its jurisdiction.

 

Wike, in a state wide broadcast asserted that with Monday’s judgement, the way is now clear for his administration to enforce the Rivers State Value Added Tax Law 2021, until otherwise set aside by a superior Courts.

 

“Consequently, I hereby direct the Rivers State Internal Revenue Service (RIRS) to ensure the full and total implementation and enforcement of this law against all corporate bodies, business entities and individuals with immediate effect.

 

“All corporate bodies, business entities and individuals are advised to willingly, truthfully and promptly comply with their tax obligations under this law to avoid the full weight of the stipulated sanctions, including having their business premises sealed-up.

 

“I wish to further assure every resident that we shall as usual make effective use of the expected proceeds from this tax to accelerate the development of our State and improve the wellbeing of everyone.”

 

He maintained that the benefits derivable from the judgement of the Federal High Court in Port Harcourt that empowered Rivers State Government to collect Valued Added Tax (VAT) within its jurisdiction, also extend to other states because it is their constitutional right and authority.

 

He explained that what the Rivers Sate Government has done is to contribute to the advancement of fiscal federalism, in which states can feel empowered to explore their potentials to generate internal revenue to address their development needs.

 

“And in doing so, our singular and progressive objective was to contribute to the advancement of fiscal federalism by enabling the federating States to explore and exploit their potential and capacity for generating greater internal revenues with which to fund their development goals and reduce the outdated over-reliance on pitiable Federal allocation and other handouts.

 

“Fiscal federalism remains the right path to economic self-reliance and sustainability for all our States and the benefits derivable from this case by all the States in the long run far outweigh the immediate revenue loss that some States may presently suffer.”

 

Governor noted that when the judgement was first delivered in favour of the Rivers State Government, the Federal Government, through the Federal Inland Revenue Service (FIRS), disagreed and filed an appeal and sought a request for stay-of-execution of the judgment before the Federal High Court.

 

According to him, while the appeal was pending and without any stay-of-execution of the subsisting judgement, the FIRS went about to bully corporate bodies and business entities from paying the VAT to the Rivers State Government.

 

He said, FIRS did so, even when they knew that an appeal does not serve as a stay, neither was there anything to stay in a declaratory judgement.

 

“However, being a government that believes in the rule of law we decided on our own to suspend the enforcement of the Rivers State VAT Law 2021 pending the outcome of the FIRS’s application for stay-of-execution.

 

“Today, the FIRS has failed in its attempt to frustrate the enforcement of the State’s Law on VAT with the Federal High Court’s dismissal of its application for stay-of-execution of the judgement.”

 

He stated that the Rivers State Government did no wrong in exercising its legal right under the country’s constitutional democracy to stop the continuing breach, denial and curtailment of the constitutional right of States.

 

Wike said it was wrong for FIRS to impose and collect VAT and other related taxes within the jurisdiction of Rivers State.

 

“It is therefore very unfortunate that some State Governors led by that of Katsina State are vainly conspiring to truncate this progressive reality in favour of the inequitable status quo so that the Federal Government can continue to rob Peter to pay Paul as the nation’s self-imposed tax master-general.

 

“All that is required is for all of us to wear our thinking caps as elected Governors to collectively fight for the greater devolution of resources, responsibilities and powers to the federating States.

 

“For us in Rivers State, we will continue to ensure and project our constitutional rights to access all possible resources we can take hold both within and outside our geographical boundaries to advance the progress of our State.”

 

Meanwhile, a Federal High Court sitting in Port Harcourt, has dismissed an application by the Federal Inland Revenue Service, FIRS, seeking to stop the Rivers State Government from collecting Value Added Tax, VAT in the State.

 

FIRS in suit no FHC/PH/CS/149/2020 had through a motion on notice applied for a Stay of Execution on the earlier judgement of the court presided over by Justice  Stephen Dalyop Pam, that declared that it was the constitutionally role of State governments to collect VAT and not FIRS.

 

Justice Stephen Dalyop Pam, in his ruling on FIRS application for a stay of execution, said the granting the application would negate the principle of equity.

 

He noted that the Rivers State Government through the State Assembly, has duly enacted Rivers State Value Added Tax No. 4, 2021, which makes it a legitimate right of the state to collect VAT.

 

According to the Judge, every court in the country is constitutionally mandated to obey every legislation enacted by both the National and State Assembly respectively.

 

He explained that the Rivers State government law on VAT remains valid until it has been set aside by a court of competent jurisdiction.

 

Justice Pam stated that since FIRS was Ab initio acting in error by collecting VAT in Rivers State,  and has huge burden of refund of those monies,  there was need not to allow it incur further liability.

 

The Judge declared that the FIRS application is refused and dismissed in the light of the fact that  all subsisting law concerning the collection of VAT stands in favour of the Rivers State Government.

 

Earlier, Justice Pam had read a who presided read a letter that  FIRS lawyers had served the court seeking for  stay of any ruling on their application.

 

But, in the absence of any requisite document that ought to have been attached to the letter, the Judge dismissed the letter.

 

Speaking on the implication of the ruling, the counsel for Rivers State Government, Mark Agwu said the Rivers State Government is still entitled to collect VAT within the State.

 

“Today, the court has delivered its ruling dismissing the said application for stay of execution, though without cost. In fact, the court’s reason is that if it should grant stay, it is more or less like over- ruling itself.

 

“And then, since the court is empowered to recognize all laws enacted by the National Assembly or the State Houses of Assembly, therefore, that law(Rivers) stands, it is a substantive law.

 

“Therefore, the issue of collection of VAT as it stands today, Rivers State Government is still entitled to so collect. That is were we are today.”

 

In his reaction, Rivers State Commissioner for Finance, Budget and Economic Planning, Isaac Kamalu said the decision by the Lordship has confirmed the position, both constitutionally and legally, that Rivers State has the authority to collect Value Added Tax (VAT).

 

“Well, first we need to thank God. Second, we need to thank the Judge for the courage. If you recall, the court has already declared that it is the Rivers State Government that has the constitutional responsibility for the collection of Value Added Tax.

 

“Following that decision of the High Court, which is binding on all parties and institutions, the Rivers State Government and the State Legislature has the Value Added Tax Law of Rivers State No. 4 of 2021 in force too.”

 

“I think the decision by the Lordship this morning is to confirm the position, both constitutionally and legally that the State has the authority to collect Value Added Tax (VAT).”

 

Lead counsel to Federal Inland Revenue Services (FIRS) Reuben Wanogho said the court has delivered its ruling on the basis of how it saw the facts of the case before it.

 

According to him, they do not agree with the ruling and already resolved to take all necessary steps to challenge it.

 

Also on Monday, Governor Wike said government may be constrained to re-imposed the suspended COVID-19 lockdown measures if residents of the state fail to adhere to the existing COVID-19 protocols.

 

The governor, in a broadcast on Monday said daily figures released from the NCDC show that both the transmission and death rates in the last two weeks have consistently been on a rising spiral because residents and visitors to the State have largely abandoned their responsibility to comply with the existing COVID-19 Protocols.

 

He stated that although it remains the desire of the State government to keep the State open and allow citizens to go about their social, religious and economic activities unimpeded. But warned that government might be compelled to imposed lockdown if the residents continue to disregard Covid-19 protocols.

 

“We may be constrained to re-imposed the suspended COVID-19 lockdown measures across the State if the transmission of the disease continues to increase beyond tolerable limits.

 

He observed that the State might face a serious health disaster of profound consequences if residents and visitors continue to behave as if the pandemic no longer exists or impotent in Rivers State.

 

“This is a big lie and we cannot afford to continue to close our eyes to the dangers such irresponsible behaviour poses to the health, lives and livelihood of everyone.

 

“Accordingly, I wish to remind residents of the subsisting protocols on regular washing of hands and use of alcohol-based sanitizer; maintaining social distancing; wearing of face masks at all public places, including transport vehicles and going for immediate testing and treatment whenever you notice any of the symptoms.”

 

He has therefore, appealed to all residents to protect themselves and their loved ones by taking the vaccine at the designated health centres in the 23 Local Government Areas of the State as they become available.

 

“Furthermore, it has been proven that vaccinations are saving lives here and across the world and those refusing to take the vaccines for no certified medical reasons should know that they are endangering the rest of the citizens.

 

“I therefore appeal to all residents to help protect yourself, your loved ones and the rest of the citizens by getting your jab at the designated health centres in the 23 Local Government Areas of the State as they become available.

 

“I also appeal to religious leaders and churches to convince and encourage their followers and members to please go out and take the vaccines and comply with the covid-19 protocols in addition.

 

The Rivers State Governor also reiterated that the ongoing demolition of shanties was borne out of the compelling need to safeguard lives and property across the State.

 

According to him, the objective, which is gradually being achieved, is to deny the criminals such places that they have used as sanctuaries and hideouts to embark on their criminal activities.

 

“We therefore refuse to be blackmailed by those unpatriotic elements who are trying to stir false ethnic, religious or tribal sentiments around our patriotic commitment to advance the safety and security of residents.

 

“Furthermore, we refuse to be intimidated by such baseless pranks. Rather, we will not rest until we clear the State of all shanties wherever they are located and restore sanity to our environment and achieve a better sense of comfort and security for everyone.”