Governor Nyesom Wike on Thursday signed the River State’s Value Added Tax (VAT) collection, Open Grazing Prohibition and other bills, hinging his act on the judgment of the Federal High Court sitting in Port Harcourt which recently ruled that collection of VAT by the Federal Inland Revenue Services (FIRS) on behalf of the Federal Government in the states lacked constitutional basis.
The governor signed the Valued Added Tax Law No. 4 of 2021; The Open Rearing and Grazing Prohibition Law No 5 of 2021; The Child’s Rights Amendment Law No 2 of 2021; The Residents Registration Agency Law No 6 of 2021 and the Naming and Renaming of Infrastructure Law No3 of 2021.
Justifying his action on the VAT, the governor clarified: “But we (Rivers State) are standing on the part of history as representatives of the state to have taken the bull by the horn to challenge the illegality of the of the Federal Government through the Federal inland Revenue Services (FIRS).
“Of course, we are all aware that the states have already been strangulated. Most states depend on allocation from federation account. States have been turned to beggars. Hardly will any day pass that you won’t see one state or the other going to Abuja to beg for one fund or the other”, he added.
Wike boasted that no campaign of calumny or blackmail on the part of FIRS will make what is illegal to become legal, debunking FIRS’ claims that 30 states will suffer if some states are allowed to collect VAT.
The governor further noted that the concerns should be on establishing whose duty is it to collect VAT and the constitutionality of such position before talking about who is going to suffer or not.
He said: “In this (Rivers) state, we awarded contract to companies and within the last month we paid over N30billion to the contractors and 7.5% will not be deducted from that and to be given to FIRS.
“Now, look at 7.5% of N30billion of contracts we awarded to companies in Rivers State, you will be talking about almost N3billion only from that source. Now, at the end of the month, Rivers State government has never received more than N2billion from VAT. So, I have contributed more through the award of contract and you are giving me less. What’s the justification for it?”, he queried.
Commenting further, the governor said there were already plans by the FIRS to introduce Road Tax and that this is likely to take away more duties from the states, and further constrain them fiscally
“Which are the roads? Are they the roads the State government is paying for or the roads Federal Government has constructed? So, at the end of the day, they have taken over the functions of the State government and the State is left with nothing.”
According to the governor, with the Petroleum Industry Act (PIA) passed and signed into law, there shall be unbundling of NNPC, which means that the corporation’s remittances to the federation account will be dwindling, requiring states to explore internally generated revenue (IGR) sources to boost their taxes and survive
While thanking the state lawmakers for their courage to have given the VAT bill speedy passage, the governor assured that every area that the law allows the state to collect revenue will be maximized for the state’s socio-economic development
On the Open Rearing and Grazing Prohibition law, No.5 of 2021, Wike said it was inimical to development and peace for any state to condone opening grazing of cattle.
Commenting further on the Child’s Rights Amendment Law No 2 of 2021, the governor maintained that with such law in place now, family courts can become operational in the State.
This is even as he noted that the Naming and Renaming of Infrastructure Law No3 of 2021 would promote the naming of public facilities after prominent Rivers people, adding that with the Residents Registration Agency Law No 6 of 2021, every resident in the State will be registered so that the State Government can know their status, what they do and where they reside for purposes of security planning.
In his remarks, the Speaker of the Rivers State House of Assembly, Rt. Hon. Ikuinyi-Owaji Ibani, described the collection of VAT by FIRS as the worst form of retrogressive tax in any tax regime.
