Rivers State Governor, Nyesom Wike, on Thursday has signed into law the bills on Value Added Tax (VAT) collection and Open Grazing Prohibition in Rivers State, signaling the commencement of the collection of VAT by the state government.
The Federal High Court sitting in Port Harcourt had last week declared that it is the duty of states to collect VAT and not the Federal Government.
While signing the law at Government House, Wike said the state did not remit the 7.5 percent VAT on the over N30 billion contracts it awarded within the last month to the Federal Government.
“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 said.
The governor maintained that the judgment of the Federal High Court had sufficiently addressed the illegality perpetrated by the Federal Inland Revenue Services (FIRS) on behalf of the Federal Government in the collection of VAT in States.
Apart from the Valued Added Tax Law No. 4 of 2021; the governor also signed 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.
The signed bills were recently passed by the Rivers State House of Assembly.
The Rivers State Governor pointed out that when agencies of the Federal Government are allowed to illegally demand and collect taxes meant for states to collect, they strangulate the States financially and turn them to be beggars.
“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 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.”
The governor said no campaign of calumny or blackmail on the part of FIRS will make what is illegal to become legal. He dismissed FIRS’ propaganda that 30 states will suffer if some states are allowed to collect VAT.
Wike pointed out 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 raised alarm over plans by FIRS to introduce Road Tax, saying the tax would likely to take away more duties from the States, and further emasculating them financially.
“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.”
The governor remarked that the states have been so emasculated that they could barely survive without monthly revenue received from Federation Accounts Allocation Committee (FAAC).
Governor Wike stressed that the over bearing attitude of the Federal Government impinges on attaining financial autonomy for the legislature and the judiciary, since the states are not allowed to collect due revenues as specified by the country’s constitution.
According to Wike, with the Petroleum Industry Act (PIA) passed and signed into law, there shall be unbundling of NNPC, which means that NNPC remittance to the federation account will be less, requiring every state to look inwards on how to survive.
While thanking the state lawmakers for giving the bill speedy passage, the governor assured that every area that the law allows the state to collect revenue would be maximised for the survival of the state.
Speaking on the Open Rearing and Grazing Prohibition Law No.5 of 2021, Wike said it is inimical to development and peace, for any state to condone opening grazing of cattle.
He said cattle rearing is agricultural business and the law, which has specified ranching, is so intended in order to stem clash between herdsmen who go to destroy farmland, crops, and having problems with farmers that lead to fighting and killing of themselves.
“It is no longer a story. All of us know what our people have suffered in terms of this open grazing. Today all Nigerians have come to accept the reality that open grazing is no longer fashionable. Even our brothers in the north have agreed that it is no longer fashionable.”
On the Child’s Rights Amendment Law No 2 of 2021, Governor Wike noted that with such law in place now, family courts can become operational in the State.
The governor said the Naming and Renaming of Infrastructure Law No3 of 2021 will promote the naming of public facilities after prominent Rivers people.
He pointed out 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.
The Speaker of the Rivers State House of Assembly, Ikuinyi-Owaji Ibani, described the collection of VAT by FIRS as the worst form of retrogressive tax in any tax regime.
He commended the governor and the state government for challenging the constitutionality of FIRS collection of VAT in States. According to him, the signing of the VAT law will ensure that Rivers’ people are not plunged into extreme poverty.
Ibani said the law banning open grazing in Rivers State will serve as both cure to the symptom and the disease of herders and farmer bloody conflict.