By Mujib Dada-Qadri Esq
SIR: Honourable Justice Dalyop Pam has just issued an order of perpetual injunction restraining FIRS & AGF from collecting and demanding personal income tax and Value Added Tax, VAT. The suit was filed by Attorney General of Rivers State. The court granted all the reliefs sought by AG Rivers State citing Item 58 and 59 of the Exclusive Legislative List of the constitution as the authority limiting the tax collection of federal government to taxation of incomes, profits and capital gains and this does not include VAT or any other sales or levies.
This judgment is exciting to some southerners who see their region of the country as the biggest source of VAT and implying the North as “parasite”. So the judgment fits the deepening regional division unfortunately. It is more unfortunate because the judgment will attract ethnic biases instead of unbiased and dispassionate legal analysis.
It is needful to disappoint those that will use the judgment as a tool of ethnic or regional manipulation to note that out of 36 states in Nigeria cum FCT, only five states can boast of contributing to substantial VAT collection in Nigeria. According to 2020 report of BudgIT, Lagos, Ogun, FCT, Rivers are the highest contributors of VAT. This is a slap in the face of other states whether in the south or north that are being sustained largely by the contributions of just four or five states.
Read Also: Court declares Rivers, not FG should collect VAT, income taxes, others
The legal perspective in respect of this judgment is a very interesting one. There is a Supreme Court judicial precedent on VAT involving AG Lagos State VS AG of the federation. It was held by the Supreme Court that only Federal High Court has original jurisdiction to entertain suits relating to federal revenues and not Supreme Court. Upon preliminary objection, the suit on VAT was only struck out and not resolved on merits. This means the substantive suit brought by Lagos State government on whether federal government should control and collect VAT was not resolved but matter regarding on jurisdiction was only resolved, this confirms the judgment and jurisdiction of the Federal High Court sitting at Rivers State.
It is too early for anyone to jubilate because statutory interpretations can be tricky. This is my prediction before further appeal by the federal government. The concurrent legislative list as provided for in the 1999 constitution does not exclusively grant “state government” ultimate authority, concurrent list empowers the National Assembly and state assemblies. In conflict between the two, the National Assembly will be supreme; this means the federal law will be ultimate. Specifically, items 58 and 59 of 1999 Constitution grant federal government exclusive control on capital gains, profits and taxation of incomes but PART 2 Of Concurrent Legislative List provides thus; section 7 “in the exercise of its powers to impose any tax or duty on-
(a) Capital gains, incomes or profits or persons other than companies and
(b) Documents or transaction by way of stamp duties;
“The National Assembly may, subject to such conditions as it may prescribe, provide that the collection of any such tax or duty or the administration of the law imposing it shall be carried out by the government of a state or other authority of a state.”
It will be a fruitful intellectual adventure for lawyers and non-lawyers to evaluate the constitutional provision above and dispassionately analyse similar statutes in respect of the subject. “What is dead may never die”.
- Mujib Dada-Qadri Esq,
dadamujeeb1@gmail.com
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