VAT Dispute: Why Nigerian Government may explore out-of-court settlement with states ─Minister

*Zainab Ahmed, Minister for Finance, Budget and National Planning, in a recent interview says the Federal Government hopes there will be a political solution to the burning issue rather than a protracted court case

*Lagos and Rivers State Governments react to out-of-court settlement proposal

Alexander Davis | ConsumerConnect

In regard to the lingering legal dispute over collection of the Value Added Tax (VAT) between its agency and some states of the Federation, the Federal Government has suggested it may explore an out-of-court solution.

ConsumerConnect had reported the Federal Inland Revenue Service (FIRS) has been embroiled in a legal tussle with both Lagos and Rivers states over the collection of VAT in the economy.

Mrs. Zainab Ahmed, Honourable Minister for Finance, Budget and National Planning

The Federal High Court sitting in Port Harcourt, Rivers State capital, August 9, 2021, had ruled that Rivers State Government and not the FIRS should be the authority collecting VAT and Personal Income Tax in the state.

Mrs. Zainab Ahmed, Honourable Minister for Finance, Budget and National Planning, during a recent interview on Channels TV programme said that efforts were in progress on the matter, but she did not give details as the matter was subjudice.

However, the Minister stated that she hopes there will be a political solution to the burning issue rather than a protracted court case among the parties.

VAT matter between FIRS, Lagos and Rivers states

It is noted that FIRS at the time had approached the Court of Appeal, in Abuja, FCT, to challenge the judgement.

The tax administration regulator also wrote to the Nigerian Senate to seek the inclusion of VAT collection in the Exclusive Legislative List.

Following the failure of the FIRS to obtain a stay of execution it sought from the appellate court to prevent the state government from enforcing the verdict, the Rivers State Government enacted a law to empower the state to collect VAT.

Governor Nyesom Wike of Rivers State signed the bill into law August 19 this year.

Lagos State, whose request for joinder as a respondent in the suit before the Court of Appeal was also granted by the court, also enacted its own VAT law.

Consequently, Governor Babajide Sanwo-Olu of Lagos State also signed the bill into law September 10, 2021.

Nonetheless, after approving Lagos State’s request for joinder as a party at the Court of Appeal, ordered all parties to maintain the status quo on the matter, a ruling the Rivers State Government had approached the Supreme Court to set aside.

The Court of Appeal also directed that the matter be moved from Abuja to its Port Harcourt Division for further hearing.

Though the court has yet to decide on the substantive suit, the Minister in the interview, that “I’m not supposed to be talking about issues in court, but I do hope that this problem can be solved by sitting on the table; not on the pages of newspaper or disagreements in court because it is possible to solve it on the table, talking of political solution.”

Mrs. Ahamed as well noted: “There are a lot of efforts going on right now. As I said, I don’t want to discuss it because it’s in court so I have to be careful.

“But there will be a positive political solution. We are working towards an out-of-court solution.”

What concerned states say on government’s suggestion

For the Rivers State Government, which initiated the VAT court case, Prof. Zaccheus Adangor, Honourable Commissioner for Justice, in Rivers State has declined to comment on the matter.

Governor Babajide Sanwo-Olu of Lagos State

Prof. Adangor rather said the Commissioner for Information should be contacted on the issue, The Punch reported.

Mr. Paulinus Nzirim, Honourable Commissioner for Information, also declined comment on the issue, simply saying, “no comment”.

In his previous comments on the matter, however, Governor Wike did not rule out the option of dialogue, but he hinted that all concerned would have to first agree that states should be the right authority to collect  VAT, according to report.

“Some people have said be your brothers’ keeper. I have no problem with that, but let us tell ourselves the simple truth.

“When you agree that it is the states that should collect VAT, we can sit down to say, now we know it is the states, but look at the problems. That is a different thing,” said the governor.

But the Lagos State Government (LASG), in its response to whether it would embrace a political solution, said it would consider the option provided the conditions were just and fair.

The state government, however, said it had yet to be contacted by the Federal Government on the out-of-court settlement option.

Mr. Gbenga Omotoso, Honourable Commissioner for Information and Strategy, in Lagos State, Friday, November 12, 2021, reportedly said: “As far as I know, we haven’t got any representation from the Federal Government. But for us in Lagos, it is not a matter of us vs them.

“It is a matter of justice, fairness and equity. It is a matter of what is good for Nigeria.

“In Lagos, if we get it right, it will affect every corner of Nigeria.”

Omotoso further noted that Lagos is like a giant carrying on its shoulders the responsibilities of so many others.

“So, if you encourage this giant to do more, it will and the effect will percolate through other parts of the country.

“If you fix roads in Lagos, goods coming from the port would get to other parts of the country fast and cost of freight would reduce; wear and tear on vehicles would reduce.

“An out-of-court settlement is an option so long it is going to promote equity, justice and fairness,” the Commissioner for Information and Strategy said.

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