The Gombe State government has urged southern states to reconsider their push to keep Value Added Tax (VAT) generated from their states, saying only three states in the country can survive if such a plan becomes a reality.
Muhammad Magaji, the state’s Commissioner for Finance and Economic Creation, made the appeal at the start of a Technical Workshop on the development of the state’s Medium-Term Sector Strategy (MTSS).
The appeal comes following plans by Governors Babajide Sanwo-Olu and Nyesom Wike of Lagos and Rivers states respectively to begin VAT collection in their respective states.
Following a court order which granted Rivers State the sole power to collect VAT and Personal Income Tax (PIT), and the dismissal of a stay-on-execution filed by the Federal Inland Revenue Service, Governor Wike signed the VAT Law No. 4 of 2021.
In the same vein, a bill to empower the Lagos State Inland Revenue Service (LIRS) to collect VAT passed second reading at the Lagos State House of Assembly on Monday.
Reacting to the developments, Magaji said with the declining money from the federation account, just three of the country’s 36 states could exist without assistance from the Nigerian government.
He mentioned the three states as Lagos, Rivers and Delta.
“The VAT issue will have adverse effects not only on Gombe State but almost all the states of the federation. I was part of the discussion few weeks ago by all commissioners of finance across the country.
“The realisation was that only Lagos, Rivers and probably Delta states would be able to pull through without this VAT being administered centrally, and it is our appeal that we all put sentiments behind and work towards a federation that is one, by being our brothers’ keepers and ensuring that what is pull together at the center is distributed to be able to balance resources across the country,” Magaji said.
Magaji said it would be a very bad development that would not bode well for the country if every state will ask for control of its resources.
He said: “Don’t forget that the oil producing states collect only 13 per cent derivation, so if you say every state will take whatever resources it has, that it means we are starting a very dangerous trajectory that will not augur well for the federation called Nigeria.”