Kingsley Moghalu, a former deputy governor of the Central Bank of Nigeria (CBN); and Ebun-Olu Adegboruwa, a Senior Advocate of Nigeria (SAN), have both hailed a ruling by the Federal High Court in Port Harcourt, Rivers State, which empowered states as the sole collectors of Value Added Tax (VAT).
The court had last month restrained the Federal Inland Revenue Service (FIRS) from collecting VAT and Personal Income Tax (PIT) following litigation instituted by the Rivers State government, ruling that the state should take charge of the collection.
On Monday, the court reaffirmed its stance on the matter by dismissing a stay-on-execution filed by the FIRS against the ruling.
VAT is a consumption tax paid when goods are purchased and services are rendered. It is charged at a rate of 7.5 per cent in Nigeria.
Reacting to the ruling, Moghalu and Adegboruwa in separate fora said the ruling was long overdue, describing it as the restart of actual restructuring in Nigeria.
In a series of Twitter posts on Wednesday, Mogahlu noted that the order will force the Federal Government, which he described as “lazy”, to subsequently up the ante with regards to fiscal federalism and responsibility.
The former CBN deputy governor wondered why states have been contributing to the Federal Government’s purse for long, adding that he expects the order to be challenged up to the Supreme Court.
“The Federal High Court ruling on VAT is the correct one, though we can expect litigation to the Supreme Court. It strikes a strong blow at THE LAZY FEDERAL GOVERNMENT whose head once called our youth “lazy”. Nigeria has long been a fiscally failed state.
“Why should states in a supposed federation be producing mainly for @NigeriaGov?#Restructuring has already begun, by fire by force. I pity those who think they can stop the wind,” Moghalu tweeted.
On his part, Adegboruwa in a statement on Thursday commended Nyesom Wike, Governor of Rivers State, for starting a “revolution” for proper fiscal federalism in the country.
According to the prominent human rights lawyer, the collection of VAT by states is a “form of restructuring”.
The statement read: “It is restructuring and I support it 100%. We’ve been shouting and crying for this lopsided federalism to be made equitable. Those who make peaceful change impossible make violent change inevitable.
“I commend Gov Wike who started this revolution.
“I also commend Gov Sanwoolu, my LBS and Hon A-G, Onigbanjo and the Lagos House of Assembly.
“Other laws should follow. LASG should go to Lagos High Court to seek an order for immediate compliance with the VAT law by all persons and authorities doing business in Lagos State.
“It’s a good beginning. Enough of feeding-bottle federalism and Abuja financial pilgrimage!”
The FIRS has, however, insisted that taxpayers must continue to honour their tax obligations under the VAT Act until the court of appeal or supreme court gives a final verdict on the issue.