VAT: You Are Too Aggressive, Buhari’s Aide Knocks Wike
Senior Special Assistant to the President on Public Affairs, Ajuri Ngelale, on Monday, knocked Rivers State Governor, Nyesom Wike, for being allegedly tribalistic and aggressive in his pursuit for the collection of Value Added Taxes by the South-South state.
He also said that the Federal Government makes contributions to VAT generated in the country, noting that the 36 states do not generate VAT all by themselves.
The President’s aide stated this when he appeared as a guest on Channels Television’s ‘Sunrise Daily’ breakfast programme.
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.
Ngelale, who said that he is from Rivers State, flayed Wike over his alleged ethnic posture, saying that VAT collection by the Federal Inland Revenue Service is about “harmonized tax policy” to make businesses easy for Nigerians.
He warned that VAT collection by states would lead to double taxation which could make survival difficult for business owners in the country.
The Rivers State Government took the FIRS to court and won the rights to VAT collection within its territory.
Wike subsequently signed the state’s VAT bill into law last month after it was passed by the Rivers State House of Assembly.
Following the path of Rivers, Lagos State Governor, Babajide Sanwo-Olu, last Friday, signed the State VAT Bill into law a day after it was passed by the Lagos State House of Assembly.
On the same day, Lagos asked to be joined as a respondent alongside Rivers State in the appeal filed by the FIRS challenging the judgment of the Federal High Court, Port Harcourt which ruled that Rivers should commence VAT collection.
Justice Haruna Tsammani of the Appeal Court had adjourned to September 16 to hear the application by Lagos and asked all parties to “maintain status quo”.
Lagos and Rivers generate bulk of the total monthly VAT in the country but get about 20 per cent of the money made through federal allocation.
Wike had lamented the injustice in the distribution of federal revenue, saying that Rivers money is not for Abuja people.
But speaking on the television programme on Monday, the President’s aide said the Federal Government makes contributions to the generation of VAT in the country, noting that Rivers, Lagos and other states do not generate VAT by themselves.
Ngelale said, “I do disagree on the notion that states are by themselves generating VAT en masse and the Federal Government is trying to hijack (it).
“In 2020, the nation generated about N1.5trn in VAT. We have about 60 per cent of VAT coming from imports at the ports. As we know, ports infrastructure in the country is not controlled by the state governments, so they cannot say that it is their revenue; it is controlled by the Federal Government, it is federal revenue.
“Aside from the fact that we have a book coming from imports, we also have that second to Lagos is Abuja with about N202bn collected and the reason why is because Abuja is the site of federal ministries, departments and agencies and a huge bulk of that collection in the country was coming from VAT collected on contracts.
“So, when we create the impression that states collect these VATs and the Federal Government is hijacking it and trying to share it when in fact, it only (belongs to) Lagos or Rivers, I think it is a gross over-simplification.”
Ngelale inferred that the collection of VAT by the FIRS should be encouraged because it is perfecting the union of Nigeria.
“Anything that will perfect our union should be embraced. Any conversation, any serious-minded discussion around how resources are managed is healthy for the country,” he stated.
The President’s aide, who said the VAT issue has been “heavily politicised”, also complained about “some of the utterances, unfortunately, that have come from my state along ethnic lines etc and political posturing ahead of the next election”.