VAT Tussle: A Pointer To The Inevitability Of Restructuring -By Ogbole Agala Esq.

With mischievous headlines, media houses are not doing justice to what transpired at the Court of Appeal in the matter between the Rivers State Government and the Federal Government on the appropriate authority to receive Value Added Tax (VAT).

The decision of the Federal High Court which was in favour of Rivers State receiving VAT was not quashed.

The Court of Appeal ruling is to the effect that all parties in the case maintain status quo, pending the hearing of all applications before the court. This means the judgment of the Federal High Court (in favour of Rivers State) will not come into effect yet, till all applications pertaining to this matter before the Court of Appeal are heard and determined.

After hearing all applications and all parties adopt their briefs, the Court of Appeal will deliver it’s judgment; either upholding (allowing Rivers State receive VAT) or upturning the judgement of the Federal High Court (allowing the Federal Government to continue receiving VAT).

A party dissatisfied with the judgment can proceed to the Supreme Court, where the matter would be determined on a final note.

Lagos State applied to be joined as a party to this matter. If their application is granted, the judgment would be binding on Lagos State too.

It’s also been reported that the 36 states are in court against the Federal Government, in a bid to get the Court’s backing for States to commence the collection of Stamp Duty, instead of the Federal Government.

Whichever way both cases go in the end, it is obvious that an era when greater autonomy is given to States is at hand. There is bound to be less concentration of powers at the center in the days ahead.

When more powers reside with the States than the Federal Government, the short term effects will be disadvantageous to everyday Nigerians. This is because State Governments will focus on revamping their Internal Revenue Generating Systems in a bid to make up for the absence of federal allocations. Nigerians will pay more tax under such circumstances. This will come with more hardship than there is already.

The foregoing notwithstanding, the long term effects would be advantageous. Well managed States will enjoy unprecedented developments within their territories. Sleeping States will awake to the need to develop their states with natural and human resources available to them. Partnerships between States will bring great complementary benefits.

For things to work this way, effective mechanisms must be set in place to ensure accountability and curtail arbitrary borrowing, spending and exercise of powers by power-drunk governors.

There is a whole lot to be done pursuant to the deconcentration of powers at the centre. Drastic changes must be made and embraced. In the long run, Nigeria would fare better if things are done properly along this line.

ogboleagala@gmail.com