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Southern states are confusing VAT with sales tax -Northern Governors Forum

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MEMBERS of the Northern Governors Forum (NGF) have said that their southern counterparts are confusing the value added tax (VAT) with sales tax.

This was part of a communique at the end of the governors’ meeting in Kaduna on Monday.

Plateau State Governor Simon Lalong, who read out the communique after the meeting, said if states were allowed to enact their various VAT laws, there would be increases in the prices of goods and services as a result of multiple taxations.

The governors noted that the reason Lagos would account for 50 per cent of VAT collection was that most telecommunication companies, banks, manufacturing and other trading activities had their headquarters in the state.

“VAT is being confused by these state governments as a sales tax. If every state enacted its own VAT Law, multiple taxations will result in increases of prices of goods and services and collapse in interstate trade. VAT is not a production tax like excise, but terminal tax which is paid by the ultimate consumer,” he said.

The governors stated that they would maintain the status quo until the final determination of the VAT row at the Supreme Court.

He said it would be sub judice to comment on VAT until the Supreme Court pronounced judgement on the substantive matter between Rivers  and Lagos states vs Federal Government.

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He noted that Northern States Governors Forum would respect this.

Controversies have continued to grow across the country after a Port Harcourt Federal High Court ruled last month that the Rivers State Government had the powers to collect VAT within its territory.

In response through its house of assembly, Rivers State enacted the state VAT law and immediately expressed readiness to enforce the judgment beginning from this month.

Lagos State Government has followed suit by enacting and signing the state VAT bill into law.

The state joined Rivers as a co-defendant in an appeal filed by the Federal Inland Revenue Service (FIRS) against the Federal High Court judgement.

But an Abuja Court of Appeal has ruled that all parties in the matter should maintain status quo.

Rivers State Government has asked the Supreme Court to set aside the ruling of the Court of Appeal.

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It also asked the apex court to order that the substantive appeal by the FIRS and all other processes be heard and determined by a new panel of the Court of Appeal.

Ogun State has also joined the race as the bill to legalise VAT collection passed second reading in the state house of assembly.

The Southern Governors Forum (SGF) has expressed support that states should collect VAT to engender fiscal federalism.

Although some states, including Kogi, Ebonyi and Katsina, have opposed the idea, many Nigerians believe that the current VAT face-off will set the nation on the path of fiscal federalism.

The ICIR reported that the Federal Government had expressed resolve to present the case to the Supreme Court for adjudication.

Minister of Justice and Attorney-General of the Federation (AGF) Abubakar Malami, who revealed this to newsmen last week, said VAT collection was outside the jurisdiction of states.

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