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VAT: 8 Governors Who Should Oppose Agitation For VAT Collection By State To Avoid Financial Crisis

As the tussle on the rightful tier of government who should collect Value Added Tax (VAT) continues among some states and the Federal Government, it is expedient that some eight (8) Governors rise up and oppose agitations for VAT collection by state because if they don't, they'll be adversely affected.

Photo Credit: BBC

Recall that the Court of Appeal in Abuja, on Friday, ordered the Rivers and Lagos state governments to stay action on their bids to collect Value Added Tax (VAT) pending the resolution of the legal dispute on the matter.

However, while the outcome of the suit is being awaited, worthy of note is that there are some states who may not be able to survive without support from the federal allocation because of the percentage of the IGR being generated in their states in comparison with what they do receive from FAAC is very low.

Photo Credit: Vanguardngr

For instance, Bayelsa's IGR to FAAC receipt is 8.0%, Jigawa: 8.1%, Katsina: 8.8%, Adamawa: 9.1%, Yobe: 9.2%, Niger: 9.6%, Taraba: 9.8% while that of Benue is 9.8%.

To this end, Duoye Diri of Bayelsa state; Governor Muhammad Badaru of Jigawa; Katsina state Governor, Aminu Masari; Ahmadu Fintiri of Adamawa; Governor Mai Buni of Yobe state; Sani Bello of Niger state; Darius Ishaku in Taraba and Benue state Governor Samuel Ortom must oppose the attempt by their Rivers and Lagos counterparts to collecting VAT in their states.

Photo Credit: Dailypost

This is because Lagos and Rivers states are the highest contributors to the Federal Government purse, generating N418bn and N117bn respectively in the year 2020, as a result, if those two states pull out from former arrangements, other states will be heavily impacted, because the FG won't have sufficient funds to share among other states of the federation.

Meanwhile, the IGR usually refers to non-oil revenue, that is, revenue from taxes on companies or businesses, thus, states with insignificant economic activities or very few buoyant companies or businesses, may not be able to generate enough IGR and vice versa.

Photo Credit: Punchng

Consequently, while some governors have argued that it was best that states were granted power to collect VAT in their states, others said it if not the best as not many states can survive on its own without the monthly Federal Allocation.

But in your view, who do you think should collect VAT, states or the Federal Government ?

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Abuja BBC Court of Appeal Lagos Rivers


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