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Opinion: Why Northern Governors Rejected Collection Of VAT By State Governments

According to the Northern Governors Forum (NGF), states collecting value-added tax (VAT) will raise prices of goods and services while also creating interstate trade barriers in the country. 

The NGF made this known at a meeting in Kaduna with northern state emirs and chiefs on Monday, September 27, 2021. 

Since August 2021, a court dispute has started over whether the states or the Federal Inland Revenue Service (FIRS) should collect VAT.

This is the context in which the federal high court in Port Harcourt issued an injunction prohibiting the Federal Inland Revenue Service (FIRS) from collecting VAT and personal income tax (PIT) in Rivers state.

Following the court's decision, Rivers and Lagos passed legislation imposing and charging VAT on businesses in their respective states. 

The court of appeal, on the other hand, directed both Rivers and Lagos states to retain the status quo (to keep things as they were before) in terms of VAT collection. 

Despite this, the Rivers state government has sought the supreme court to overturn a court of appeals decision in the case.

These are the possible reasons why the northern governors rejected state collecting VAT. 

1. The collection of Value Added Taxes by states might kill many small businesses, especially businesses that cut across different states of the federation. Too many taxes can easily kill businesses. 

2. When states start collecting Value-Added Taxes, prices of goods might skyrocket in the country because states will be eager to make more money by taxing every available business. 

In my opinion, the Northern Governors Forum is right in rejecting the position of their southern counterparts on VAT collection. The Federal Government should continue collecting Value Added Taxes across the country and distribute them among states. 

Content created and supplied by: Worldfashion (via Opera News )

Federal Inland Kaduna NGF Port Harcourt Rivers


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