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OPINION: Why It May Be 'Risky' For Wike And Sanwo-Olu To Accept FG's VAT Deal As It May Affect Them

There is a move by the federal government to do an out of court deal with Lagos State and Rivers State Governors respectively over the Value Added Tax (VAT) tussle.

The Minister of Finance, Zainab Ahmed, made this known. According to a report by The Punch, she added that the move has been on as efforts have been intensified to make it work out. She then refused to disclose further details about the deal since the case is subjudice.

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However, accepting the deal for an out of court settlement may be risky as it may affect the interests of Rivers State and Lagos State which Governors Nyesom Wike and Babajide Sanwo-Olu are pursuing. This article seeks to explain why accepting the deal is risky and how it may affect Wike and Sanwo-Olu's interests later.

First, this comes off like a smart move by the federal government to buy time. The manner Wike and Sanwo-Olu are pushing for the VAT case to be heard and decided in court seems too fast and decisive. The pace they are pursing the case and giving it accelerated attention does not give the federal government enough time to effect the constitutional changes it plans to do which would have given it the exclusive right to collect VAT in all states in Nigeria. This out of court deal may be a smart move to buy time to do what it plans to do.

Image credit: The Punch

Secondly, it may stop the Supreme Court from delivering a categorical judgment on the issue. It would be recalled that the first judgment delivered by Justice Dalyop Pam of a High Court in Rivers was in favour of states. The Judge had declared that Rivers State had the right to collect VAT. The federal government them filed an Appeal which is yet to be decided.

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After the Court of Appeal ordered a status quo stopping Rivers and Lagos states from collecting the VAT after passing a law to back it, the two Governors approached the Supreme Court to set it aside. Now, the out of court deal may be a plan to make the Governors to withdraw the case so that the Supreme Court would not make any categorical judgment. Within the interim, the constitutional amendment would have been done to give the federal government the exclusive right to collect VAT in all states.

Image credit: The Punch

Finally, if Wike and Sanwo-Olu accept the deal now, it may be hard for them to get what they want through he court later. This may work against them and the cause they were fighting initially. How would this happen? If they agree to withdraw the case, it means that the Supreme Court would not rule on it now that there is no exclusive right in the constitution for the federal government to collect the VAT. Any moment from now, the constitution could be amended to give the federal government that exclusive right. By then, the court's judgement will be determined by what the constitution as amended provided concerning the VAT. This may favour the federal government and make Wike and Sanwo-Olu to lose out.

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Finance The Punch Wike Zainab Ahmed


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