The issue of VAT (Value Added Tax) collection has raised many arguments across the nation. The Federal Government led by Buhari is battling against some state Governors over the collection of VAT revenues in their states.
Governor Wike (Rivers State) and Sanwo-Olu (Lagos State Governor) are the two major people that are fighting with the federal government over the issue of VAT. These two Governors claimed that there is injustice in the sharing of allocations to their states after they generate a huge amount of VAT revenue for the federal government.
(Photo Credit: Infogist).
Therefore, these two Governors decided to be collecting VAT revenues by themselves after a federal high court in Port Harcourt told FIRS to stop collecting VAT in some states. However, the federal government led by President Buhari also opposed this judgement given by the federal high court in Port Harcourt.
(Photo Credit: Afriknews).
Recently, a report disclosed by "Punch Newspapers" revealed that the domestic debts owed by state governments and the Federal Capital Territory Administration is about N4.12tn at the end of the second quarter of 2021.
Lagos, Rivers and Akwa Ibom States are the three most indebted states according to the latest data from the Debt Management Office.
Lagos owed N533.81bn as of the second quarter of 2021 and Rivers State had a domestic debt stock of N213.17bn (This represents 5.10 per cent of the country’s subnational domestic debt stock).
While other states like Kano and Katsina have a domestic debt stock of N127.65bn and N55.34bn respectively.
(Photo Credit: Adrikgist).
So, a lot of people are curious to know why Lagos and Rivers State will be owing more debts compared to Northern states despite that they generate VAT revenue which is almost bigger than the total VAT from the entire Northern States.
Nevertheless, I believe that Lagos and Rivers State government may be executing projects that are capital intensive than Northern States and this could be why they are indebted more than the Northern States.
Therefore, in order to settle their debts, I believe that Governor Wike and Sanwo-Olu may insist that their states should be collecting VAT revenues instead of the federal government in the ongoing VAT crisis.
Also, I will advise Rivers and Lagos State government to be careful in spending and they should find more ways to settle their debts before it becomes an issue.
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