Senior Special Assistant to the President on Public Affairs, Ajuri Ngelale, on Monday, knocked Rivers State Governor, Nyesom Wike, for being allegedly tribalistic and aggressive in his pursuit for the collection of Value Added Taxes by the South-South state.
Ngelale noted that the Federal Government has not been taking the money made in the oil-rich Niger Delta to Northern Nigeria.
He also said that the Federal Government makes contributions to VAT generated in the country, noting that the 36 states do not generate VAT all by themselves.
The President’s aide stated this when he appeared as a guest on Channels Television’s ‘Sunrise Daily’ breakfast programme monitored by The PUNCH.
VAT is a consumption tax paid when goods are purchased and services are rendered. It is charged at a rate of 7.5 per cent.
‘FIRS’ collection of VAT about harmonized tax policy’
Ngelale, who said that he is from Rivers State, flayed Wike over his alleged ethnic posture, saying that VAT collection by the Federal Inland Revenue Service is about “harmonized tax policy” to make businesses easy for Nigerians.
He warned that VAT collection by states would lead to double taxation which could make survival difficult for business owners in the country.
The PUNCH had earlier reported that the Rivers State Government took the FIRS to court and won the rights to VAT collection within its territory.
Wike subsequently signed the state’s VAT bill into law last month after it was passed by the Rivers State House of Assembly.
Following the path of Rivers, Lagos State Governor, Babajide Sanwo-Olu, last Friday, signed the State VAT Bill into law a day after it was passed by the Lagos State House of Assembly.
On the same day, Lagos asked to be joined as a respondent alongside Rivers State in the appeal filed by the FIRS challenging the judgment of the Federal High Court, Port Harcourt which ruled that Rivers should commence VAT collection.
Justice Haruna Tsammani of the Appeal Court had adjourned to September 16 to hear the application by Lagos and asked all parties to “maintain status quo”.
Lagos and Rivers generate bulk of the total monthly VAT in the country but get about 20 per cent of the money made through federal allocation.
Wike had lamented the injustice in the distribution of federal revenue, saying that Rivers money is not for Abuja people.
‘FG makes input, states not generating VAT by themselves’
But speaking on the television programme on Monday, the President’s aide said the Federal Government makes contributions to the generation of VAT in the country, noting that Rivers, Lagos and other states do not generate VAT by themselves.
Ngelale said, “I do disagree on the notion that states are by themselves generating VAT en masse and the Federal Government is trying to hijack (it).
“In 2020, the nation generated about N1.5trn in VAT. We have about 60 per cent of VAT coming from imports at the ports. As we know, ports infrastructure in the country is not controlled by the state governments, so they cannot say that it is their revenue; it is controlled by the Federal Government, it is federal revenue.
“Aside from the fact that we have a book coming from imports, we also have that second to Lagos is Abuja with about N202bn collected and the reason why is because Abuja is the site of federal ministries, departments and agencies and a huge bulk of that collection in the country was coming from VAT collected on contracts.
“So, when we create the impression that states collect these VATs and the Federal Government is hijacking it and trying to share it when in fact, it only (belongs to) Lagos or Rivers, I think it is a gross over-simplification.”
‘Collection of VAT by FIRS perfecting Nigeria’s union’
Ngelale inferred that the collection of VAT by the FIRS should be encouraged because it is perfecting the union of Nigeria.
“Anything that will perfect our union should be embraced. Any conversation, any serious-minded discussion around how resources are managed is healthy for the country,” he stated.
The President’s aide, who said the VAT issue has been “heavily politicised”, also complained about “some of the utterances, unfortunately, that have come from my states along ethnic lines etc and political posturing ahead of the next election”.
Continuing, he said, “I really don’t want to repeat some of the stuffs we’ve heard from the Rivers State Governor that we (FG) want to take Niger-Delta money to the north and all this ethnic sabre-rattling. That is what I am talking about when I say politics.”
Ngelale also took a veiled swipe at Wike, who confirmed in January 2021 that the Federal Government had refunded to the state government the N78bn it spent on federal projects.
But the President’s aide said he was not sure the projects were constructed by Wike.
“There are those who despite collecting tens of billions of naira from this administration in form of refund for federal roads that they did not even construct in their states and you still have these claims coming out trying to abuse the Federal Government because of political reasons,” Ngelale said.
‘Court system will serve justice’
Furthermore, Ngelale acknowledged that there are grey areas in the collection of VAT in the country but sought better specificity between who should collect taxes between the central and sub-national governments.
According to him, on the one hand, it may not be clearly stated in the constitution but on the other hand, it would be wrong to say that because we have a VAT Act that was enacted by the National Assembly.
He, however, expressed optimism that now that the matter is in court, the judiciary would serve justice on the case.
“Fortunately for us (FG), it is now in a judicial process and we are very much expectant that the outcome of the law will reflect the law that we have which until now, states have no business abiding in… I believe our court system will do justice to the matter,” he stated.