The Federal Inland Revenue Service has maintained that it would continue to collect Value Added Tax (VAT) from businesses in states despite a Rivers State Hight Court dismissing its appeal for stay of execution against an earlier judgement that empowered Rivers state to collect VAT.
The FIRS in a statement, late Monday, by special assistant to the FIRS chairman on media and communications, Johannes Wojuola, urged taxpayers not to panic over the recent court rulings, noting that the status quo remains until the matter is settled by Appeal Court or possibly the Supreme Court.
Mr Wojuola said until the appeal or supreme court determines the matter, taxpayers in the state were to continue paying their VAT obligations to the FIRS.
“There is an injunction pending appeal of the said judgement, therefore we assure taxpayers that there is no cause for alarm,” he said.
“The Federal High Court ruling should not breed any confusion as to the obligations of taxpayers. Taxpayers must continue to comply with the Value Added Tax Act pending the final determination of appeal.
“Taxpayers must continue to honour their tax obligations under the VAT Act. Failure to do this would put them on a collision course with the law,” the special assistant said.
Mr Wojuola said the agency was confident that given the extant laws, the arguments and the case put forward, it will earn a favoured judgment at the appellate court.
The Rivers state governor, Nyesom Wike had on Monday ordered the immediate enforcement of its Value Added Tax Law 2021 across the entire state, following the failure of the FIRS to secure a stay-of-execution order against the state.
The governor who gave the directive during a state-wide broadcast, on the heels of a ruling by a Federal High Court sitting in Port Harcourt, yesterday affirming the right of states to VAT, noted that the appeal by the Federal Inland Revenue Service (FIRS) against the judgement doesn’t translate to stay of execution.
Justice Stephen Daylop Pam had dismissed Federal Inland Revenue Service (FIRS) application, in Suit No FHC/PHC/149/2021, seeking for a Stay of Execution on the earlier judgement of the court that stopped FIRS from collecting VAT, as it was constitutionally the role of state governments.
Justice Pam, in his ruling yesterday, said granting the application would negate the principle of equity.
He noted that, in as much as the Rivers government and the state legislature had enacted a law in respect of the VAT, that courts were bound to obey laws.
Governor Wike, shortly after the court ruling, directed RSRS to commence total enforcement and implementation of the VAT, warning that the state government would not tolerate any attempt from any quarters to sabotage the process.
“As we all know, following the recent judgement of the Federal High Court, Port Harcourt, which upheld the constitutional right and authority of State Governments to impose, collect and utilize value added taxes (VAT) within their respective territorial jurisdictions, the Rivers State Government enacted the Rivers State Value Added Tax Law 2021 to regulate the effective administration of VAT in Rivers State,” the governor said.
“As expected, the Federal Government, through the Federal Inland Revenue Service (FIRS), disagreed and filed an appeal coupled with a request for stay-of execution of the judgment before the Federal High Court.
“While the appeal was pending and without any stay of-execution of the subsisting judgement, the FIRS went about to bully corporate bodies and business entities from paying the VAT to the Rivers State Government even when they knew that an appeal does not serve as a stay neither was there anything to stay in a declaratory judgement.
“As a mere agency of the Federal Government without any political authority the effrontery and impunity exhibited by the FIRS against the Rivers State Government was ill-advised and highly provocative.
“However, being a government that believes in the rule of law we decided on our own to suspend the enforcement of the Rivers State VAT Law 2021 pending the outcome of the FIRS’s application for stay of-execution
“Today, the FIRS has failed in its attempt to frustrate the enforcement of the State’s Law on VAT with the Federal High Court’s dismissal of its application for stay-of-execution of the judgement.
“It is important to reiterate the fact that we did no wrong in exercising our legal right under our constitutional democracy to stop the continuing breach, denial and curtailment of the constitutional right of States to lawfully impose and collect value added and other related taxes within jurisdiction to the exclusion of the Federal Government.
“And in doing so our singular and progressive objective was to contribute to the advancement of fiscal federalism by enabling the federating States to explore and exploit their potential and capacity for generating greater internal revenues with which to fund their development goals and reduce the outdated over-reliance on pitiable Federal allocation and other handouts.
“Naturally, some States with presently low economic activities and ethically restrictive social policies with economic implications may be adversely affected for now.
“But, this is not our own making. Like the right to derivation, this is also a constitutional prescription, which we all swore as political leaders to respect and defend as the supreme law of the land.
“Above all, fiscal federalism remains the right path to economic self-reliance and sustainability for all our States and the benefits derivable from this case by all the States in the long run far outweigh the immediate revenue loss that some States may presently suffer.
“All that is required is for all of us to wear our thinking caps as elected Governors to collectively fight for the greater devolution of resources, responsibilities and powers to the federating States.
“It is therefore very unfortunate that some State Governors led by that of Katsina State are vainly conspiring to truncate this progressive reality in favour of the inequitable status quo so that the Federal Government can continue to rob Peter to pay Paul as the nation’s self-imposed tax master-general.
“For us in Rivers State, we will continue to ensure and project our constitutional rights to access all possible resources we can take hold both within and outside our geographical boundaries to advance the progress of our State.
“And with today’s judgement the way is now clear for the administration and enforcement of the Rivers State Value Added Tax Law 2021 across the entire State until otherwise decided and set aside by the Superior Courts.
“Consequently, I hereby direct the Rivers State Revenue Service (RSRS) to ensure the full and total implementation and enforcement of this law against all corporate bodies, business entities and individuals with immediate effect.
“All corporate bodies, business entities and individuals are advised to willingly, truthfully and promptly comply with their tax obligations under this law to avoid the full weight of the stipulated sanctions, including having their business premises sealed-up including having their business premises sealed-up.
“Let me warn that the Rivers State Government is fully in charge of the State and will not tolerate any further attempt by the FIRS to sabotage or undermine our authority to freely administer our tax and other related laws in our own State. Those who play with fire risks having their fingers burnt. Enough of the shenanigans.
” I wish to further assure every resident that we shall as usual make effective use of the expected proceeds from this tax to accelerate the development of our State and improve the wellbeing of everyone.”