The Northern Governors’ Forum on Monday cautioned the governors of Lagos and Rivers states against implementing the recently passed VAT laws in their respective states, arguing that if other states across the country decide to tow the same line, it would lead to multiple taxations and increase in the prices of goods and services as well as the collapse in interstate trade.
This was the position of the northern governors at the end of their meeting which was held in Kaduna on Monday.
According to the communique read on behalf of the governors by the chairman of the Northern Governors Forum, NGF, Simon Lalong, they argued that the reason Lagos accounts for over 50% of VAT collection was that most of the telecommunication companies, banks, manufacturing and other trading activities have their headquarters in the State with the resultant and wrongful attribution of VAT.
The Northern Governors said though they are constrained by the fact that the VAT matter is subjudice, it was important for them to speak on it to educate the public.
They said: “The Northern State Governors Forum considered the ongoing National debate on the collection of Value Added Tax (VAT). As responsible leaders, while we are constraint by the fact that the matter is sub judice we however for the purposes of educating the public make the following observations:
“The judgement of the Federal High Court calls to question the constitutionality of VAT, withholding tax, education tax, Niger Delta Development Commission, National Information Technology Development Agency, 13% derivation, National Economic Development Council and many other currently levied and collected by the Federal Government of Nigeria, Federal Inland Revenue Service.
“Rivers and Lagos State Government had enacted their own VAT laws and the Southern Governors Forum has expressed support for this course of action.
“VAT is being confused by these State Governments as a sales tax. If every state enacted its own VAT Law, multiple taxations will result in increases in prices of goods and services and collapse in interstate trade. VAT is not a production tax like excise, but a terminal tax that is paid by the ultimate consumer.
“Another confusion is ignoring observation above and its “overall effect”. The reason Lagos account for our 50% Vat collection is that most of the telecommunication companies, Banks, manufacturing and other trading activities have their headquarters in Lagos with the resultant and wrongful attribution of VAT.
“Until and unless the Supreme Court pronounces judgement on the substantive matter between Rivers State and Federal Government, the matter is subjudice and Northern States Governors Forum would respect this,” he said.