Justice Stephen Pam of the Federal High Court sitting in Port Harcourt yesterday dismissed an application by the Federal Inland Revenue Service (FIRS) seeking to stop the Rivers State Government from collecting Value Added Tax (VAT) in line with an earlier judgement in favour of the state.
The FIRS in suit no FHC/PHC/149/2021 had approached the court seeking a stay-of-execution on an earlier judgement of the court that stopped the agency from collecting VAT, and held that it was constitutionally the role of state governments.
The FIRS had following the judgement against it requested the high court to stop the Rivers State government from executing the ruling.
Pam stated that in as much as the state government and the state legislature had enacted a law with respect to VAT, the courts were bound to obey such law. He said the state government and the House of Assembly had duly enacted the Rivers State Value Added Tax No. 4, 2021, which makes it a legitimate right of the state to collect VAT, as contained in a THISDAY report.
The judge maintained that the law remained valid until it had been set aside by a court of competent jurisdiction.
Pam further said granting the prayers of the FIRS would amount to committing murder. He noted that the prayers could not stand and, hence, dismissed them.
But reacting to the Federal High Court ruling, in a state broadcast in Port Harcourt, Wike alleged that the FIRS was bullying corporate bodies and business entities in the state for refusing to pay VAT to the federal agency. He said Rivers State would not allow further collection of VAT from corporate bodies and businesses operating in the state by the federal government agency.
“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 for 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, ”Governor Wike stated.
“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’ 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 hand-outs.”
Wike stated, “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 outweighs 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.”
He, therefore, directed the Rivers State Revenue Service (RSRS) to ensure the full and total implementation and enforcement of the 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,,” the governor said.
