Northern governors: VAT collection by states will increase prices of goods, collapse interstate trade

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The Northern Governors Forum (NGF) says the collection of value-added tax (VAT) by states will cause an increase in prices of goods and services as well as create interstate trade barriers.

The NGF made the resolution at a meeting with northern state emirs and chiefs in Kaduna on Monday.

The legal battle on the collection of VAT by either states or the Federal Inland Revenue Service (FIRS) has been an ongoing issue since August 2021.This is a backdrop to when the federal high court in Port Harcourt issued an order restraining FIRS from collecting VAT and personal income tax (PIT) in Rivers state.

Following the court’s ruling, Rivers and Lagos enacted a law to impose and charge VAT on businesses.However, the court of appeal ordered both Rivers and Lagos states to maintain status quo ante bellum (to maintain the situation as it existed before) over the collection of VAT.Notwithstanding, the Rivers state government asked the supreme court to set aside an order of the court of appeal regarding the case.

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There has been opposition against this course, however, some southern governors have thrown their support of states collecting VAT.“VAT is being confused by these State Government as a sales tax,” the forum said.“If every State enacted its own VAT Law, multiple taxations will result in increases of prices of goods and services and collapse in interstate trade.“VAT is not a production tax like excise, but terminal tax which is paid by the ultimate consumer.

The reason Lagos account for our 50% Vat collection is because 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 sub judice and the Northern States Governors Forum would respect this.”

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