Adamawa Becomes First Northern State To Support VAT Reform

Adamawa State has announced its
preparedness to consider the stance of Rivers State Governor Nyesom Wike
on the collection of Value Added Tax (VAT) in the state, making it the first northern
state to show interest in the move.

The Rivers Division of the Federal High Court in August held that the state
government should take charge of VAT instead of the federal government, after Mr Wike’s administration filed a suit seeking the power to do so, over illegality claims.

The court, presided by Justice Stephen Pam, noted that the Rivers government and not the Federal Inland Revenue
Service (FIRS) was authorised to collect VAT.

Mr Wike subsequently signed into law the bill on VAT collection in the state. Also,
the Lagos State House of Assembly commenced the move to enact a value-added tax law.

Also showing interest, Solomon Kumangar the Director-General, Media and Communications, Adamawa State Government, stressed that it will improve the northeastern state’s Internally Generated Revenues (IGR) and reduce
its reliance on federal allocations.

This comes even as FIRS opposed the ruling, as it already filed an appeal
against it.

Federal Inland Revenue Service (FIRS) chairman, Muhammad M. Nami “Anything to extend and improve on our IGR is
welcomed. So, we are keen on joining the River State Government should the
Federal Government appeal the judgment, which granted Rivers State the right to
collect VAT in its domain,” Mr Kumangar said in an interview with PUNCH.

The Director-General who explained that the state was overstretched by impact of
COVID-19 and insurgency, said the court’s ruling on tax collection by states rather
than the federal government will enable states with financial challenges to extend
their IGR.

“Whatever will bring improvement to the IGR is a welcome idea for an insurgency ravaged state like Adamawa,” he reiterated.

He stressed that tax collection by states “is the only way to assist the states, which are heavily dependent on federal
allocations, to be able to wean themselves and meet their financial obligations to
the citizens.”

Mr Kumangar further maintained that “if there are areas where revenues can be
exploited and extended, surely the state government will welcome it. Surely it’s a
case of interest to us and we would like to be joined.”

Meanwhile, Gombe state governor admonished Mr Wike to reconsider his stance on tax collection, arguing that it will have adverse effects on his state and
others.

“The VAT issue will have adverse effects not only on Gombe State but almost all
the states of the federation,” according to the state’s Commissioner for Finance
and Economic Creation, Muhammad Magaji.

On the other hand, Governor Aminu Masari said Katsina was appealing against the
ruling by the court .