The Presidency has broken its silence on the raging controversy over the Value Added Tax (VAT). It said President Muhammadu Buhari will respect the final verdict on the matter as decided by the Supreme Court.
“Eventually, we will have a legal pronouncement, which may come from the highest court in the land…. Knowing the Buhari administration, it will obey the rule of law,” Presidential spokesman Femi Adesina said.
He added: “All these states are not unanimous. You have heard some governors speaking out against the position of certain states which are so militant on this VAT issue.”
According to him, the matter will affect the ongoing conversation on fiscal federalism. He added: “The VAT is good because there have been talks about restructuring and fiscal federalism in the country. If states eventually get their demands in respect of VAT, there will be something like fulfilling fiscal federalism. But then, fiscal federalism itself must be done within the ambits of the law.”
The row over who collects VAT between the Federal Government and the state governments broke out after last month’s verdict by a Federal High Court in Port Harcourt that Rivers State is legally in order to collect VAT in its domain.
The Rivers State Government quickly enacted a VAT law and commenced the process to start the collection.
But, the Federal Inland Revenue Service (FIRS) insisted on continuing with the collection.
It has challenged the judgment at the Court of Appeal, which on Friday ordered the maintenance of the status quo until the determination of the appeal.
Lagos State, which generates the highest amount of VAT, has enacted its own law empowering it to collect the consumption tax in its domain.