The Pacesetter Frontier Magazine

Tag: VAT

  • Why We Need To Bring Cash Back

    Why We Need To Bring Cash Back

    By Dr. Samson Abanni

    Some needs when delayed disappear. in the light of the economic challenges, it may be more advisable to return to cash as much as possible. Cash is not easily taxed. Let me put it in a better way. The financial system is one of the best systems used to collect rent because it’s easy to setup digital check points to collect fees. A single transfer of N50,000 can bounce around the country 100 times or more in 24 hours and each time, it will be taxed. And of course, we are seeing it in bank profits.

    Also, it’s easier to spend money when it’s not cash. You don’t feel the pain of the loss of hard earned money, so you spend more and the psychology is well known which is why there’s a massive push for adoption of digital payment systems-it’s easily policed and it is easier to collect rent. Account maintenance fees are rents you pay to economic elites who own these systems of rent collection and the federal government.

    Unlike platforms like piggyvest which pays you for holding your money and encourage you not to spend, banks are more or less paid for keeping your money. When we spend more via cash, we delay gratification more, and when needs are delayed in many cases, they disappear.

    You pay bank to keep the money. They use it to make more money. Then you pay POS, federal government for VAT and electronic transfer levy, and bank to withdraw the money. You also pay for sms to be told of the transaction.

    There are so many checkpoints where your electronic money is being made to pay “fees” before moving on, and because it’s digital, we don’t feel it. Every important stakeholder has his interests covered except the ordinary people.

    Let’s take a look at the journey of a certain N50,000. Immediately a man received his salary of N100,000, he sends N50,000 to his landlord to complete his rent. The landlord sends it to his child in school, who uses it to pay for two shoes. The vendor sends to his girlfriend who buys a wig from someone who borrows it to his sister via transfer and its journey continues, within 24 hours, that N50,000 can crisscross the country a thousand times, crossing different bank borders in 20 states. Each time, that money is taxed differently by different digital checkpoints.

    So, the same N50,000, before it’s done with its rounds, can generate a good part of N50,000 as profit for the financial stakeholders.

    Abanni is a Medical Doctor and Member of the Board of Editors of Pacesetter Frontier Magazine.

  • FEEDING BOTTLE FEDERALISM: ALLOW VAT LEGAL BATTLE RUN FULL COURSE – EKWEREMADU

    FEEDING BOTTLE FEDERALISM: ALLOW VAT LEGAL BATTLE RUN FULL COURSE – EKWEREMADU

    …Calls for expedited hearing of VAT, stamp duty suits

    Former Deputy President of the Senate, Senator Ike Ekweremadu, has advised the National Assembly not to embark on any legislation over the collection of the Value Added Tax (VAT) and Stamp Duties, which are subjects of raging legal tussles between some states and the federal government, noting that allowing the litigations to run the full course could be a major step towards strengthening the nation’s federalism.

    Ekweremadu, who recalled that he had for over a decade been warning the nation against what he had since termed a “feeding bottle federalism” in which states depend on redistributed resources of other federating units for survival, held that any constitution amendment to transfer VAT collection to the Exclusive Legislative List, as reportedly requested by the Federal Inland Revenue Service, FIRS, would amount to changing the goal post in the middle of a game.

    He bared his mind in a statement by his media adviser, Mr. Uche Anichukwu, on Sunday.

    The lawmaker, who chaired the constitution amendment process in the Sixth, Seventh, and Eighth Senate, asserted since past legislative efforts to get things right had failed or been scuttled, it was natural and imperative to allow the judiciary to play its role in shaping the nation’s federalism.

    He said: “I commend Governors Nyesom Wike and Babajide Sanwo-Olu as well as the Rivers and Lagos Houses of Assembly for their courageous moves. It is by so doing that our constitution or laws can be tested and our federalism strengthened.

    “In April 2012, I delivered a lecture at the Osgoode Hall Law School, York University, Canada, entitled ‘Nigerian Federalism: A Case for a Review’ wherein I forewarned that Nigeria would surely run into stormy economic weather unless we reinvented our federalism, steering the country away from a military-imposed ‘feeding bottle federalism’ to one predicated on self-reliance, hard work, enterprise, and resourcefulness to catalyse national development and economic prosperity. Many others have also made related calls. Unfortunately, few people were interested in what we were talking about.

    “Although we achieved a number of successes, perhaps my worst experience at the helms of the constitution amendment process was in the Seventh Assembly. We recorded the most elaborate amendments to our constitution, including the rearrangement of the Legislative Lists to devolve more powers to the subnational governments by moving certain items like Aviation, Railway, Power, Stamp Duties, among others to the Concurrent Legislative List. Unfortunately, the amendments were denied assent by the President.

    “But as a lawyer and lawmaker, I know that case law or judicial precedent, is also a veritable source of law. So, I think we should allow the Constitution and the laws of our land to be tested in the courts of law.

    “It is untidy for the Presidency or its agency to come through the backdoor to seek legislative intervention in its favour on the same matter that is prejudice.

    “The ball is now in the court of the judiciary and all we should seek at this juncture is an expedited and courageous adjudication of the lawsuits”.

    Meanwhile, Ekweremadu, whose doctoral thesis is on Fiscal Federalism, has equally advised every state to look inwards to boost its revenues since every part of the country had what it takes to prosper.

    “The bottom line of the raging tax ‘war’ is that having unwittingly killed industry, having elevated our nation to an oil dependent economy, and consequent upon the collapse of oil price amid other sources of energy, our economy is virtually collapsing, the naira has crashed to an all-time low, and the nation has come to rely more and more on taxes. Inevitably, some states have now begun to question some practices they feel fly in the face of federalism and justice, among them the collection and distribution of VAT and other taxes.

    “VAT is essentially a consumption tax and what states like Rivers and Lagos are saying in essence is that the federal government cannot continue to rob them of taxes paid on goods and services consumed in their states, some with environmental and social consequences that they have to deal with, but only to withhold as well as transfer a large chunk of such revenues to other states.

    “The major takeaway from our ailing economy, collapse of the naira, and the VAT and stamp duty imbroglio is that our feeding bottle strand of federalism is no longer sustainable. We must diversify and expand our economy now; and there is no other way than to remake our federalism to enable states to harness and unleash their endowments and comparative advantages.

    “Rather than begrudge states like Rivers and Lagos, all federating units should be encouraged and enabled to look inwards to reinvent themselves, boosting their respective competitiveness through improved security, human capital development, industry, and building of egalitarian and cosmopolitan societies to attract more investments and economically viable populations. That is how federations are meant to function”, he concluded

     

    Uche Anichukwu

    Media Adviser to Sen. Ike Ekweremadu

    Former Deputy President of the Senate

    12/09/2021

  • VAT: Despite Appeal Court ruling, Wike inaugurates new tax commission

    VAT: Despite Appeal Court ruling, Wike inaugurates new tax commission

    Rivers Governor Nyesom Wike on Friday inaugurated the state’s Tax Appeal Commission shortly after the Abuja Division of the Court of Appeal ordered maintenance of status quo in the collection of value added tax by state governments.

    The commission inaugurated by Mr Wike is saddled with the responsibility to ensure taxable persons and entities comply with the rules of the newly introduced Rivers VAT law.

    Mr Wike had on August 19 signed the VAT Bill into law following the judgement of the Port Harcourt Division of the Federal High Court on the illegality of VAT collection by the federal government via the Federal Inland Revenue Service, FIRS.

    At the inauguration ceremony in Port Harcourt, Mr Wike urged the commission to “focus on dealing with complaints arising from those who do not want to pay their taxes, while also prevailing on those who believe that the tax body is doing what it is not supposed to do.”

    “It is a very serious assignment at this period as regards to what is going on. So, I believe that you have to take this assignment as a call of duty from your state,” the governor explained. “No country can survive without taxes. And so, you will do all you can to support the government and the citizens to do what they are supposed to do,”

    The governor’s remarks were contained in a statement by available to Peoples Gazette by his spokesman Kelvin Ebiri on Friday.

    The governor, however, expressed confidence in the chairman of the commission to effectively carried out the assignment.

    The Gazette learnt that members of the tax appeal commission sworn in are: Bennett Eke Ugbari (Chairman), Edwin Krukrubo, Owhonda Ihekwoaba Nobel, and Gift Sovins.

    In his response, Mr Ugbari, a retired judge, agreed with the governor that the state needs to generate enough internal revenues to augment the statutory allocations it receives from the federal government.

    He noted that the newly introduced VAT will enable the governor to fulfill his promises to Rivers people in terms of infrastructure and other development.

    “It is, therefore, the intendment of the commission to partner with other relevant tax authorities in Rivers State to generate adequate internal revenue for the State,” Mr Ebiri quoted Mr Ugbari to have said.

    Meanwhile, the Abuja Division of the Court of Appeal, on Friday, however, ordered that Rivers State and the FIRS maintain status quo ante bellum, pending the determination of a suit filed by the latter concerning the Rivers court judgement.

    Like FIRS, many northern states like Katsina, Gombe and Kogi have registered their protests against the move by Rivers and Lagos to begin independent collection of VAT. Adamawa State government however says it was ready to explore the new VAT reform.

    Lagos Governor Babajide Sanwo-Olu had also signed the state’s VAT Bill into law on Friday following the speedy passage by the State Assembly. The state is also seeking to be joined in the FIRS’ suit at the appellate court.

    Earlier, the FIRS had urged taxpayers to discountenance the High Court ruling in Port Harcourt.

    In another desperate move, the federal tax body wrote to the National Assembly, seeking amendment of the Constitution to exclusively grant it the rights to collect consumption taxes, among others, across the country.