History will be made on Thursday, September 9 when the lawmakers in the Lagos State House of Assembly will take the third reading of the Lagos State Bill on Value Added Tax.
Recall that the House on Monday took the first and second reading and asked the committee on finance which is handling it to report back on Thursday.
Echonews can predict that the bill will be passed at the third reading on Thursday and the process of turning it into law will be the fastest possible exercise in recent times.
Ask us why.
The urgency of the bill is the real reason the House broke its recess, expected to end next week.
The Lagos State House of Assembly began the battle to wrestle the sales tax, which the Value Added Tax signifies from the Federal Government as early as 2002 when it enacted the states law on Sales Tax.
But the execution of the law ran into trouble because the Federal Government insisted that corporate entities in Lagos State must comply with the VAT law, being a federal law that morphed from a military decree.
By the law, 5 percent ( now 7.5percent) of the value of sales transactions must be paid to the Federal Inland Revenue Service, the revenue collecting agency of the Federal Government.
Dissatisfied, the Lagos State Government approached the Federal High Court to determine the appropriate tier of the Federation constitutionally empowered to collect the sales tax on March 5, 2004.
Contrary to its expectations, the Federal High Court and the Appeal Court took the position that the Federal Government had the power to collect the tax.
Led by the Attorney –General and Commissioner for Justice, Mr. Yemi Osinbajo, SAN, (Nigeria’s Vice President), the state proceeded to the Supreme Court. It argued that by the spirit of federalism and the letters of Section 4 of the 1999 Constitution, the Lagos State had the powers to collect the sales tax.
Again, it met a brickwall. In a unanimous verdict, the Supreme Court relied on the doctrine of “covering the field”.
According to Arthur Andersen & Co:
“Specifically, the Court held that the VAT Act has covered the field on the subject odf Sales Tax and therefore prevails over the Sales Tax Law of Lagos State. In reaching theis decision, the Supreme Court relied on the doctrine of “covering the field” which suggests that once any laew validly made by the Federal Government has covered the field of a state law, the Federal Law must prevail.”
This was a major setback to the administration of Asiwaju Bola Ahmed Tinubu which was pursusing its policy of true federalism by establishing the limits of the powers of the Federal Government in a constitutional democracy.
Lagos State however did not give up its doggedness to get all that accrues to the state by law. This led the House of Assembly to enact other laws on consumption and hotel services and defend them at the court.
Rivers victory triggers re-launch
However, there was a recent twist in the tale.
The Rivers State Government recently instituted a similar action like what Lagos did in 2004, Suprisingly, the Federal High Court and the Appeal Court granted its prayers to collect sales tax in Rivers State and set aside the implementation of the VAT law in the state.
Consequently, the Rivers State Government has announced plans to start collecting sales tax.
It is believed this development awakened the House to re-launch the battle to administer the sales law and other similar consumption laws being tackled by the Federal Government in the courts.
Lagosians expecting more money for roads, utilities from VAT law
What is in it for Lagos communities?
The burden of providing infrastructures and running a secure and efficient state costs a lot of money. If the House of Assembly passes the law and it is executed without any obstruction by the Federal Government, the State will receive more revenue to invest in the economy and provide more infrastructures.
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=&cad=rja&uact=8&ved=2ahUKEwjfo-fJnO7yAhV5DGMBHQTyA-IQ5fUFegQIARAF&url=https%3A%2F%2Fwww.vanguardngr.com%2F2021%2F09%2Fvat-collection-saga-again-rivers-beats-firs-in-court-as-wike-cautions-taxpayers%2F&usg=AOvVaw0Kh9lQqSrBFe6kT74AigdKObasa said the VAT law when passed, would help the state meet challenges in its various sectors. He also urged the Lagos State government to do everything legally possible to ensure the judgement of a Federal High Court, Port Harcourt, is sustained even up to the Supreme Court.
He lamented a situation where about 500 billion is generated from Lagos State while 300 billion is generated from other southwest states and paltry amounts are disbursed to them in return.
“It is an opportunity for us to emphasise again on the need for the consideration of true federalism,” he said.