VAT: Adamawa Becomes First Northern State To Support Reform

Adamawa State has stated that it is willing to accept Rivers State Governor Nyesom Wike’s position on the collection of Value Added Tax (VAT) in the state, making it the first northern state to do so.

After Mr Wike’s administration filed a challenge requesting the ability to do so, the Rivers Division of the Federal High Court ruled in August that the state government should assume care of VAT instead of the federal government.

The court noted that the Rivers administration, not the Federal Inland Revenue Service (FIRS), was authorized to collect VAT.

Following that, Mr Wike signed the state’s VAT collection measure into law. The Lagos State House of Assembly has also begun the process of enacting a value-added tax law.

Solomon Kumangar, Director-General, Media and Communications, Adamawa State Government, expressed interest in the project, stating that it will increase the northeastern state’s Internally Generated Revenues (IGR) and lessen its reliance on federal subsidies.

This is despite the fact that FIRS has already filed an appeal against the verdict.

“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.”

Gombe State governor, Muhammad Inuwa Yahaya
Gombe State governor, Muhammad Inuwa Yahaya
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.