Following the recent judgment of the Federal High Court, Port Harcourt, which upheld the constitutional right and authority of state governments to impose, collect and utilize value added taxes (VAT) within their respective territorial jurisdictions, the Rivers State Government has enacted the Rivers State Value Added Tax Law 2021 to regulate the effective administration of VAT in Rivers State.
The Governor of Rivers State Nyesom Wike, who stated this in a state-wide broadcast in Port Harcourt said he expected the Federal Government, through the Federal Inland Revenue Service (FIRS) to disagree and filed an appeal coupled with a request for stay of execution of the judgment before the Federal High Court.
He said while the appeal was pending and without any stay of execution of the subsisting judgment, the FIRS went about bullying corporate bodies and business entities, urging them not to pay the VAT to the Rivers State Government even when they knew that an appeal does not serve as a stay neither was there anything to stay in a declaratory judgment.
“As a mere agency of the Federal Government without any political authority the effrontery and impunity exhibited by the FIRS against the Rivers State Government was ill-advised and highly provocative.
“However, being a government that believes in the rule of law we decided on our own to suspend the enforcement of the Rivers State VAT Law 2021 pending the outcome of the FIRS’ application for stay of execution.
“Today, the FIRS have failed in its attempt to frustrate the enforcement of the State’s Law on VAT with the Federal High Court’s dismissal of its application for stay of execution of the judgment.
Governor Wike further reiterated the fact that the state did no wrong in exercising its legal right under the constitutional democracy to stop the continuing breach, denial and curtailment of the constitutional right of states to lawfully impose and collect value added, and other related taxes within its jurisdiction to the exclusion of the Federal Government.
“And in doing so our singular and progressive objective was to contribute to the advancement of fiscal federalism by enabling the federating states to explore and exploit their potential and capacity for generating greater internal revenues with which to fund their development goals and reduce the outdated over-reliance on pitiable Federal allocation and other handouts.
“Naturally, some states with presently low economic activities and ethically restrictive social policies with economic implications may be adversely affected for now.
“But, this is not our own making. Like the right to derivation, this is also a constitutional prescription, which we all swore as political leaders to respect and defend as the supreme law of the land.
“Above all, fiscal federalism remains the right path to economic self-reliance and sustainability for all our states and the benefits derivable from this case by all the states in the long run far outweigh the immediate revenue loss that some states may presently suffer.
“All that is required is for all of us to wear our thinking caps as elected Governors to collectively fight for the greater devolution of resources, responsibilities and powers to the federating states.