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Fashola opposes planned 100% hike in VAT

By Olasunkanmi AKONI
Governor Babatunde Fashola of   Lagos State has vowed to contest the Federal Government proposed 100 per cent increase in Value Added Tax ,VAT and the tax policy if it went ahead to implement them.


Fashola while tasking the National Assembly to stop the proposal to increase VAT to 10 per cent noted that the policy would further undermine the country’s federalism and the power of the State House of Assembly to legislate over tax matters not included in the Exclusive List, stressing that it is unconstitutional.

The move came at the background of the planned move by President Goodluck Jonathan who recently met the federal lawmakers and other stakeholders, with the intention of supporting the proposed increase when brought to the floor of the House of Representatives and Senate.

According to a source the reason for a 100 per cent VAT increase was based on the world trend as being operated in some countries in Africa, Asia and Europe among others where VAT “is as high as 15 per cent or 20 per cent, thus making it imperative and necessary for Nigeria to follow suit in order to generate more revenue into the Federation Account.

“President Jonathan told the leadership of the National Assembly that he was going to increase VAT to 10 per cent as other countries had done. He asked us to support the proposal when initiated on the floor and confirmed the proposal had gone through all necessary stages,” the source said.
Fashola who spoke at the fourth Executive/Legislative parley at the weekend acknowledged that the National Tax Policy had gone through the National Economic Council (NEC) and Federal Executive Council (FEC) where it was strongly opposed because the policy usurped the residual power of State House of Assembly to legislate on tax matters not included in the Exclusive List.

He said the policy “has passed through the National Economic Council (NEC) and Federal Executive Council (FEC). Despite strong opposition to it, the tax policy on its way back to the Federal Internal Revenue Service (FIRS). If we cannot stop it at the FEC, we work harder to stop it at the National Assembly.

“If the National Assembly goes ahead to pass the tax policy, we shall go to  court to stop it. We must rise against it. We should not rest on our oars. The tax policy is unconstitutional. That the policy is unconstitutional does not mean it cannot be passed. It might even be introduced to subvert our interest,” Fashola said.

Also at the parley, the Minority Chief Whip of the House of Representatives, Hon. Akeem Gbajabiamila acknowledged that President Jonathan proposed a 100 per cent VAT increase at a meeting with the leadership of the National Assembly, though it was hardly opposed.
Gbajabiamila, who addressed a gathering of federal and state lawmakers, members of the State Executive Council, local government chiefs and party leaders in Lagos, said some federal lawmakers opposed the proposed VAT increase, thereby calling for proper enforcement of the current 5 per cent VAT.
He explained that some lawmakers “feel other countries are probably the size of Lagos alone and can afford increase in VAT in order to generate more revenue. However, in the case of Nigeria with a population 150 million people, if 5 per cent VAT is properly enforced, Nigeria will generate enough revenue”.

The lawmaker added that the National Tax Policy (NTP) “should be ignored for now because the policy had not been brought to the National Assembly for legislation.
It is therefore unconstitutional.

It is not going to work. It is going to succeed because all tax issues require constitutional amendment”.
Gbajabiamila explained that the policy was an agenda of the ruling People’s Democratic Party (PDP), arguing that President Jonathan did not have to lobby the federal lawmakers for its passage and that the policy should be allowed to be objectively deliberated upon at the floor of the National Assembly.


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