Senior Nigerian lawyers on Saturday faulted the claim by the Attorney General of the Federation and Minister of Justice, Mr. Abubakar Malami (SAN), that the Value Added Tax (VAT) is on the Exclusive Legislative List.
In an interview in New York, Malami was quoted as saying that no state has the power to lay claim to the collection of the VAT across the federation.
“A lot has precluded the state from collecting value-added tax. One, generally speaking, as you rightly know, the issue of the Value-Added Tax is an issue on the Exclusive Legislative List,” Malami said.
“And the implication of being in Exclusive Legislative List matter is that only the National Assembly can legislate on it. The question that you may perhaps wish to address your mind on is whether there exists any national legislation that has conferred the power on the state to collect VAT. And my answer is ‘no’.
“In the absence of a law passed by the national assembly in that direction, no state can have a valid claim to a collection of Value-Added Tax.
“The responsibility, right and constitutional power to legislate on a collection of VAT is exclusively and constitutionally vested in the national assembly and not in the state,” Malami reportedly explained.
But in separate interviews with THISDAY, some senior lawyers challenged the minister to point out where VAT was mentioned in the Exclusive Legislative List of the 1999 Constitution of the Federal Republic of Nigeria (as amended).
Human rights lawyers, Mr. Femi Falana (SAN), Dr. Mike Ozekhome (SAN), and Mr. Ebun-Olu Adegboruwa (SAN), among others, faulted Malami in separate responses to THISDAY’s inquiries.
But another senior lawyer, Mr. Ahmed Raji (SAN) expressed the belief that Malami was misquoted, not heard properly, or misrepresented in his claim that VAT is on the Exclusive Legislative List.
On his part, Mr. John Baiyeshea (SAN) said whether it is the federal government or the state that is legally empowered to collect VAT, is a decision of the court and not the AGF or any lawyer.
The collection of VAT has been a subject of national debate since Justice Stephen D. Pam of the Federal High Court in Port Harcourt ruled that the Federal Inland Revenue Service (FIRS) lacked the power to collect taxes not listed under Items 58 and 59 of Part I of the Second Schedule to the 1999 Constitution.
The FIRS had challenged the decision of the Federal High Court at the Court of Appeal, Abuja Division.
The appellate court had ordered the Rivers and Lagos State governments to maintain the status quo, pending the resolution of the legal dispute on the matter.
Dissatisfied with the decision of the appellate court that directed all parties to maintain the status quo, the Rivers State Government approached the Supreme Court, asking it to set aside the decision of the appellate court.
Citing different judicial precedents and constitutional provisions to disprove Malami’s position, Falana said the constitutional powers and competence of the federal government “is limited to taxation of incomes, profits and capital gains which does not include VAT.”
Falana argued that in both E.C. Ukala versus FIRS and Attorney-General of Rivers State versus FIRS, the Federal High Court held that there “is no constitutional basis for the FIRS to demand and collect VAT, Withholding Tax, Education Tax and Technology Levy in Rivers State or any other state of the federation.”
Specifically, the human rights activist contended that the federal government “cannot collect VAT or any other species of sales, or levy other than those specifically mentioned in items 58 and 59 of the Exclusive Legislative List of the Constitution.”
He, therefore, argued that the two decisions “cannot be faulted on legal grounds. Until the Court of Appeal or the Supreme Court sets them aside, to that extent, the decisions of the Federal High Court remain the law and as they cannot be impugned by any ex-cathedral statement or political opinion of any public officer, no matter how highly placed.”
Falana said since it would be problematic to set aside the judgments of the Federal High Court, the federal government might wish to embark on a consultation to let all the stakeholders appreciate the need to have a central collection system through the FIRS.
Falana, a former President of the West African Bar Association (WABA), however, observed that the federal government should be prepared to review the unjust distribution formula if it wanted the FIRS to collect the VAT.
Falana said in 2020: “The total VAT collected was N1.53 trillion. Apart from the allocation of 15 per cent to the federal government, the FIRS deducted four per cent as a collection fee while the Nigeria Customs Service deducted seven per cent from import VAT. There are some criteria involved in the distribution of FIRS that ought to be reviewed.”
Falana argued that having acknowledged the lacuna in the Constitution, the FIRS had mobilised the National Assembly to amend the law, noting that the attempt to use the federal legislature “will not work, as it is a non-starter.
“In Attorney-General of Ogun State versus Aberuagba, the Supreme Court stated categorically that the Sales Tax Law of Ogun State was invalid as it encroached on the exclusive legislative powers of the federal government. That was the prevailing situation in the Second Republic. But the judgment is not applicable under the current political dispensation.
“In other words, the VAT cannot be located in either the Exclusive or Concurrent Legislative List. Hence, it is a residual matter within the legislative competence of the House of Assembly of each State of the Federation,” Falana noted.
He, however, explained that the federal government might wish “to propose an amendment to the Constitution by putting VAT in the Exclusive Legislative List since another constitutional review is in progress.
“It is pertinent to point out that VAT was increased by the National Assembly last year, albeit illegally. But the increase has not had any positive impact on the Nigerian people.
“The essence of paying VAT and other taxes has long been defeated as governments have abandoned the provision of social amenities for the people,” he said.
Faulting Malami’s position yesterday, Ozekhome observed that the VAT “is not anywhere reflected in the Exclusive Legislative List of the 1999 Constitution.”
The senior advocate noted the judgment of the Federal High Court, Port Harcourt Division held that the VAT was not a matter within the Exclusive Legislative List.
He, therefore, added that the VAT “is a matter, which the state governments can or should legislate upon. As a result, there is now a law in Rivers State, which makes VAT an exclusive matter within the jurisdiction of the state. That is the present position.
“So, the mere pronouncement of the attorney-general in the faraway US cannot change the law, neither can it change an extant subsisting judgment of a competent court of law, which has not been set aside by the Court of Appeal. And that remains the law.”
On his part, Adegboruwa reinforced Ozekhome’s viewpoint, challenging the AGF to explain why the FIRS wrote a letter to the National Assembly to list the VAT on the Exclusive Legislative List if it was already there.
He, therefore, contended that the VAT “is not on the Exclusive Legislative List at all. If indeed it were on it, why would FIRS write a letter to the National Assembly, seeking to put VAT on the Exclusive Legislative List?”
The senior advocate added that all states across the federation “are thus entitled to make laws on VAT, through their various Houses of Assembly.
“This is the best way to end the controversy on the VAT. The federal government has no power in law to dabble into any matter that is not within its competence,” the senior advocate explained in his three-paragraph.
Another senior lawyer, Mr. Ahmed Raji (SAN) observed that a court of competent jurisdiction “has made a pronouncement which has been appealed. The matter is subjudice. The golden rule in ethics is that the appeal court should be allowed to rule before any further comments for or against”.
Raji expressed the belief that the AGF was misquoted, not heard properly, or misrepresented.
He, however, advised that all parties should focus their attention on the contents of their brief of arguments to be filed before the appeal court or Supreme Court as the case may be.
Similarly, Baiyeshea (SAN) said whether it is the federal government or the state that is legally empowered to collect VAT, is a decision of the court and not the AGF or any lawyer.
The senior advocate noted that he would not want to make the same mistake by the AGF by commenting on a case that is already before the court,
Baiyeshea said: “I will not like to make the same mistake with Malami by commenting on a matter that is before the Court of Appeal presently.
“All lawyers and indeed senior lawyers should know that we are not permitted to comment on or express an opinion on subjudice matters.
“Be that as it may, whatever the AGF has said will not matter. What matters is the decision of the superior court (in this instance, the Court of Appeal), which we are all waiting for. The matter will not stop at the Court of Appeal.
“It will certainly get to the Supreme Court. Whatever pronouncement the Supreme Court makes (based on interpretation of the relevant provisions of the Constitution), will eventually be the law. Therefore, what the AGF or any other lawyer or persons have said or may say, will at best be speculative opinions.”
Gboyega Akinsanmi in Lagos and Alex Enumah in Abuja