*Wike right but should also stop collecting taxes, levies meant for LGS -RIVSCO
By Egufe Yafugborhi
For so long, widespread demand for restructuring of the Nigerian union, fiscal federalism at the heart of it, had seemed an impossible quest because of the seeming belief that without the endorsement of an unwilling Presidency and National Assembly, no headway can be made.
Given this defeatist mindset, many have resorted to extrajudicial conducts, including violence, mass action and in extreme cases, secessionist movements which have done more harm than good.
When it seems all hope it lost, a new phrase, new order, lawful in all ramifications, has been introduced into gainful agitation for restructuring. National Coordinator, Niger Delta Peace Coalition, Zik Gbemre termed it the “Wike Effect”, following the watershed court declaration that the Rivers State Government, not the Federal Inland Revenue Service, FIRS, reserves the prerogative to collect Value Added Tax (VAT) and sundry taxes in Rivers state in response to a suit instituted by Rivers under Governor Nyesom Wike.
The Appeal Court in Abuja yesterday granted FIRS a stay of execution of the Federal High Court judgment in favour of Rivers. Before yesterday’s decision many Nigerian were hailing Rivers Governor and the judgment, saying that it was another way of achieving part of the restructuring Nigerians had been clamouring for.
Zik defined the “Wike Effect as the audacity to dig deep into hitherto overlooked strengths in the Nigerian constitution, to force the desired restructuring on an unwilling Federal Government.”
Public affairs analyst, Monday Wehere, in his reflection on the Wike Effect now rippling across states of the federation, said, “We may yet thank Wike. Without an ego, without a bullet, states in Nigeria have won what for years they had all clamoured for. Fiscal federalism.”
From joke to serious business
In the timeline on the VAT court battle, it all started as one of perceived Wike’s attention seeking exuberances when he first challenged the Federal Government (FG), filing against the Attorney General and the FIRS in 2020.
August 9, 2021, Justice Stephen Dalyop Pam, of the Federal High in Port Harcourt, in his judgment declared that Rivers State Government and not the FIRS, should collect VAT and Personal Income Tax (PIT) in the State.
The court at that point also issued an order of perpetual injunction restraining FIRS and the Attorney General of the federation, both first and second defendants, from collecting, demanding, threatening and intimidating residents of Rivers to pay to FIRS, PIT and VAT. The Appeal Court in Abuja changed all that yesterday, granting a stay of execution, until it hears the substantive matter.
On August 19, the governor signed into law, the Valued Added Tax Law No. 4 of 2021. By next day, parties were back in court for a relief sought by the FIRS to restrain the Rivers Government from enforcing the judgement it got on VAT in the State.
FIRS lawyer, Reuben Wanogho, in a motion on notice told the court that his client had filed an appeal against the judgment of 9th August which declared that it is the Rivers State government and not FIRS, that is constitutionally empowered to collect VAT in the State.
September 6, the Federal High Court in Port Harcourt, dismissed the Suit No FHC/PH/CS/149/2020 by the FIRS, seeking to stop the Rivers Government from collecting VAT based on earlier court judgement.
September 10: The Court of Appeal sitting in Abuja, ordered both Rivers and Lagos States to maintain status quo on the collection of Value Added Tax, VAT, pending the determination of an appeal that was lodged before it by the Federal Inland Revenue Service, FIRS.
The appellate court said the order was to preserve the ‘Res’ (subject matter) of the appeal before it.
Wike, highlighting perceived injustices over VAT before the new turn of events, said, “In June 2021, VAT collected in Rivers was N15.1billion. What they gave us was N4.7Billion. The money includes contracts awarded by Rivers Government. This is not an issue of party, but of infraction of the constitution, issue of illegality.
Look at Lagos, not same party with me. June 2021, VAT collected in Lagos was N46.4Billion, but see what Lagos got, N9.3Billion. Have you seen the injustice in the country? VAT collected in Kano was N2.8Billion and they gave them N2.8Billion. Is there any justice in this country?”
Governor Wike described as morally offensive a situation where Rivers State government will award contracts for State roads worth N200Billion and the FIRS will illegally receive 7.5% of the amount as VAT to be distributed among the States.
“So you allow me to call the big companies, award contracts to them, then you, FIRS, come and collect the tax and then go and distribute it to other states who are not awarding contracts. How does it sound.”
With Lagos having also passed a VAT Law, Ekiti, Ogun, Akwa Ibom about to follow suit, the Wike Effect was reverberating in a new struggle for restructuring order. For experts, including legal luminaries and industry icons, real restructuring has begun in Nigeria. Yesterday’s Appeal Court decision may not end the struggle as the Appeal Court was yet to hear the substantive matter.
In Delta state, stakeholders had urged Governor Ifeanyi Okowa to “wake up from your slumber” and join the bandwagon.
For Wike, “Powers have already been devolved in the constitution, but the FG does not allow us (States). All they want us to do is come and beg and I say I will not beg. Give me what the law says I should get.
“It is therefore very unfortunate that some State Governors led by that of Katsina State are vainly conspiring to truncate this progressive reality in favour of the inequitable status quo so that the FG can continue to rob Peter to pay Paul as the nation’s self-imposed tax master-general.
“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.”
Zik Gbemre of NDPC said, “Wike is very right in this. All other governors should emulate him, but it should not be a license to turn the VAT money to politicians’ personal use as they do with other commonwealth.
Media consultant, Wehere said, “We should all be thankful to Wike, who with one strike of the machete, had given us the Resource Control, that we all dreamt about.
“The delicious side of history, is that those who make history, do not know that they are making history. Wike will not be Governor again from 2023, but he had given to the states, a future investment that succeeding generations will build on” He spoke before the Appeal Court order yesterday.
Ebun-Olu Adegboruwa and OCJ Okocha, both Senior Advocates of Nigerian (SANs) conclude that the Wike Effect signals end to ‘’feeding-bottle federalism and Abuja financial pilgrimage”.
Adegboruwa said: “VAT is restructuring and I support it 100%. We have been shouting and crying for this lopsided federalism to be made equitable. Those who make peaceful change impossible make violent change inevitable.
“I commend Governor Wike, who started this revolution. I also commend Governor Babajide Sanwo-Olu of Lagos State and the state House of Assembly. Lagos should go to the High Court to seek an order for immediate compliance with the VAT law by all persons and authorities doing business in the state. Again, they spoke before the Appeal Court position yesterday.
Also, speaking before the Friday ruling, Kingsley Moghalu, former Central Bank of Nigeria (CBN) Deputy Governor and Presidential candidate of the Young Progressives Party (YPP), said the verdict of the Federal High Court “Strikes a strong blow at the lazy FG whose head once called our youth ‘lazy’. Nigeria has long been a fiscally failed state. Restructuring has already begun, by fire by force. I pity those who think they can stop the wind.”