The Federal Inland Revenue Service has accused state governments of failing to remit Value Added Tax to the tune of N41bn to the Federal Government’s coffers.
The Jigawa State Governor, Abubakar Badaru, disclosed this to State House correspondents at the end of the meeting of the National Economic Council presided over by the Acting President, Yemi Osinbajo.
This came just as the Lagos Chamber of Commerce and Industry has faulted the provisions in Section 31 of the Federal Inland Revenue Service Act, which allowed for the freezing of accounts of tax defaulters.
Badaru said the indebtedness of the state governments formed part of the presentation made to the council by the Chairman of the FIRS, Babatunde Fowler.
The governor quoted the FIRS boss as saying that the state governments had only remitted about N40bn VAT and withholding tax to the FIRS between January and July.
He said Fowler also informed the council members of some initiatives meant to enhance tax collection and remittance from the states.
Badaru said, “We had a briefing from the Chairman of the FIRS. It dwelt on the two aspects of tax. One is the Value Added Tax that is being collected by states. He informed the states what the positions are, that there is outstanding VAT from the states to the tune of N41bn.
“The FIRS also came up with new techniques/platform that will help in VAT/withholding tax collection. It is very important when talking of zero oil economy. Currently, a lot is going on, on how to remit tax. With the new initiative, tax can now be transferred to the Federal Government.
“He said, so far, from January to date, about N40bn had been remitted from the states. This is a significant figure from what happened last year. So, the states are well notified and they are willing to pay.”
Badaru also briefed on the measures by NEC to optimise the contributions of the Micro Small Medium Enterprises to the nation’s tax profile.
He said the number of the MSMEs in the country had reached 37 million.
The Minister of Finance, Kemi Adeosun, reported to NEC that as of August 14, 2018 that the balance in the Excess Crude Account stood at $2, 250, 434, 918.00; Stabilisation Fund Account, N21, 591, 091, 564.37; and Natural Resources Development Fund, N143, 479, 688, 711. 25.
Meanwhile, Badaru confirmed to journalists that the Nigeria Governors Forum had engaged the services of lawyers to challenge the probe of states’ security votes by the Economic and Financial Crimes Commission.
The anti-graft agency had recently initiated a process to probe Benue State Governor Samuel Ortom’s security votes, drawing the wrath of the state chief executives.
Badaru confirmed to newsmen that the issue was discussed by the governors in their meeting in Abuja on Wednesday night.
He said the lawyers had been instructed to investigate the case.
“The issue was discussed at the governors’ forum and the position is that we will have our lawyers see the legality of doing that.
“After giving us the report, then we will see the next line of action to take,” he said.
In a related development, the Director-General, LCCI, Mr Muda Yusuf, has described the provisions in section 31 of the FIRS Act as ‘draconian’.
The Act gives the FIRS the powers to appoint collection agents for the recovery of tax payable by the taxpayer. Such agent will be mandated to pay any tax payable by the taxpayer from any money held by the agent on behalf of the taxpayer.
The chamber was reacting to a recent decision by the FIRS to appoint banks as collecting agents and freeze accounts of taxpayers considered to be in default of tax payment.
The FIRS had directed that such account be debited to the tune of the tax debt.
“This provision is draconian and could be used as a tool of intimidation, coercion and harassment of taxpayers. It should be invoked with utmost discretion and caution,” Yusuf said.
In a statement on Thursday, the LCCI DG pointed out that the provision in the FIRS Act could be used as a tool of intimidation, coercion and harassment of taxpayers.
He said, “It should be invoked with utmost discretion and caution. The LCCI is a strong proponent of regulatory compliance by private sector players. However, it is important to underscore the fact that tax administration should be in consonance with the basic tenets of the rule of law and the fundamental principles of a good tax system.
“Tax administration should be consistent with the basic principles of equity, fairness, legality and accountability. The LCCI is concerned about the recent turn of events, especially the freezing of accounts of bank customers based on tax assessments that are in dispute. This development raises a number of key concerns which need to be urgently addressed.”