VAT collection: Nigeria’s tax system is problematic and confusing, says Fayemi

Kayode Fayemi, governor of Ekiti State, says the Nigerian Governors’ Forum (NGF) is waiting for the decision of the supreme court over value-added tax (VAT) collection.

Fayemi, who doubles as the chairman of the NGF, said Nigeria’s tax system is problematic and confusing and needs attention.

Recently, the Southern Governors’ Forum backed the collection of VAT by state governments instead of the Federal Inland Revenue Service (FIRS) on behalf of the federation.

Two states –- Rivers and Lagos states –- had enacted laws for VAT collection, but the court of appeal had directed that states should maintain statuo quo pending the determination of an appeal filed by the FIRS.

Rivers State had also asked the supreme court to set aside an order of the court of appeal.

On Sunday, Fayemi, during a live interview on Arise Television, monitored by TheCable, said governors are awaiting the outcome of the case instituted by some state governors.

He said the governors’ forum is currently looking at the issues and consulting on the implications of the collection on state governments.

“For us, at NGF, this is an issue we are looking at both legally and policy-wise. We are asking our experts to help us look at the implications for states,” Fayemi said.

“Our take is that the supreme court should accelerate decision on this so that we have clarity over who should be in charge of VAT – whether FIRS or states.

“We will wait for the supreme court to have a decision on this.

“The important thing is that our tax system is problematic, confusing and contradictory, and we need to do a lot more to begin to clarify things. So that we can have more efficient ways of collecting taxes.”

When asked about President Muhammadu Buhari’s calls for the cancellation of debt at the United Nations general assembly, Fayemi said the federal government’s borrowing is for reasons and are specific loans.

“Nigeria is borrowing for reasons that are specific. The bulk of what we are borrowing is specific. If you look at what we are borrowing. You will see that these are specific borrowings and most attractive,” he said.

Fayemi said the borrowings are in line with World Bank and IMF standards.

“On the other hand, you have the Chinese infrastructure lending,” he added.

“We can now quiz whether we should be using 97 percent of servicing on debt. That’s a debate we can have.

“The issue is what are you borrowing for. Are you borrowing for consumption or infrastructure development?

“Buhari needs to be commended on that.

“The question is we have revenue challenges…borrowing is a win-win situation for our country and economy.

“I don’t think there is anything wrong if President is calling for a review of debt structuring.”