Lagos Councils Canvass 50% Revenue Share From New VAT Bill

Local Governments in Lagos State under the umbrella body of ‘Conference 57’, on Wednesday canvassed for 50% revenue share from the new Value Added Tax (VAT) revenue when the bill is passed into law.

The councils made the call during a public hearing on a ‘Bill for a Law to Impose and Charge Value Added Tax on Certain Goods and Services, Provided for the Administration of the Tax and Other Related Matters’ organised by the state House of Assembly.

Speaking on behalf of the Council Chairmen, the Chairman of Odi-Olowo Ojuwoye Local Council Development Area (LCDA) and Secretary, Conference 57, Mr Rasaq Ajala, said for the state to realise the Greater Lagos agenda, it needs more funds in its kitty, adding that he was sure the bill would get the concurrent support of all stakeholders.

Ajala said the revenue distribution in the bill needs to be revisited to give more share to local governments, saying that the bulk of financial responsibilities lie on the councils being the closest tier of government to the people.

“This bill is very important to the realisation of the Greater Lagos agenda and so for us to be able to realise this agenda, the state will need more funds in its kitty. I am sure this bill will get the concurrent support of the stakeholders.

“I want us to revisit Clause 33 of the bill which centres on the distribution of revenue. 25% to the local governments to be shared on the basis of derivation principle is not enough. As the closest tier of government to the people and where the VAT will be generated, Conference 57 as a body would appeal that it should be increased to 50%,” Ajala said.

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A tax practitioner and representative of KPMG, Olatoyosi Lawal, said that there was need to define the terms in the interpretation session of the bill to avoid future legal argument, adding that definition as to what constitute commencement of business for VAT taxation should be clearly stated.

Jonathan Ayo, a hospitality industry accountant, said the proposed collection of VAT by the state may result to double taxation as consumption tax was already in existence, asking whether the consumption tax would be repealed.

A Civil Rights Activist and Executive Director, Centre For Human and Consumer Rights, Bar. Adeola Samuel, argued that the execution of the judgement delivered in Rivers State by the Lagos State goverment was a booby trap that would make it failed in its implementation.

He explained: “There is a booby trap except if Lagos wants to over look it. Doctrine of covering of the field will have to be applied. If the law is passed as it is, there will be a lot of litigations.”

He cited a judgement where it was declared that an individual or organization cannot benefit in a judgement that one is not a party to.

But in a swift reaction, Commissioner for Justice, Myosore Onigbanjo (SAN) said: “That judgement on VAT law is not valid only in Rivers State. Any state in Nigeria stands to benefit. Your statement is not correct on the position of the law.

“The National Assembly does not have power on VAT, that is what bring us where we are today. The position as it is today, the VAT law is no longer applicable in Nigeria. I respectfully disagree with your position sir.”

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Meanwhile, while speaking with journalists, the Chairman, House Committee on Finance, Hon Rotimi Olowo said: “It will make no sense if all money accruable to us in Lagos State is taken by the Federal Government. Lagos is working hard and we are sweating.”

He argued that there are a lot of pressure on the state goverment in terms of infrastructure, saying with the proposed law on VAT in the state, it would being about holistic development.

Olowo said the bill was to correct the injustice perpetuated by the Federal Government, adding that since the revenue was accrued in the state, it should be collected by the state for the betterment of the state.

He stated that the law enacted by the National Assembly becomes dead because issue in the residual list should be legislated on by the House of Assembly.

Olowo added that issues that bothers on VAT is a residual issue in legislation.

He stated that despite the fact that Lagos is contributing almost 55% of VAT revenue, it is getting paltry sum in return.

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