A bill seeking to include value-added tax (VAT) in the exclusive list has passed second reading at the House of Representatives.
The proposed law is co-sponsored by Benjamin Kalu, deputy
speaker, Chris Nkwonta, Daniel Ago, Nkemkanma Kama, Tolani Shagaya, Alex
Egbona, and Joshua Gana.
Leading the debate during Wednesday’s plenary, Gana,
lawmaker representing Lavun/Mokwa/Edati constituency of Niger state, said the
bill intends to erase confusion in the collection of VAT.
“The bill seeks to bring order where confusion reigns, to
create clarity where overlaps have persisted, and to ensure that every naira
raised, shared, or spent by government is traceable, lawful, and transparent,”
he said.
“At the heart of this bill is a simple but transformative
goal, which is to align the revenue powers of the federation, states, and local
governments in a way that promotes efficiency, discourages duplication, and
restores trust in the fiscal system.
“The fiscal architecture of our federation has, over time,
become congested and conflicting. Multiple taxes and levies are imposed at
different tiers of government, often on the same taxpayer. Revenue agencies
overlap, leading to inefficiencies and litigation over collection rights, as
seen in disputes over Value Added Tax (VAT), stamp duties, and personal income
tax.
“In many instances, private consultants or agents are
unlawfully contracted to collect taxes and levies, giving room for corruption,
harassment, and revenue leakages.
“These dysfunctions weaken our ability to plan budgets
accurately, erode investor confidence, and alienate citizens from government.
To strengthen our budgetary process, therefore, we must first strengthen the
foundation of fiscal order, and that is precisely what this bill does.”
MAIN PROVISIONS
The bill, which contains four key clauses, seeks to clarify
that stamp duties collected by the federal government apply only to documents
or transactions involving corporate bodies, while those arising from individual
transactions fall under the jurisdiction of states.
It also proposes introducing a new item — VAT or consumption
tax — into the exclusive legislative list to ensure national uniformity,
predictability, and a clear constitutional basis for VAT administration by the
federation.
The bill seeks to prohibit the outsourcing of tax collection
to private entities and to set a ceiling of nine as the maximum number of
taxes, levies, or charges that may be imposed on a person’s income,
consumption, or property within a year.
It further aims to streamline local government taxation by
removing redundant or overlapping tax powers to prevent the harassment of
traders, artisans, and small businesses.
Gana said if passed into law, the bill will reduce
intergovernmental conflicts over revenue collection, strengthen fiscal
coordination across the
three tiers of government and enhance budget predictability,
enabling governments to plan expenditures.”
BACKGROUND
In 2021, the Federal Inland Revenue Service (FIRS) asked the
national assembly to include VAT collection in the exclusive legislative list.
The FIRS made the request following a legal tussle with the
Rivers state government over the authority to collect VAT and personal income
tax (PIT) within the state.
The bill hit a brick wall in the ninth assembly during
voting on the constitution amendment bills.
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