2 Reasons Lagos May Collect VAT Despite Appeal Court Order As Lawmaker Reveals What It Gets From FG

Indications have emerged that Lagos State is set to proceed with the collection of Value Added Tax (VAT) despite the order of the Court of Appeal.


The Court of Appeal had last week issued an order stopping Governor Nyesom Wike of Rivers State and Governor Babajide Sanwo-Olu of Lagos State from going ahead to collect the VAT until the main suit filed by the federal government through the Federal Inland Revenue Service (FIRS) has been decided. But, a lawmaker in Lagos, Setonji David revealed that Lagos is set to proceed to collect the VAT despite the order of the Court of Appeal. This article will discuss two main reasons the state may do that.

VAT collection row: Wike talks tough, Lagos defends bill as FIRS writes  National Assembly

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The order was to maintain ''status quo''.

To maintain status quo means to allow things to remain the way they are as at the time the order was issued. In that case, the parties involved are not allowed to take any new action that may change what is on ground at the time the order was issued. In this regard, the VAT law of Lagos and Rivers are already on ground before the order by the Court of Appeal.


The implication is that the two states may proceed with the collection of the VAT. According to the lawmaker, the interpretation of the ''status quo'' in this case is that the VAT law of Lagos State can still be enforced which means that the collection will go on. David added that the order did not mean that the VAT collection should not go on since that law has been passed before the stay of execution order was issued.

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Lagos State felt unfairly treated on VAT over the years.

This is the second major reason why the state may proceed to collect the VAT. The state has always been a major revenue generating state in Nigeria. The lawmaker David who is a member of Lagos State House of Assembly revealed that Lagos alone generates 55 percent of VAT money in Nigeria. Unfortunately, the state gets a small portion of that money which is only 10 percent from the federal government as the FIRS collects and shares the VAT money.

Image credit: The Guardian

This is similar to what Wike reveled earlier when he alleged injustice in the VAT collection and sharing by the federal government. He used Rivers and Kano States to give an idea of the injustice he was talking about. Wike state that Rivers raised over N15 billion in VAT while Kano generated a little over N2 billion in a month. But, While Rivers got a little over N2 billion from the federal government out of the huge amount it raised, Kano received the whole money it raised in VAT from the federal government. In view of this, Lagos is most likely to go ahead to collect the VAT despite the legal hurdle as it hopes to correct this injustice this time.



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