The Chairman of the Presidential Tax Reform Committee, Taiwo Oyedele, believes that allowing states to collect value-added tax (VAT) would negatively impact businesses.
Oyedele was a guest on Channels Television’s Hard Copy, which aired on Friday.
He explained, “By 1999, when we were drafting the constitution for the 4th Republic, we essentially replicated the 1979 constitution.
“Since VAT is considered a residual matter, it falls under subnational jurisdiction. That’s why Rivers State and Lagos have taken the matter to court and won. In 1979, VAT didn’t exist, so it wasn’t included in that constitution.”
He continued, “However, by 1999, VAT had been implemented for about five years and was becoming one of our main revenue sources. How did we overlook including it in the 1999 constitution? Since it’s not in the 1999 constitution, lawyers will argue it remains a residual matter.”
“If we were to get a Supreme Court judgement today, it would likely determine that VAT should be collected and administered by the states, which would create chaos. States would collect less, businesses would suffer, and the economy would regress.”
He added, “Overall, the new reform aims to create a fairer system. It’s essential to dispel the belief that state-level VAT collection would result in substantial revenue gains, as this isn’t accurate.
“In fact, VAT on imports and international services now generates more revenue than VAT collected within Nigeria itself.”
