Governor Nyesom Wike of Rivers State has led the way for many others in ensuring that his state gets more money on its own through Internally Generated Revenue (IGR).
One of the major steps Wike took to make that happen was to go against the policy of the federal government which allows only the Federal Inland Revenue Service (FIRS) to collect Value Added Tax (VAT) including collecting that from people and businesses in various states in Nigeria. To Wike, that action is simply unfair to the states and it could be against the law. To this end, Wike signed the bill into law which empowers Rivers State government to collect VAT in the state going forward.
It seems that Wike’s move is seen as a popular one. This is because more states have backed him and have also adopted the move. According to a report by The Punch, Akwa Ibom and Adamawa states have adopted the move and they are already working on the bill that will allow their states to collect VAT. This is because they also agree with Wike’s view on the issue that it is unfair to the states for the federal government to be collecting the tax alone when the state governments need the money too.
To prove that Wike’s move is legal and popular, the report cited above states that the Federal High Court in Port Harcourt had ruled that the state government has the power to collect VAT in its state. That means that Wike has the backing of the law to do so. Again, when FIRS filed a motion for stay of execution on the issue, the Presiding Judge, Justice Stephen Pam rejected it saying that it was against the principle of equity. It means that the move against Wike on this issue is very likely to fail. In fact, more states such as Lagos, Osun, Benue and others are studying the move with a view to adopting it too.
Why Wike’s move is necessary.
First, it will help the state government to raise more money through the IGR. With the more money it makes, it will be able to sponsor its projects, pay salaries of its workers and meet other vital financial obligations it has. It will make the state more buoyant financially.
Second, it will reduce the dependence of states on the federal government. This is another big advantage of this move. Over the years, the states have depended on the federal allocation to run their affairs. Meanwhile, the FIRS collect the money which the states through State Inland Revenue Service (SIRS) are supposed to collect. If states collect the VAT, it would make them less dependent on federal government.
Again, it will create more jobs for people in various states. This is because more people will be employed to do the job. Apart from creating more jobs in various states, it will also lead to more developments in those states because the state governments will have more money to work with.
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