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Falana Says Judgement on VAT Will Strengthen Campaign for Restructuring
Mr. Femi Falana, human rights lawyer, has, said the judgement of the Federal High Court in Port Harcourt, which ruled against the administration and collection of Value Added Tax (VAT) by the Federal Inland Revenue Service (FIRS) not only corroborated the struggle for restructuring via litigation, but also strengthened the campaign.
Falana urged all state governments to team up with Rivers State Government to defend the judgement.
However, Falana warned that the FIRS should not be prevented from collecting VAT, pending the hearing and determination of the appeal. He said dispute over the enforcement authority of VAT, should not call for anarchy.
The lawyer added that, if implemented, Lagos State Government, believed to contribute about 70 per cent of VAT, would be the greatest beneficiary, followed by the Federal Capital Territory (FCT) with 15 per cent contribution to VAT.
Falana, a former President of the West African Bar Association (WABA), also contended that it was evident in the 1999 Constitution of the Federal Republic of Nigeria (as Amended) that VAT, “is neither listed in the Exclusive Legislative List nor on the Concurrent Legislative List.”
The legal luminary spoke in response to THISDAY’s enquiries on whether or not Rivers State Value Added Tax Law No.4 of 2021 was enacted in contravention of the provisions of the 1999 Constitution.
Justice Stephen D. Pam of the Federal High Court in Port Harcourt had ruled that the FIRS lacked constitutional authority to enforce and administer taxes not expressly stipulated under Items 58 and 59 of Part I of the Second Schedule to the 1999 Constitution.
Emboldened by the judgement of the Federal High Court, the Rivers State House of Assembly duly passed the State Valued Added Tax Bill No. 4 of 2021, whichMr. Nyesom Wike, state governor, subsequently signed into law.
FIRS said in a statement by Abdullahi Ahmad, irector of Communications and Liaison, advised taxpayers to continue remitting their VATs to the federal agency or face stiff penalties if they failed to honour their tax obligations.
But Falana, in response to THISDAY’s inquiries, explained away the constitutional provisions for the administration, collection and enforcement of VAT in relation to the power of the FIRS under the Value Added Tax Act, 2007, which had its foundation in the Decree No. 102 of 1993.
He said the judgement of the federal high court was consistent with Items 58 and 59 of Part 1 of the Second Schedule of the 1999 Constitution, which according to him, did not encompass the VAT or consumption taxes.
On this ground, according to him, the court decision that the Rivers State Government and not the federal government was constitutionally entitled to impose VAT, enforceable or collectable in its territory was in order.
Based on the judgement, the senior advocate challenged other states of the federation to file applications to join the case at the Court of Appeal as interested parties to defend the judgement of the Federal High Court.
Specifically, Falana explained that other state governments “will have to join Rivers State to defend the judgement of the Federal High Court. They are entitled to join the suit at the appellate court because any order from the appeal will affect them.”
Falana pointed out that in view of the valid and subsisting judgment of the Federal High Court, the Rivers State Value Added Tax Law No. 4 of 2021, “has not impugned any provision of the 1999 Constitution (as Amended).”
He said the judgement “will provide an opportunity for the appellate courts to review the contradictory judicial authorities on the legal status of VAT. Actually, there is a lacuna in the 1999 Constitution. The lacuna is that VAT is not on the Exclusive Legislative List, which was the basis of the judgement.”
The senior advocate explained that the judgement of the federal high court, “has confirmed the struggle for restructuring via litigation. That means that the judgement will strengthen the campaign for restructuring.”
Falana also observed that the judgement, “has a lot of implications for the dwindling revenue of the state and local governments across the federation,” which according to him, reinforced the call for other state governments to join the suit at the appellate court.
“VAT was increased from five per cent to 7.5 per cent last year by the National Assembly. Right now, VAT collected is between N1.5 trillion and N1.8 trillion per annum.
“VAT is fully collected by the federal government and payable into the federation account for distribution among the three tiers of government. Even though state governments have joined the campaign for resource control, the judgement is not in favour of the majority of them.
“If the judgement is implemented, the Lagos State Government, which contributes about 70 per cent of VAT, will be the greatest beneficiary. The Federal Capital Territory will be the next beneficiary with 15 per cent contribution to VAT.
“Apart from Rivers and about four other states that will benefit minimally, not less than 30 states will be adversely affected as they contribute little to the VAT. It is expected that apart from FIRS, which is allocated four per cent from VAT as cost of collection, other state governments may file applications to join the case at the Court of Appeal as interested parties.
“It is also interesting to note that the judgement does not affect the collection of import VAT on international trade. The judgement requires all stakeholders to take advantage of the current constitutional review to examine the collection of VAT as it is neither in the exclusive nor in the concurrent legislative lists under the 1999 Constitution.
“Since an appeal to the Court of Appeal together with a motion for stay of execution had been filed, the FIRS had simply enjoined all parties to allow the status quo to remain.”
He said FIRS should not be prevented from collecting VAT, pending the hearing and determination of the appeal. He said the dispute over the enforcement authority of VAT “is not a call for anarchy.”
Rather, according to the senior advocate, the process was meant to ensure that appeal that had been filed by the FIRS was not rendered nugatory. That was the practice in Nigeria, when the rule of law reigned supreme.
Falana also expressed reservations about the administration of President Muhammadu Buhari in terms of upholding the rule of law.
He lamented that the Buhari administration “has put the rule of law in abeyance by saying that court orders should pave the way for national security. A regime that has disdain for the rule of law cannot turn round to insist on compliance with court orders.”
To compound the crisis, Falana acknowledged that Rivers State Government “has enacted a Value Added Tax Law. The effect is that the law takes precedence over the practice of suspending action until the hearing and determination of the motion of the FIRS for stay of execution.
“As soon as the vacation of the courts ends, the FIRS will ensure that the trial court hears its motion for stay. If the motion is granted, the status quo remains but if it is refused the Rivers State Government will continue to collect VAT under the new law, because of the serious issues involved in the case, the legal battle will be pursued up to the Supreme Court.”
By Okoko Chidozie Christian
[email protected]; 09025179984.
Epileptic power supply has been a mainstay of Nigerian society and profoundly impacted communities, undermines the access of individuals to electricity and hampered economic growth.
And, a range of factors have been identified by stakeholders as the root causes including energy theft.
Electricity – essential part of our daily lives is used for powering our homes, offices, businesses and industries. Unfortunately, some people choose to illegally tap into it.
Illegal electricity connections, also known as “power theft” refers to the unauthorized tapping of electric from a power grid, often without the knowledge or approval of electricity providers.
According to source, electric theft is the criminal practice of stealing electric power, and it is nearly as old as electricity distribution.
Accomplished through a variety of means, from methods as rudimentary as direct hooking to a power line, to manipulation of computerized electrical meters endangering the environment.
For instance, if the power consumption in a region increases to a level where the average demand exceeds the rating of transformer or other electrical equipment due to power theft, then power quality problem like voltage collapse or transformer overloading may occur.
Frequent power cuts lead to deterioration in the customer-utility relationship. Illegal connections to the electricity network often transverse roads, fields, footpaths and present a safety risk for communities who must go about their normal daily activities into contacts with live cables and wires that have not been properly installed.
However, bypassing an electric meter co-located with fuses, circuit breakers, residual current earth leakage detection will often lead to risk of electrical faults and excessive use within the house may not be detected.
And, the supply will remain live within the house, increasing the risk of electrocution or fire. Cost of electricity is substantially compared with low income flow and credit constraints in most countries. For examples, more than 70% of Nigerians live on less than US2.0dollars per day. Yet, there is need to pay for the cost of power consumed.
So, it would appear illogical to conclude that residential consumers steal electricity thereby contributing to this loss.
According to the new Electricity Act, offenders to electric theft shall be subject to imprisonment for a term exceeding three years, a fine or both. If the load consumed or used or attempted consumption or use, does not exceed 10 kilowatts, the first conviction shall warrant a fine no less than three times the financial gain resulting from the electricity theft.
In Nigeria today, the Power Distribution Companies, DisCos face several challenges of electricity theft which remain one of the major causes of massive revenue losses thereby increases the debt profile in Nigeria Electricity Supply Industry, hence negatively impacting the nation’s economy.
Recently, Adetayo Adegbemle, executive director of Power Up Nigeria, expressed that the Senators are out of touch with the realities of the power sector and should seek advice from professionals and experts for accurate information. According to him, electricity is also not a public utility anymore, it is now a commodity.
Energy theft is an international problem and globally estimated in 2022 that consumers spent up to 1.4 billion pounds annually. This costs have to be passed to customers in the form of higher energy charges. The annual worldwide financial losses due to power or electricity theft are estimated to be around US 100billion dollars.
In a recent report by the Director of the Power Sector Advocacy Group in Nigeria; one (1) transmission company TCN, twenty-three(23) generation companies, GenCos and eleven (11) electricity distribution Companies, DisCos operates in Nigeria. Moreover, the plants are managed by generating companies (GenCos), independent power providers, and the Niger-Delta Holding Company.
Unfortunately, the twenty-three (23) power-generating plants connected to the national grid with the capacity to generate 11,165.4MWs of electricity has not been feasible. Despite having a capacity of 22,000 MWs, the country’s power generating peaked at 4,594.6 MWs as of November 2022 has been insufficient for the populace. So, the electricity generated is considerably low for over 200million people.
Although, some anti-theft products can help shield the network and consequently reduce power theft. Just like in United Kingdom, their electrification is made under subsurface about 100meters; not so easy for human to access, study confirms.
So, being a complex challenge, there are some ways to combat the illegalities of energy theft in Nigeria, but the consumers-utility relationship is a key determinant. Improvement of this relationship through local participation in development of renewable energy schemes such as rooftop solar photovoltaic, use of biomass and many more could bring benefit. Also, financing, redesigning of the distribution system and utility company codes and standards, competence in post-installation maintenance.
Strengthening of legal and regulatory framework particularly with larger users, and installing high security tampered-resistant metering systems for commercial consumers may have more effect.
Clean Technology Hub, renewable energy and climate change advocacy firm has launched a Climate Change and Youth Movement in FCT secondary schools in collaboration with the Department of Science, Technology, and Innovation of the FCT Education Secretariat.
Ms Ifeoma Malo, founder and CEO of Clean Technology Hub,
The collaborators commenced the Climate and Change Youth Movement recently at the Government Science and Technical College, Bwari, FCT.
The Climate Change and Youth Movement is a platform for students to learn about the environment and contribute to solving challenges linked to climate change starting from their local communities. It aligns with a worldwide effort to raise awareness and educate children and youth about climate change and renewable energy.
Experts say children and youth are potential driving forces in achieving the climate change objectives in the Sustainable Development Goals.
Clean Technology Hubs’ Climate Change and Youth Movement, for public secondary school students and teachers, seeks to support schools in building climate education programs.
CTH says it will implement it by Establishing new environmental clubs (Green Clubs) or partnering with existing ones targeting science and art students and equipping them with a club manual to guide their meetings.
The schools will also participate in the first-ever Nigerian Students Climate Summit billed to commemorate World Environment Day on 6 June 2024.
The program aims to increase awareness, sustainability, and resilience regarding climate change and clean energy, build capacity on the various technical skills required in the clean energy market value chain, and increase understanding of opportunities in the renewable energy sector.
Ms Ifeoma Malo, founder and CEO of Clean Technology Hub, remarked, “The agreement signed with DSTI enables us to launch a pilot program in the Government Science and Technical College, Bwari, which, upon its successful completion, will be replicated in other colleges in Abuja.”
Dana Air has laid off about 1000 employees, including 583 permanent members of staff and expatriates, following the suspension of its operations by the Nigerian Civil Aviation Authority (NCAA).
Though the airline claims this disengagement is temporary, but emails seen Nigeria CommunicationsWeek, suggested that it a permanent termination.
A paraphrased email sent to all the disengaged members of staff from the airline’s management read: “We regret to inform you that your service is no longer required effective May 9, 2024. This difficult decision was necessitated by the unfortunate suspension of our AOC/business operations by the Nigerian Civil Aviation Authority (NCAA) and enormous challenges the suspension continues to occasion. We take this oppourtunity to thank you for your contribution to the organisation during your time here with us and wish you the best in your future endeavours.”
Kingsley Ezen, head, Corporate Communications for the airline, in a statement, however blamed the development on the ongoing audit by the Nigerian regulatory authorities.
“In light of the ongoing audit, Dana Air has decided to temporarily disengage some staff members pending the conclusion of the audit,” Ezen said.
“The Management of Dana Air extends its sincere appreciation to all staff members for their resilience and dedication during this period of uncertainty. It recognises the difficulties that staff have had to endure and assures them that every effort is being made to resolve the situation promptly,” it added.
Recall that on April 24, the Nigerian Civil Aviation Authority suspended the Air Operators Certificate of Dana Air 24 hours after the airline’s plane from Abuja landed at the Lagos airport runway and veered off into a nearby field.
Reacting to the development, Festus Keyamo, minister of Aviation and Aerospace Development, said the airline has been operating in an unhealthy status.
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