The Implications of Not Passing the PBAT's Tax Reform Bills

In 2021, Lagos and Rivers states took the federal government to court, seeking to retain 100% of Value-Added Tax (VAT) collected within their borders. 

Both states won their respective cases, but the federal government, through the Federal Inland Revenue Service (FIRS), appealed the decision, which is now before the Supreme Court.

*Danger Looms*

If the Supreme Court rules in favor of Lagos and Rivers states, all states would be allowed to retain 100% of their VAT collections, effectively ending the sharing of VAT revenue among states.

Implications of Supreme Court Judgment

4 states have increments while 32 states have decrements.

In other words, only four states – Lagos, Oyo, Rivers, and Bayelsa – would benefit from this ruling, with increased earnings. However, the remaining 32 states would experience a decline in their earnings.

Here's a breakdown of the potential impact on eight states:

Supreme Court Judgment: 4 States Would Experience Increments

• Lagos: 16.67%  would increase to 600%
• Rivers: 22.45% would increase to 445%
• Oyo: 43.7% would increase to 229%
• Bayelsa: 94.69% would increase to 106%

Supreme Court Judgment: The Rest of 32 States Would Get Less Than Their Current Earnings

• Kano: 159.97% would decrease to 62.5%
• Kaduna: 311.76% would decrease to 32.08%
• Abia: 793.13% would decrease to 12.60%
• Imo: 2715.98% would decrease to 3.68%

It's essential for stakeholders to understand the implications of this ruling before it's too late. 

Some states would suffer significantly if VAT is collected and retained exclusively by source states. 

The governors opposing this bill may not fully grasp the potential consequences.

The proposed bill has undergone 14 months of consultations across Nigeria, which is sufficient. 

Time is of the essence, and prompt action is necessary before the Supreme Court delivers its judgment.

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God bless Nigeria!!!

Ref:

https://x.com/dmightyangel/status/1863745360096571633