States that have a penchant for destroying alcoholic beverages can no longer enjoy the dividends of Rivers state Value Added Tax (VAT), governor Nyesom Wike has said.
Speaking during a statewide broadcast after the Federal Inland Revenue Service (FIRS) failure to secure a stay-of-execution to stop Rivers from collecting VAT from businesses in the state, Mr Wike hinted his victory would affect states’ with low revenue.
Rivers State had the second-highest Internally Generated Revenue (IGR) in 2020, according to a report obtained from the National Bureau of Statistics (NBS).
Mr Wike threw a subtle jab at northern states whose insistence to be governed by Sharia law has witnessed the loss of millions from the destruction of alcoholic beverages, while these states partake in VAT from alcohol consumption from other states.
He said he was aware that the Rivers state government decision to collect VAT would lead to setbacks for some of these Sharia-compliant states.
“Naturally, states with ethically restrictive social policies with economic implications may be adversely affected for now,” Mr Wike said.
Over the years, the Hisbah police (enforcers of Sharia law) has continued to destroy millions of bottles and cans of alcoholic drinks considered a sin in Islam.
In an interview with Punch, Kano-based distributor of alcoholic drinks, John Simon, lamented how he lost over N35 million to the Hisbah police after they destroyed thousands of his alcoholic drinks in November last year.
Nigeria: How Rivers Governor Wike’s VAT law sets a new precedent for Abuja
The controversy playing out in Nigeria over Governor Nyesom Wike’s new value-added tax (VAT) law in Rivers State is not so much about the expected earnings from the tax, but rather about how other states will respond.
The law has brought back the debate about restructuring in Nigeria and some see it as a wake-up call for states to become more independent of Abuja.
Governor Nyesom Wike of Rivers State in southern Nigeria recently took a step that might just change the status quo in Africa’s most populous country.
He signed a law allowing the administration of VAT following a court judgement that ruled that the state – not the Nigerian government – should collect such tax.
The matter is still playing out in the court where the government-led Federal Inland Revenue Service (FIRS) has filed an appeal.
But this is not just an arcane move about a complicated tax procedure. It touches on a volcanic argument: who runs Nigeria, the centre or the states? How should Nigeria’s wealth be shared? And more obliquely, whether the South should subsidise the North; a complex of issues known in Nigeria shorthand as ‘restructuring’.