Sanwo-Olu, LG chairmen battle over VAT sharing formula

The 57 Local Governments and Local Council Development Areas (LCDAs) in Lagos have requested equal sharing formula with the state in the proposed value-added tax (VAT) bill now before the Lagos House of Assembly.

Abdulrasak Ajala, the secretary of the Conference 57 and chairman of Odi-Olowo/Ojuwoye LCDA made the request at a one-day public hearing on the bill organised by the Lagos Assembly on Wednesday.

The parliament is considering a tax bill titled ‘A Bill for a Law to impose and charge Value Added Tax (VAT) on certain foods and services, provided for the administration of the tax and for related matters’, following Rivers’ example.

Mr Ajala explained that for the councils to pursue meaningful development, they required a better sharing formula for its members in the proposed VAT law.

The conference 57 secretary demanded a 50-50 sharing formula, contrary to the 75-25 proposed in the bill in favour of the state government.

Being the closest to the grassroots, Mr Ajala explained that the councils, which also host companies, should benefit from a better share than the 25 per cent in the bill.

The council chairman commended the legislators for the bill, as well as the synergy between the executive and the legislature.

“On the distribution of revenue, you will agree with me value-added tax is on consumption and production, and all these economic activities are domiciled in our respective communities. In addition, local governments, being the closest to the grassroots, need more revenues given the enormity of the responsibilities the Constitution confers on us,” he noted. “Hence, the 25 per cent in the bill is grossly inadequate for local governments to execute all the promises we made to our people; and of course all our electoral promises.”

Ajala further stated, “This is the reason we are making a passionate appeal, on behalf of Conference 57, that we should raise the bar higher, from 25 per cent to 50 per cent.”

Contributing, Michael Ade, representing the Lagos Tax Justice and Governance, commended the lawmakers and the state government for having the political will to imitate Rivers’ government and parliament.

Also commenting, the attorney general and commissioner for justice, Moyosere Onigbanjo, declared that the judgment on the VAT law was not valid only in Rivers, but any state in the country stood to benefit from the judgment.

According to the attorney-general, the National Assembly does not have powers on VAT.

The House Committee on Finance chairman Rotimi Olowo, insisted that it would make no sense if all monies accruable to Lagos was taken by the federal government.

Olowo argued that given the pressures on the state governments in terms of infrastructure development, the proposed law on VAT in the state would bring about development.

The Speaker of the parliament, Mudashiru Obasa, assured stakeholders at the public hearing that their contribution were as vital as the bill and would be included in the proposed bill before its passage.