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Hostile tax approach, laws frustrating businesses at all levels—NECA

At a time the federal and states governments seem to be expanding their tax nets with new laws and policies, the negative after effects are beginning to elicit reactions from stakeholders.

Firing the first shot on Tuesday, was the Nigeria Employers’ Consultative Association (NECA) who has expressed displeasure at attempts by Government to strangulate Businesses through multiple taxes and duplication of taxes and levies in the country.

A star example presented before the public by the pressure group was the recent enactment of Kano State Revenue Administration (Amendment) Law 2017, which imposes a Consumption tax payable by Consumers of goods and services bought or rendered in any hotel, restaurant, eatery, bakery, takeaway, suya spot, shopping mall, store, event centre and other similar businesses in the State.

In an interview, the Director-General of NECA,  Mr. Olusegun Oshinowo, argued that “the imposition of Consumption Tax by Kano State amounted to a duplication of Value Added Tax (VAT), which our Laws frown against, as stated by the Supreme Court in the case of Attorney General of Ogun State vs. Aberuagba and Ors.”

“We do not agree with the imposition of such tax due to the existence of Value Added Tax (VAT) in the country. This is because VAT is a consumption tax collectible by the Federal Government (and shared among the states) in respect of sale of goods and provision of services within the Federation”.

While revealing that NECA had instituted an action challenging such imposition by Kano State Government, Oshinowo averred that “the cause of the recent development is the Taxes and Levies (Approved List for Collection) Act (Amendment) Order 2015, which several States are misinterpreting and now leveraging to enact Laws that clearly amount to and promote duplication of taxes. This trend is spreading like wide fires going by the recent actions of Kogi and Delta States, just to mention but a few”.

“At NECA, we are convinced that this initiative is killing business, wealth creation and entrepreneurship. It is equally a clear disincentive to foreign direct investment”.

“While the private sector is not opposed to taxation, it is, however, against illegality and unreasonable taxes through imposition of multiple taxes as well as duplication of taxes. The private sector will not accept a duplication of VAT in any guise irrespective of the name given to it by the state governments,” NECA boss noted.

He hinted that the group is relying on the judgment of the Supreme Court in the case of Attorney General of Ogun State v. Alhaja Ayinke Aberuagba, where the court affirmed, as follows “… a State House of Assembly has power to make…. Law, ….such law should not be inconsistent with any law validly made by the Federation and should not make Sales Tax Law (Consumption Tax Law) where any law validly made by the Federation has covered the field”.

Efforts to get reactions from Kano State Internal Revenue Service, failed at press time.