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Section 41 of Personal Income Tax Act locks horns of Niger State, FCT together

A serious tax crisis capable of causing a legal battle between the government of Niger State and management of Federal Capital Territory (FCT), Abuja is brewing.

Raising the issue during a meeting with the Minister of Finance, Mrs. Kemi Adeosun, the Governor of Niger State, Alhaji Abubakar Bello, argued the state has been losing about N1.3bn monthly and more than N15bn yearly as Personal Income Tax to the FCT as well over 95,000 people resident in Suleja, Niger State, but work in Abuja were being deducted by the Office of the Accountant-General of the Federation and remitted to the FCT.

The scenario is more annoying the State as currently, it only makes an annual Internally Generated Revenue (IGR) of N400m while it loses fortunes to FCT.

He said with the state losing that huge amount to the FCT, it would be difficult to meet the infrastructure needs of residents of Niger State.

In his lead argument which leveraged on Section 41 of the Personal Income Tax Act, Bello averred that such wrong remittances negate the residency rule as contained in Section 41.

Business Hilights findings show that the Act actually stipulates that the Personal Income Tax should be remitted to the state in which a person resides and was silent on workplace.

In her response, Adeosun assured Niger State government of looking into the matter, agreeing that many FCT workers actually reside in Niger State.

In the voice of the minister, “You have put your points very well and this is a government of fairness and a law abiding government. N1bn a month is a lot of money that is deducted from people who are residents in Niger and to be paid in error to the FCT.

“You have come with facts, figures and names. We will pass that on to the Office of the Accountant-General and those on the Integrated Personal Payroll Information System (IPPIS), of course once we are sure they come from Niger State, we will segregate their taxes and pay those taxes to Niger and those of the FCT will go to the FCT Administration.”

Governor Bello noted further that “Our findings indicate that many thousands of those working in the Federal Capital Territory actually reside in Niger State, in areas such as Suleja and parts of Bwari, which border the FCT”.

“However, the taxes deducted from their salaries are being remitted to the FCT on a consistent basis. This has been the case over many years and relates to both civil servants and workers engaged by the private sector.

“From our records, the number of people affected is up to 95,000 and the amount being lost monthly to Niger State is over N1.3bn, which is over N15bn every year. This money could be used to improve the lives of Niger State residents in the areas of health care, education, water and social services and job creation.

“By remitting the taxes of Niger State residents to the FCT, the hardworking residents of Niger State are being deprived of essential services such as schools, hospitals and good roads, as funds available to the Niger State Government are incomplete and thus development needs cannot be met.”

Though the governor had urged the Finance minister to direct the Accountant-General of the Federation, Alhaji Ahmed Idris, to henceforth remit what belonged to the state to its coffers, a top official of the Niger State Ministry of Finance confided in our Abuja Bureau Chief that “If the error is not corrected in record time, Niger State will have no other option to approach the court for interpretation of the Section 41 of the Personal Income Tax Act.

Analysts say should Niger State get the targeted justice, Lagos State Internally Generated revenue (IGR) may nose-dive as Ogun State where majority of workers and business operators in Lagos reside, may tap into the judgment to ask for refund form Lagos State government, all Personal Income Tax so far paid by Lagos workers residing in Ogun State.