Reps seek equitable distribution of taxes, duties between federal, state governments

The bill which seeks to ensure equitable distribution and payment of taxes and duties accruable into the Federation Account to Federal and State Governments scaled through second reading on the floor of the House of Representatives on Wednesday.

The ‘States, tax and duty net proceeds (distribution) bill, 2016’, sponsored by Babajide Akinloye, seeks to to give effect to the provisions of Section 163 of the 1999 Constitution (as amended), by ensure that relevant revenues in form of tax, duty, capital gains, incomes or profits of persons other than companies, documents or transactions by way of stamp duties collected by Federal Inland Revenue Service (FIRS) or any other federal agency shall be paid into a Special Distributable pool account to be maintained by the Federation.

Section 1(2) of the bill provides that “the net proceeds of such tax or duty which is derived from a state shall be determined by the collecting authority and credited to that state in accordance with section 163(b) of the 1999 Constitution.”

Section 1(3) also provides that each state government shall be paid a net amount due to it at the end of each of the relevant year.

Section 4 (a-b) also provides that “where stamp duty is paid on land or real property transaction of any type, the stamp duty shall be deemed to be derived from the state in which the land or real property is situated; and in any other case, stamp duty shall be deemed to be derived from the state in which the duty was actually paid to the receiving authority notwithstanding that the document was executed in another state.”

Subsection 4(c) also provides that “a tax on incomes or capital gains shall be deemed to be derived from State in which tax payer was located at the time of collection.”

Section 5 of the bill provides that “all sum due to any state government before the commencement of this enactment shall be determined by relevant agency of Federal Government in conjunction with the Accountant General of the State and paid over to the State Government within a period of three months after the come of this bill,” the document obtained by BusinessDay read.

In his lead debate, Akinloye (APC-Lagos) said the provision of the constitution relates to the powers of the National Assembly to make laws in matters of collection in taxes.

Akinloye explained further that it relates to capital gains, profits of persons other than the company, stamp Duties to be remitted to the States where the properties subject to stamp Duties are situated or where the payee of the capital gains resides.

According to him, upon collection of such taxes by the FIRS, a certain percentage of such collections are remitted to the States affected and the FIRS retain some.

“This is intended to achieve fiscal federalism in Nigeria and make the FIRS more accountable and transparent with no financial responsibility on the federal government,” Akinloye said.

Speaking in favour of the bill, Mukaila Kazzim (APC-Ogun) observed that the enforcement of the legislative framework will help in augument revenues accruable to State Governments to meet critical financial obligations especially payment of salaries.

“It will boost the financial status and revenue of States if taxes are paid on time,” Kazzim said.

The Bill consists of six Clauses and of importance in the provisions is clause two which seeks to fix the quantity of the net proceeds to not exceeding 5% of the total sum collected.

While ruling, Speaker Yakubu Dogara referred the bill to the House Committee on Finance for further legislative action.

KEHINDE AKINTOLA, Abuja