Nigerian states are of a sudden championing a rare push for true fiscal federalism by insisting on collecting taxes under their purview, whether that is Value Added Taxes (VAT) or more recently stamp duties.
While some states remain locked in a tussle with the Federal Inland Revenue Service (FIRS) over who collects VAT, they have also now instituted legal action against the federal government over its continued collection of stamp duties in the country.
The state governments in a suit filed last month at the Supreme court are claiming that the right to collect stamp duties on financial transactions between persons or individuals in a state is the exclusive right of the states, hence the apex court should intervene and restrain the federal government from further collection of the money.
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They are asking for a refund of N176 billion as stamp duties collected between 2015 and 2020.
In the current legal action dated August 19, 2021 and filed 24th, the 36 state governments in an 18-paragraph affidavit claimed that FG’s collection of stamp duties and retention of same in financial transactions between individuals was contrary to the provisions of the law.
The Attorney General of the Federation and Minister of Justice, Malam Abubakar Malami, was the sole defendant in the suit filed by Yusuf Alli, SAN, on behalf of the plaintiffs.
Alli stated that his client resorted to the court action after efforts to resolve the issue with the defendant failed to yield desired result.
The plaintiffs attached a copy of their letter dated September 16, 2020 to the federal government asking it to stop both the FIRS and NIPOST from collection of the said money accruing to them as exhibit A.
According to the senior lawyer, some of the issues brought before the apex court for determination were that whether the states are not the sole authority to administer and collect stamp duties on all transactions involving individuals/persons within their respective states.
Alli also wanted the court to determine, “whether having regard to the provisions of Section 4(2) of the Stamp Duties Act Cap. S8 of the Laws of the Federation of Nigeria read in conjunction with the provisions of Section 163, items 58 and 59 of the Second Schedule part I and items 7 (a) and (b) of the second Schedule part II and other provisions of the Constitution of the Federal Republic of Nigeria, 1999 (as amended), the defendant (Malami) could claim, retain, distribute or in any other manner deal with the monies or sums collected as stamp duties on individual persons transactions within the respective states of the plaintiffs without reference to, concurrence of, input or agreement of the plaintiffs?”
Furthermore, the States wanted to know whether or not they were “entitled to 85% of all stamp duties collected on electronic money transfer levy, on electronic receipts or electronic transfer for money deposited in deposit money banks and financial institutions, on any type of account to be accounted for and expressed to be received by the person to whom the transfer or deposit is made in the plaintiffs’ respective states”.
The defendant, Malami, however, has 21 days to respond to the suit starting from the date it was served.
