Kehinde Emmanuel,Ilorin
A Research Fellow, Research Institute for African Development, Mr. Francis Uzoma Ubani, has said that the National Assembly is vested with powers to make laws on any matter included in the Concurrent Legislative List to the exclusion of the Houses of Assembly of States.
He argued that Item “D7” or D, paragraph 7 of the Concurrent Legislative List (bearing “Collection of Taxes” as the marginal note) authorizes the National Assembly to delegate the administration of the taxes to the States “subject to such conditions” as the National Assembly prescribes.”
He said: “We therefore, urge you, Executive Chairman, to use your good offices and withdraw the obnoxious FIRS Press Release on Clarification on Administration of Stamp Duties in Nigeria dated 20/7/2020 and replace it with a version that is consistent with the provisions of the 1999 Constitution.”
He stated these in his letter to the Executive Chairman, FIRS, Dr Zacch Adedeji, which was made available to journalists on Tuesday.
Ubani, who is also a tax practitioner and tax consultant to many state governments on stamp duties, argued that some provisions of the Finance Acts 2021 and 2022 are unconstitutional.
According to him, the collection, recovery and distribution of revenue from stamp duties/electronic money transfer (EMTL) by the Federal Inland Revenue Service, (FIRS) is unlawful and contrary to the provisions of Sections 2(2) and 163 of the 1999 Constitution of the Federal Republic of Nigeria as amended.
He pleaded with the FIRS boss to direct the deposit money banks and other financial institutions to immediately begin to remit qualified chargeable stamp duties/EMTL accruable to the different federating States of the Federation, pursuant to Section 4 (2) of the Stamp Duties Act, as amended, to the “Relevant Tax Authorities in the various States of the Federation as applicable please.”
He also argued that it is not right as directed in paragraphs 5 (iii) and (iv) of the FIRS Press Release on Clarification on Administration of Stamp Duties in Nigeria, which stated that the FIRS is vested with powers to collect stamp duties on all banking transactions.
According to him, the powers given to the State Governments through their respective Revenue Authorities to administer stamp duties by ensuring the assessment, collection and accounting for stamp duties between individuals into the State Governments Revenue Accounts does not include banking transactions, Deposit Money Banks and Financial Institutions relied on in not remitting qualified chargeable stamp duties to the federating State Governments pursuant to Section 4 (2) of the Stamp Duties Act, as amended.
He opined that it is a very wrong clarification that is not supported by the applicable laws on the issue, based on the facts stated above.
He therefore urged Adedeji to use his good offices to withdraw the perceived obnoxious FIRS press release on clarification on administration of stamp duties in Nigeria dated 20/7/2020 and replace it with a version that is consistent with the provisions of the 1999 Constitution.
Ubani wrote: “We respectfully write to bring to your attention and inform you that the amendment to the sharing formula for revenue from stamp duties/Electronic Money Transfer Levy (EMTL) as enacted in the provisions of Section 23 of the Finance Act, 2022, which amends Section 89A of the Stamp Duties Act, by substituting for subsection (4), a new subsection (4) as follows: –
“Notwithstanding any formula that may be prescribed by any other law, the revenue accruing by virtue of the operation of this section, shall on the basis of derivation, be distributed as follow: – (a) 15% to the Federal Government and the Federal Capital Territory, Abuja; (b) 50% to the State Governments; and (c)35% to the Local Governments.
“This is clearly inconsistent with the provisions of Sections 2(2) and 163 of the Constitution of the Federal Republic of Nigeria, 1999, as altered, and therefore, should be voided, alongside with any regulation made by the Minister, pursuant to thereof, since the distribution of Stamp Duties/Electronic Money Transfer Levy (EMTL) revenue is statutorily based on DERIVATION, pursuant to the provisions of Section 163 of the said Constitution and should not be shared through “the Federation Account” pursuant to Section 162 of the said Constitution, without Constitutional amendment.
“It is pertinent to point out that the “Division of Taxing Powers” is contained in the Constitution of the Federal Republic of Nigeria, 1999, as altered. It appears that the prolonged military rule in Nigeria has bequeathed a highly centralized system of government as evident under our said Constitution. Under the 1999 Constitution, the Federal Government alone has power to legislate exclusively on 68 items or matters; hence the demand for decentralization or devolution of powers to States, particularly on taxation, but our tax system appears to remain in the firm grip of centralization.
“This is borne out by the provision of the Federal Inland Revenue (Establishment) Act, 2007, which attempts to centralize the administration of personal income tax, capital gains tax, and stamp duties, these are the three most important taxes currently being administered by the States, including Withholding tax, even though with the Federal government. However, the “Federal Government Taxing Power” in respect of these taxes are limited to residents within the Federal Capital Territory, members of the armed forces, diplomatic corps and non-residents and companies. However, the revenue collected by the Federal government from these taxes is constitutionally required to be distributed to the States on the basis of derivation pursuant to Section 163 (b) of the 1999 Constitution, as altered.”
