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VAT For Brothers: Stop Illegality First Wike tells FG

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VAT for brothers: Stop illegality first, Wike tells FG, Gombe fears stoppage

Governor of Rivers State, Nyesom Wike, has advised his counterparts that are begging the state and Lagos State to discontinue moves to collect the Value Added Tax directly.

Wike, in Port Harcourt on Monday, said the Federal Government and states that were appealing to Lagos and Rivers states to be their brother’s keeper, must first accept the illegality of the central government collecting VAT, instead of states.

He stated this as the Gombe State Governor, Muhammadu Yahaya, while receiving the All Progressives Congress stakeholders from the southern part of the state on Monday, said other states must wake up to reality on ground.

Yahaya noted that if the income from VAT ceased, the state government would not be able to pay salaries.

The battle for VAT started last month when the Federal High Court sitting in Port Harcourt in its judgment held that Rivers State had the right to collect VAT within its territory.

But in its ruling on an appeal filed by the Federal Inland Revenue, the Court of Appeal on September 10 ordered a stay of execution of the Federal High Court judgment.

Lagos State has asked to be joined in the appeal filed by the FIRS.

While some states have appealed to Lagos and Rivers states to be their brother’s keeper, the Katsina State Governor, Aminu Masari, dismissed moves by the states as a joke.

On Monday, Wike said Nigeria must encourage federating states to harness their resources and generate revenues.

The governor made the observation when the Managing Director and Editor-in-Chief of the SUN (Newspaper) Publishing Limited, Mr. Onuoha Ukeh led a delegation to present a letter of nomination to him as the SUN Man of the Year 2020 Award at Government House, Port Harcourt on Monday.

Wike observed that there were attempts to frustrate states like Rivers, to actualise the constitutional provisions that empower them to harness their resources and revenues, particularly VAT.

The governor decried the situation where the legality of states collecting  VAT was not considered on the merit of the law by some public commentators including state governors,  who were politicising it and looking at it from prisms of ethnicity and religion.

Wike said this in a statement issued by his media aide, Kelvin Ebiri titled ‘States must be encouraged to harness their resources, revenues to develop themselves—Wike’

According to the governor, what the FIRS is doing is illegal and could be likened to robbing states.

He stated, “You don’t even need to be a lawyer to know that VAT is not in items 58 and 59 of the second schedule of the 1999 Constitution as amended. Everybody knows that.

“It is not even in the concurrent list. Therefore, it falls under the residual list. It is not arguable. That yesterday nothing happened does not mean that today nothing will happen, or tomorrow something will not happen.

“Nigeria should encourage states to be strong enough to have resources to develop their states. We are in a federal system where we are practising unitary system. Everybody at the end of the month will run to Abuja to share money. Nobody comes back to the state to think, how do I develop my state”?

“The issue of VAT did not start from Rivers State alone. It started in Lagos State when Lagos State challenged it in the Supreme Court. Unfortunately, the Supreme Court said  Lagos shouldn’t have sued the Federal Government.”

He urged those demanding a brother’s keeper consideration to first appreciate the position of the law and situate it rightly.

“Some people say, be your brother’s keeper. I have no problem in being my brother’s keeper. But why not come out and say, let us tell ourselves the simple truth. As it is being provided in the law, who is the person responsible to collect  VAT?

“When you agree to that, that it is the state, then we can sit down to look at the different problems of states. And not to say be your brother’s keeper while you’re doing an illegal thing, in disobeying what the law says you should not do,” the governor explained.”

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Naira depreciates further to N614/$ at parallel market

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Naira depreciates further to N614/$ at parallel market

The Nigerian naira has dropped to N614 against the dollar at the parallel section of the foreign exchange market.

The figure signifies a depreciation of N7 or 1.2 percent compared to the N607 it traded last two weeks.

Bureaux De Change operators (BDCs), popularly known as ‘abokis’, who spoke to TheCable in Lagos on Tuesday, said they purchase the greenback at N608/$, make a gain of N6, and then sell at N614.

At the official market, the naira also depreciated by 0.21 percent to close at N421/$ on Monday, according to information obtained from FMDQ OTC Securities Exchange — a platform that oversees official foreign-exchange trading.

Nigeria operates multiple exchange rate windows ranging from the importers and exporters window (I&E) window, where forex is traded between exporters, investors, and purchasers of forex, the SMEIS window where forex is sold to importers, and others.

International organisations such as the World Bank and the International Monetary Fund (IMF) have constantly advised the Central Bank of Nigeria (CBN) to unify the official and parallel market exchange rates.

But Godwin Emefiele, the CBN governor, had said that despite advice offered by IMF and the World Bank, developing economies such as Nigeria had the liberty of adopting “homegrown solutions to their economic problems.

According to him, the managed floating exchange rate, which allows the CBN to intervene in the market when there is a supply shock, would be in place as long as supply exceeds demand.

“They want us to free the exchange rate. And you do know that this has some impacts on the exchange rate itself,” he had said.

“When you allow that to happen, you will have an uncontrollable spiral on the naira.

“But what managed float means is that we have some measures in place to help control the spiral.”

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FG, states in trouble, as NNPC again fails to remit, despite N470.61bn revenue

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FG, states in trouble, as NNPC again fails to remit, despite N470.61bn revenue

These are challenging times for the federal and state governments as one major source of income to the federation account seems to be totally cut off.

On Monday, The National Petroleum Company Limited (NNPC) revealed it failed to remit monies to the federation account in May 2022 despite making N470.61 billion.

This is the fifth straight month NNPC has failed to credit the federal account while exporting crude at an average price of $100 per barrel.

Details of the June FAAC report obtained by The Harmattan News showed NNPC since the start of the year made N1.897 trillion, over N234.1 billion more than the expected revenue.

Sadly, however, NNPC said all the revenue had gone into various expenditure which includes petrol subsidy, oil search, Pipeline Security & Maintenance cost, National Domestic Gas Development and Nigeria Morocco Pipeline cost among others.

As expected, the bulk of the expenditure, N1.27 trillion, went toward recovery (also known as petrol subsidy).

In fact, NNPC said it has budgeted another N617 billion for petrol subsidy in June.

The report reads: “The Value Shortfall on the importation of PMS recovered from May 2022 proceeds is N327,065,907,048.06 while the outstanding balance carried forward is N617bn .”

“The estimated Value Shortfall of N845,152,863,012.97bn (consisting of arrears of N617bn plus estimated May 2022

Value Short Fall of N227,721,200,478.23) is to be recovered from June 2022 proceed due for sharing at the July 2022 FAAC Meeting,” it added.

The development means states have a tough road ahead and will have to look inwards to cover for the drop in federal allocations.

Already, some states have announced plans to slash workers’ salaries over dwindling income.

Kano Sate has already announced plans to slash workers’ salaries, following in the foot steps of the Ekiti State government that announced civil servants’ and political appointees’ salaries will be slashed in response to the present economic reality in the country.

Ekiti went further to suspend minimum wage implementation with no date of resumptions.

The Harmattan News had recently reported that pension contribution from governments dropped to a 16-year low in the first quarter of 2022.

From recent developments, it is more likely the figure will tank further.

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Nigerian govt to auction N225bn bond as search for funds continues

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Nigerian govt to auction N225bn bond as search for funds continues

Federal government bonds worth N225 billion would be auctioned today, Monday, June 20, 2022, by the Debt Management Office (DMO) at the primary market.

The debt instrument is being sold by the central government to raise funds to finance the 2022 budget deficit and in today’s exercise, the DMO is offering the notes in three tenors.

The debt office is anticipated to sell the FGN bonds at double digits to make the asset class more attractive to investors.

In a circular published on its website and obtained by The Harmattan News, all three maturities are re-opening, meaning they are from the previously sold bonds.

The circular noted that N75 billion worth of a 10-year bond with maturity in 2025 would be offered for sale at the auction. Another N75 billion worth of a 10-year note maturing in 2032 is up for grabs and N75 billion worth of a 20-year instrument with maturity in 2042 would be sold.

Intending subscribers would be expected to reach out to primary dealer market makers to buy the bonds for N1,000 per unit subject to a minimum subscription of N50 million and in multiples of N1,000 thereafter.

The interest would be paid by the government semi-annually, while the bullet repayment will be done on the maturity date.

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