Lagos Tax Law Not Investment Friendly - MAN
Industry
By Crusoe Osagie
The Director General of the Manufacturers Association of Nigeria (MAN), Engineer Olawale Akinpelu, has said that the Lagos State Government's tax system was becoming increasingly unfriendly to investors in the manufacturing sector.
Akinpelu who spoke with THISDAY in Lagos over the wekend, said MAN would not hesitate to warn prospective investors who consult the group for advice about the intricacies and complications inherent in the tax laws before setting up businesses in Lagos.
Akinpelu said it would be unfair of MAN not to put any state's business environment in the right perspective to prospective investors who consult it.
"We are duty bound to give our clients and members the detail fact about any state where they are interested in directing their investment leave them to decide," he said.
He said it was unfortunate that while some states are going the extra rule to lure manufacturers to invest in their state others do not care how well manufacturers in their state are fairing and are not interested in keeping them.
Akinpelu who spoke on the two weeks' ultimatum given to manufacturers in the state to comply with the ruling of the Lagos High Court asking manufacturers to pay sales tax on intra-state sales, said the manufacturers had not contravened any law because they appealed against the High Court judgment and the appeal is still in court.
"After the judgment by the Lagos high court asking manufacturers to pay sales tax on intra-state sales, we appealed and also called for a stay of execution so that we have not contravened sales tax," he said.
He however stated that what constitutes the inter-state and intra-state sales must be sorted out.
He said that the position of the Lagos State government on sales tax, which holds that whatever is manufactured in the state must attract sales tax no matter where it is sold was very unacceptable and needed more clarification.
He said that the sales tax was a consumer tax which was actually supposed to be paid by the end users of the product and not the manufacturers.
He said upholding the opinion of Lagos State will mean that citizens of other states will have to pay the said tax to Lagos State even though they bought the product on which they pay such taxes outside Lagos.
He also argued that the Lagos State Government was not supposed to target manufacturers as their collection point of the tax to be paid by consumers.
According to him, the government should rather go to the distributors of these products and work out the way and manner to collect the consumer tax.
The constitutionality of the sales tax has been under serious contention between manufacturers and the Lagos State government, which eventually resulted in litigation.
Hon. Justice O. M. Falase of the Lagos High Court had in his ruling of November 14, 2003 stated that:
"By this enabling section, I declare that the provisions of Decree 102, to the extent that they seek to regulate the taxation of the sale of goods within Lagos State is null and void, such exercise being in violation of the provisions of the 1999 Constitution and ultra vires the National Assembly."
The judge also declared: "I have already held that in order to continue to remain valid and consistent with the 1999 Constitution, Decree 102 must be restricted to inter-state commerce and trade only."
Consequently, the DG had written the Director General, Federal Inland Revenue Service (FIRS) on January 6, 2004 seeking 'clear statements from both the Federal Government and FIRS on this issue, as it is totally unacceptable for our Lagos State based members to be subjected to double taxation on the same products."
|
