Kogiflame
Kehinde Akinpelu
A member of the Taxation Standards and Practice Monitoring Committee of the Chartered Institute of Taxation of Nigeria, (CITN), Mr, Francis Uzoma Ubani, (FCTI), has called on the Nigerian Bar Association (NBA) to ensure that the Rule of Law prevailed with regard to the Finance Acts 2020, 2021.
In his petition to the NBA, he argued that some provisions of the Finance Acts, 2021, and 2022, were unconstitutional.
An acknowledged copy of the petition was made available to journalists on Tuesday.
The petition was titled: “Unconstitutionality of some of the provisions of the Finance Acts, 2021 and 2022, unlawful and illegal collection, recovery and distribution of revenue from stamp duties/electronic money transfer levy (EMTL) by the Federal Government of Nigeria, contrary to the Provision of Section 163 of the 1999 Constitution of the FRN, as altered, and the need for all Federal Government’s institutions, money deposit banks and individuals involved to be more transparent and obey the rule of the law on stamp duties/EMTL collection, recovery and distributions as enshrined in the relevant provisions of the 1999 Constitution of the FRN, as altered and the Stamp Duties Act, as amended.”
The petition read in part: “ We respectfully write you as a promoter of law reforms and legal education in Nigeria, 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 Section 163 of the Constitution of the Federal Republic of Nigeria, 1999, as altered and therefore should be null, void and of no effect whatsoever, since the distribution of the Stamp Duties/Electronic Money Transfer Levy (EMTL) revenue is based on DERIVATION, pursuant to the provisions of Section 163 of the said Constitution and should not be shared through “the Federation Account”, without Constitutional amendment.
We hereby call on you and respectfully urge you to stand up and take an “Official Position” in this very important constitutional issue for the development of law in Nigeria and thereby advance the principle of rule of law and the supremacy of law in Nigeria, for the common good of all citizens, as Nigeria itself, is a creation of law. Rule of law means that the country is governed by civil law or regular law, that is, laws which are reasonably justifiable in a democratic society, as opposed to draconian, oppressive and arbitrary laws or arbitrary exercise of powers by the government. It is the rule of right and not of might. Therefore, rule of law and not of men, implies that decisions should be made by the application of known principles of civil laws; and without the uncertainty of discretion, force or arbitrariness in their application.
It is in fact, very clear that the provisions of Section 163 of the Constitution under reference, that Capital Gains Tax and Stamp Duties are supposed to be paid, when applicable to the States from which they are derived and not for the benefit, inter alia, of ALL the States, which will be the case were the tax and duties are to be paid into the Federation Account pursuant to Section 162 subsection (3) of the Constitution.
It is our contention that all policies, actions and things in society whether they are done by an individual or government, should be done in accordance with the law and governed by the law. Therefore, the applicable procedure should be observed. When the law is not observed and people breach it here and there, dislocations and problems will occur, and the victims (the federating States of the Federation) will suffer injustice and dissatisfaction in society. Therefore, persons and governments should always obey the rule of law at all times, to avoid anarchy in society.
KINDLY TAKE LOOK AT SECTIONS 162 AND 163 OF THE CONSTITUTION OF THE FEDERAL REPUBLIC OF NIGERIA, 1999, AS ALTERED, TO SEE WHY THE PROVISIONS OF SECTION 27 OF THE FINANCE ACT, 2021 AND SECTION 23 OF THE FINANCE ACT, 2022, ARE NEEDLESS.
PUBLIC REVENUE/DISTRIBUTABLE POOL ACCOUNT:
Section 162 (1) of the Constitution of the Federal Republic of Nigeria, 1999, as amended, enjoins the Federation to maintain a special account to be called “Federation Account” into which shall be paid ALL revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the Armed Forces of the Federation, the Nigerian Police Force, the Ministry or Department of government charged with the responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja.
Section 162 (10) (a) of the said Constitution provides thus:
“For the purposes of subsection (1) of this section “revenue” means any income or return accruing to or derived by the Government of the Federation from any source and includes –
(a) any receipt, however, described, arising from the operation of any law…”. Thus, stamp duties/EMTL could be said to constitute “revenue” within the meaning of this section.
However:
Section 163 of the Constitution of the Federal Republic of Nigeria, 1999, as amended, provides thus:
“Where under an Act of the National Assembly, tax or duty is imposed in respect of matters specified in item D of Part II of the Second Schedule to this Constitution, the net proceeds of such tax or duty shall be distributed among the States on the basis of derivation and accordingly –
(a) where such tax or duty is collected by the Government of a State or other authority of the State, (such as SIRS) the net proceeds shall be treated as part of the Consolidated Revenue Fund of the State; (in line with Section 4 (2) of the Stamp Duties Act) (emphasis, mine).
(b) where such tax or duty is collected by the Government of the Federation or other authority of the Federation, (such as FIRS) there shall be paid to each State, at such times as the National Assembly may prescribe, a sum equal to the proportion of the net proceeds of such tax or duty that are derived from the State”. (In line with Section 4 (1) of the Stamp Duties Act) (emphasis, mine).
Paragraph 7 (i.e. Item D) of Part II of the Second Schedule to the Constitution of the Federal Republic of Nigeria, 1999, as amended, which is on the Concurrent Legislative List provides thus:
“In the exercise of its powers to impose any tax or duty on –
(a) Capital gains incomes or profit of persons other than companies; and
(b) documents or transactions by way of stamp duties.”
