Imo State ₦3000 Adult Development Levy and Another Instance of State Violation of Tax Laws.

The media was agog recently of a news report from Imo State wherein the state government was reported to have imposed a development levy of Three Thousand Naira (₦3000) on every adult person in Imo state. According to the report, the various autonomous communities are to be the collecting agents and the punishment for non-compliance is to have their recognition stripped away from them by conjoining them with others who have complied and suspend their traditional ruler.

https://www.vanguardngr.com/2018/04/okorocha-imposes-n3000-devt-levy-adults/

We are

not particularly aware of the motivation behind the sudden announcement but we find trouble placing it within valid tax law parameters. As at the time of writing this commentary, we are unaware of any law passed by the Imo State House of Assembly to this effect, one may therefore validly ask what powers do the executive arm of government have to impose such controversial tax/levy on her populace? It is important at this stage to mention that Imposition of Tax is a function reserved exclusively for the legislative arm of government by virtue of S. 4(2) and (7) of the 1999 constitution. Thus, in the absence of any legislation made by the state house of Assembly, the executive arm has erroneously acted ultra vires its power.

On the same footing,

we submit that even if the state legislature has made any legislation to that effect that such legislation cannot also be said to have been validly enacted. Taxing powers in Nigeria is divided in the legislative list of the 1999 constitution among the three arms of government into the exclusive, concurrent and residual list. While the federal government and state can legislate on the concurrent lists, only the former can legislate on the exclusive list and only the latter can legislate on the residual list. The Taxes and Levies (Approved List for Collection) Act (TAL Act) has allocated further specific powers to all of federal, state and local government to the ambit which they can validly operate. The TAL Act sometimes make provisions for the amounts that can be collected by the appropriate tax authority. Thus, it provides with respect to Development Levy, that it can only be collected by the state “appropriate tax authority” from taxable individuals and should not be more than ₦100(One Hundred Naira) per annum. Thus, one wonder again whether the ₦3000(Three Thousand Naira) can stand a legal testing. We in fact, find solace in the decision of the High court of Akwa Ibom State in Thompson & Grace v. Govt. of Akwa Ibom State 3 TLRN Nov. 2010 where a similar matter came up. What was in contention in that case was levy imposed on an alleged business premises-Grace Garden. The TAL Act had stipulated ₦10,000 (Ten Thousand Naira) for registration and the Akwa Ibom State Government had sought to recover ₦50.000.00(Fifty Thousand Naira) as business premises registration and renewal levy.

According to the court, par Ebienyie:

The Assessment of ₦50,000.00 by the first and second respondents as registration fee to be paid by the applicant is arbitrary and in excess of the jurisdiction of the 3rd respondent. It is a truism that the taxes and levies (approved list for collection) Act, Cap T2 is to delineate the respective sphere of authority for each tie of government in the federal republic of Nigeria. The collection of registration of business premises is conferred on the state by part II of the Taxes and Levies (approved list for collection) Act…the crux of the matter here is whether the 1st and 2nd respondents can depart from what Cap T2 and the registration of business premises law provide. My answer is no.

The motivation

behind the executive enactment of the new development levy may be to generate more revenue for
the state government, it is not however enough justification for the government to violate the same law they swore to protect. If the Imo State government want to change the sum for being too small, The TAL Act provides the Minister of Finance may amend the schedules the said sum inclusive upon advice from the Joint Tax Board. This Commentary does not set out to give the Imo State Government handout on how to Impress on the Minister to do the needful. We however, submit that the Imo state Government cannot validly impose a development levy of ₦3000 on her indigenes. Acting otherwise is acting ultra vires the power given that sphere of government by the constitution and TAL Act and liable to be set aside upon the slightest test before the court.

Christian Tochukwu Onuora

Writes from University of Nigeria.