THE BRIEF REIGN OF CONSUMPTION TAX IN KANO STATE

Introduction

The Kano State House of Assembly passed into law, the Kano State Revenue Administration (Amendment) Law 2017, which imposed 5% consumption tax on consumers of goods and services bought or rendered in any hotel, restaurant, eatery, bakery, suya spots, shopping malls, event centres and other similar businesses within the State. The tax is to be charged and deducted at source by business operators and remitted to the State Revenue Service (Section 96 & 97 of the Law).

The Issues

Nigeria Employers’ consultative Association “NECA” and Retail Supermarkets Nigeria Limited: operators of Shoprite sued the Attorney General of the Federation, Attorney General of Kano State and Kano State Inland Revenue Service before Justice John Tsoho of the Federal High Court Abuja.” They urged the court to determine “whether having regard to the provisions of the Value Added Tax Act, Cap VI, Laws of the Federation of Nigeria, 2004, which are already being implemented by the Federal Government as consumption tax for the benefit of both the federal and states governments, the provisions of sections 96 and 97 of the Kano State Revenue Administration (Amendment) Law, №3 of 2017, did not amount to double and multiple taxation.”

The Decision

The Federal High Court declared that the imposition of the consumption tax vide sections 96 and 97 of the Kano State law, over the same goods and services which were already subject to Value Added Tax, amounted to double taxation.

The court struck down sections 96 and 97 of the Kano State Revenue Administration

(Amendment) Law, №3 of 2017, which empowers the state to collect consumption tax. The judgment was given in favor of the plaintiffs and dismissed the preliminary objection filed by the defendants challenging the court’s jurisdiction to entertain the suit.

Conclusion

It was settled in this case that Consumption Tax levied over the same goods and services which had already suffered the brunt of Value Added Tax amounts to double taxation. In conclusion, we are all aware of the need for state governments to generate fund internally, this should however be done within the ambit of the law. Also, taxpayers needs to always be abreast with the law and be well informed of their rights and duties.

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