A group of financial experts in the country have criticised Section 27 of the Finance Act 2021, otherwise known as stamp duties Act, saying it is unconstitutional.
In a statement by the leader of the group, Uzoma Francis Ubani, which was made available to the Nigerian Tribune in Ilorin on Thursday, the experts said that the section is contradictory to the 1999 Constitution as amended.
Titled; UPDATE ON THE UNCONSTITUTIONALITY OF SECTION 27 OF THE FINANCE ACT, 2021, AND EXPLANATION OF WHY THE SECTION IS NEEDLESS, the financial experts said that there is no basis for the provisions, as currently provided under Section 27 of the Finance Act, 2021, and therefore should be removed and not allowed to subsist.
“How the net proceeds of such tax or duty are to be distributed among the different States of the Federation is now provided under Section 48 (4) of the Finance Act, 2020. It therefore follows that there is no basis for the provisions, as currently provided under Section 27 of the Finance Act, 2021, and therefore should be removed and not allowed to subsist.
“In the light of the foregoing therefore, we are of the opinion that the Federal Government, through the FIRS, should return the sum equal to the proportion of the net proceeds of all the stamp duties that are derived and collected by the FIRS, under Section 4 (1) of the Stamp Duties Act, to the respective “Stamp Duties Account” of the various States of the Federation in accordance with the provisions of Section 163 (b) of the 1999 Constitution of the FRN, as the National Assembly have clearly prescribed in Section 48 (4) of the Finance Act, 2020, forthwith, as anything short of this would be inconsistent with the provisions of the Constitution of the Federal Republic of Nigeria”.
ALSO READ FROM NIGERIAN TRIBUNE
- Police, Amotekun After Criminals On Lagos-Ibadan Expressway
- Buhari, Obama, OBJ, Pope, Others Mourn As Desmond Tutu Dies At 90
The statement, which was written to the Attorney General of the Federation and copied the Senate President, the Speaker House of Representatives, the Minister of Finance, the Executive Chairman, FIRS, the Executive Secretary, JTB, and the Director General, Governors’ Forum, also said that “the Stamp Duties collected by the Government of the Federation, through the FIRS, under Section 4(1) cannot be paid into the Federation Account as directed by the FIRS, in paragraph 7 of its Press Release on collection and remittances of stamp duties dated 20/7/2020, as doing so would be inconsistent with the provisions of Section 163 of the Constitution of the Federal Republic of Nigeria, 1999.
The statement reads:
“Further to our letter dated Friday January 7, 2021, we respectfully write to critically examine and discuss in details, the issues surrounding the Stamp Duties Act.
“LET US LOOK AT SECTIONS 162 AND 163 OF THE CONSTITUTION OF THE FEDERAL REPUBLIC OF NIGERIA, 1999, AS ALTERED.
“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:
162 (10) “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 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 altered, 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)
(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)
Paragraph 7 (Item D), Part II of the Second Schedule to the Constitution of the Federal Republic of Nigeria, 1999, as amended, which is on 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
The National Assembly may, subject to such conditions as it may prescribe, provide that the collection of any such tax or duty or the administration of the law imposing it shall be carried out by the Government of a State or other authority of a State”. (Such as States’ IRS).”
Uwais, CJN (as he then was) in interpreting the above cited provisions of the 1999 Constitution, in the case of Attorney-General of Ogun State & Ors. Vs. Attorney-General of the Federation (2010) 2 N.T.L.R. 902 at 943 para. F 944 para. B) held:
“It seems to me that the provisions of Section 162 Subsections (1) and (10) of the 1999 Constitution, are general in nature, while those of Section 163 (b) of the Constitution, which deal in particular with Capital Gains Tax and Stamp Duties are specific. Therefore, the latter provisions override the former for generalibusspecialia derogant (i.e. special things derogate from general things). There are the Capital Gains Act, Cap 42 of the Laws of the Federation of Nigeria, 1990, as mended and Stamp Duties Act, Cap. 411 which are “existing laws” under Section 315 of the 1999 Constitution. However, the Acts do not contain provisions pursuant to Section 163 of the 1999 Constitution, and as at now the National Assembly has not prescribed how the net proceeds of such tax or duty are to be distributed among the States on the basis of derivation”.
DISTRIBUTION OF PROCEEDS FROM STAMP DUTIES:
In view of the Supreme Court decision in Attorney-General of Ogun State & Ors. Vs. Attorney-General of the Federation (supra) the National Assembly has put the requisite legislation under Section 48 (4) of the Finance Act, 2020, for the distribution of the proceeds of stamp duties among the various States of the Federation on the basis of derivation.
How the net proceeds of such tax or duty are to be distributed among the different States of the Federation is now provided under Section 48 (4) of the Finance Act, 2020. It therefore follows that there is no basis for the provisions, as currently provided under Section 27 of the Finance Act, 2021, and therefore should be removed and not allowed to subsist.
The Stamp Duties collected by the Government of the Federation, through the FIRS, under Section 4(1) cannot be paid into the Federation Account as directed by the FIRS, in paragraph 7 of its Press Release on collection and remittances of stamp duties dated 20/7/2020, as doing so would be inconsistent with the provisions of Section 163 of the Constitution of the Federal Republic of Nigeria, 1999.
It is, in fact, very clear by 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 (see Section 162 subsection (3) of the Constitution).
As currently constituted and administered, the Constitution and the Stamp Duties Act, did not permit the infringement by the Federal Government, through the FIRS, into area which, under the precise and well spelt out separation of powers enshrined in Section 4 (1) and 4 (2) of the Stamp Duties Act, as amended, are within the exclusive preserve of the various States of the Federation.
Section 8 subsection (1) (c) of the Federal Inland Revenue Service (Establishment) Act, 2007 provide thus: The Service shall:
(c) Collect, recover and pay to the designated account, any tax under any provision of this act, or any other enactment or law. (Including the stamp duties enactment/law).
In the light of the foregoing therefore, we are of the opinion that the Federal Government, through the FIRS, should return the sum equal to the proportion of the net proceeds of all the stamp duties that are derived and collected by the FIRS, under Section 4 (1) of the Stamp Duties Act, to the respective “Stamp Duties Account” of the various States of the Federation in accordance with the provisions of Section 163 (b) of the 1999 Constitution of the FRN, as the National Assembly have clearly prescribed in Section 48 (4) of the Finance Act, 2020, forthwith, as anything short of this would be inconsistent with the provisions of the Constitution of the Federal Republic of Nigeria.