By Wale Adedayo
A simmering crisis is brewing between the Governments of Lagos and Ogun states following a unilateral suspension of proceeds of income tax remittances, which highly placed sources blamed on Lagos State Governor, Mr. Akinwunmi Ambode.
Nigerian tax laws stipulate that income tax should be paid to the states where workers are resident, not where they work. And, scores of workers employed in Lagos State live in Ogun State, with their income taxes being paid to the Lagos State Government.
The Peoples Democratic Party (PDP) controlled-Government of former Ogun State Governor, Otunba Gbenga Daniel, failed to convince its Action Congress of Nigeria (ACN) counterpart in Lagos State to cooperate on the tax issue. But the Administrations of Senator Ibiunle Amosun (Ogun State) and Babatunde Raji Fashola (Lagos State) resolved the issue with Fashola regularly remitting due tax proceeds from identified residents of Ogun State.
Uhuru Times gathered that the almost four years arrangement of remitting the tax proceeds was unilaterally put on hold by Ambode upon assuming office in 2015, in what a highly placed official in the Ogun State capital, Abeokuta, described as a political decision meant to deprive Amosun of much-needed revenue due to differences in who would succeed the Ogun State Governor in 2019.
The source, who insisted on anonymity, told Uhuru Times that, “It will interest you to know that Ambode deliberately stopped the remittances because he felt we are against their choice of the next Governor of Ogun State. The laws on PAYE tax is very simple. We, in Ogun State, have a lot of border towns with Lagos State. In fact, a lot of people living in Akute, Iju, Alagbole, Mowe, Ibafo and others sometimes believe they live in Lagos State, where they work.
“It was the residency rules that made former Governor Fashola cooperate with Ogun State and Governor Amosun by remitting taxes paid by those Ogun residents working in Lagos State. Governor Ambode on assumption of office pulled out of this cooperation by stopping these remittances to Ogun State, because they believe we are against their anointed candidate. It is not right, because politics should be left out of development. These border areas need roads, water and other infrastructure. And, in this season of low revenue from Abuja, it is these taxes we need to develop these areas, and they are starving us of these funds.”
But, in his response to the allegations, Lagos State Commissioner for Information, Mr. Steve Ayorinde, dismissed claims of political victimisation as being responsible for stopping the remittances. “How can a fellow APC governor be punished for a few millions on PAYE? That is certainly not true,” he said.
Instead, Ayorinde pushed the blame back to Abeokuta saying that Lagos State does not want to be cheated despite playing the good neighbor. He explained that, “Lagos State does not have the power to change tax laws. The law subsists. To mitigate the problem caused by workers not filing their tax forms properly so that their employers can remit their taxes directly to their State of origin, Lagos and Ogun states entered into an MoU which subsists till today. But reconciliation has to be constantly done before funds are remitted.
“Lagos is not a collecting agent. We are only mitigating a problem that ought to have fizzled out with adequate sensitization. However, it is a two-way situation. There are a number of Lagos residents working in Agbara and a few other locations in Ogun State. We’ve asked for information on such workers so that proper reconciliation can be made and remittances properly netted off. That’s where we are.
“The funds involved are not substantial but the rule of reciprocity should apply, since both states have duties to perform under the understanding, so once reconciliation is concluded and other necessary information and justifications provided both ways, the needful shall be done. But more importantly, the ideal situation is not to make states agents of PAYE tax collection, so employers and employees too have crucial roles to play.”