Reviewing the VAT Act Through the Eyes of the Constitution

Abstract

The Value Added Tax (VAT) is a type of indirect tax that is levied on goods and services for any value or pint of value added at every point of production or distribution cycle beginning from the raw materials and going all the way to the final retail purchase . According to the Federal Inland Revenue Service (FIRS) the VAT is a consumption tax because it is the end consumer who bears the brunt of the entire tax. The history of Consumption Tax can be traced to the 1960 and 1963 Constitutions of the Federal Republic of Nigeria, where the subject matter was contained within the exclusive competence of the Federal Government. During the enactment of the 1979 Constitution, consumption/sale tax was deleted from the exclusive legislative list. It was this exclusion that gave rise to the creation of the multiple Sales Tax law of the various States. To resolve this issue, the Supreme Military Council in 1993 promulgated the VAT Decree (The Decree).

Keywords: Taxation, Consumption tax, Value Added Tax