Consumption Tax: Gombe Hoteliers, Internal Revenue Service smoothen edges
By Ben Ngwakwe, Gombe
The controversial Consumption Tax in Gombe state has led to the Gombe Lodging Proprietors and Hoteliers Association to lodge serious letter of protest where they expressed total displeasure with the Executive Chairman of Gombe State Board of Internal Revenue over the implementation of Hotel Occupancy and Restaurant Consumption Tax.
In the statement signed by the Chairman of the Association, Engineer Tarfa Dzarma Garba and Acting Secretary, Mrs Maryam Sarkin and made available to Periscope Nigeria in Gombe, the Association assured the Board of Internal Revenue of the support of the members in the ongoing financial and public service reforms being undertaken by Gombe State Government especially against the background of the state emerging on top of the ease of doing business survey by the Presidential Enabling Business Environmental Council.
They said as stakeholders, “our Association and our members are contributing significantly to the economy of Gombe State, by way of providing employment to a large number of Citizens and residents, and by providing the required hospitality services that are enablers for economic activities, the economic interest of our members will be put in jeopardy if HORCT is implemented as it is, against the downturn and economic activities and the rising inflationary trend.
“When the Gombe State Revenue (Codification and Consolidation) Law 2020 was enacted, our membership, even though a critical stakeholder in the implementation of HORCT, were not invited to make any input to the legislation, thereby, depriving the law our valuable business and practical experiences.”
They added that if Hotel Occupancy and Restaurant Consumption Tax is implemented as it is, their members would end up bearing the burden of the tax instead of the final consumer as intended by the law, stressing the reason was because of the lack of public awareness of the HORCT, while consumers are already paying the 7.5 percent Value Added Tax (VAT) which would make it difficult or outright impossible to pass on the additional 5 percent consumption tax to them making it a total of 12.5 percent.
“There is a category of our customers, who by Law and international treaty, exempted from paying taxes (such as VAT and consumption taxes) by the nature of their activities being humanitarian in nature. he peculiarity of these NGOs do not seem to have been recognized by the HORCT Law, and to this extent its implementation will be opposed by this category of our consumers.
“Typically, consumption Tax Law, (such as Value Added Tax Law) recognizes the need to allow business to off-set input tax from output tax, and pay the net-amount. In the case of Gombe State HORCT, there is no such provision, thereby resulting in double taxation in a situation where one hotel, due to over booking, patronizes the services of another hotel in order to meet the demand of a single consumer for a single activity.
“Having achieved the top position in the country in the ease of doing business as stated earlier, implementing the HORCT this time will likely lead to an erosion of this laudable achievement as businesses and NGO, may likely shift patronage of hospitality industry to other states where there is no additional burden of consumption tax,” The group stated in the letter.
The Association said after deliberations, have collectively resolved to seek for their kind consideration and approval to suspend the implementation of the HORCT for an indefinite period and to embark on a wide publicity campaign to bring the matter to wide public awareness by consumers of the services.
They asked that the Revenue Service should initiate a process for legislative action to amend the Gombe State Revenue (Codification and Consolidation) Law 2020 to achieve the reduction of HORCT rate from 5 percent to one percent and the exemption of non- governmental organization from payment of HORCT.
Other relief canvassed by the Association are to provide for netting- off of input consumption Tax from output consumption Tax to arrive at a net- due consumption Tax before remittance and to bring other sectors in addition to hotels and Restaurants in order to widen the tax base, remove the seeming discrimination embedded in the law against the members.
Meanwhile, taxes have been the bedrock of revenue generation to any government and the administration of tax is very important to any government as it is the body responsible for the implementing and governing the tax laws and other tax related to assessment, collection and remittance of tax. It was based on these trends that the Chairman of the Board of Internal Revenue reacted.
Reacting to the complaints of the Gombe Lodging Proprietors and Hoteliers Association in the state, the Executive Chairman of the Board of Internal Revenue, Mallam Abubakar Inuwa Tata said the service is statutory body with overriding powers concerning all Internally Generated Revenue in the state.
Adding that the service is empowered by Section74 of the Gombe State Revenue Codification and Consolidation Law (2021) to levy and collect consumption tax from the hotels, restaurants, and event centers in the state.
He said, “As a fallout of our meeting with the Union in April 2022, and the resolutions to commence the collection with the consumption tax rate of 2.0 percent as against 5.0 percent stipulated by Law, the Service wishes to, by this letter, direct you to collect and remit to the Service a “Consumption Tax Rate of 2.0 Percent” from your customers on behalf of Gombe State Government with effect from 1st July,2022. The amount to which this tax applies shall be two percent (2%) of the total bill issued to the customer, excluding VAT”.
The Chairman of the Revenue also asked that all the Hoteliers and those concerned should register with the Gombe State Internal Revenue Service, IFS Department upon the receipt of the letter not later than June 30,2022 to avoid laws taking its full course.
Some of the Owners of Hotels who spoke to Arewa Voice in Gombe, appealed to the Board of Internal Revenue to extend implementation of Consumption tax to next year 2023 as the Year had gone half with low support from the public considering the high level of inflations in the country.
They canvassed that the Executive of the Association should meet the Board of Internal Revenue to dialogue the lingering issues of consumption tax rather than confrontational as only three states in the 36 states of the federation namely Lagos, Abuja and Port Harcourt that are implementing the consumption tax.
It will recall that the prudent and transparent steps taken by the Governor Muhammadu Inuwa Yahaya made the Board of Internal Revenue to record the highest amount of revenue collection in 2020.
Also, the Gombe State Internal Revenue Service generated the sum of N8.4 billion as internally Generated Revenue in 2020 and this was disclosed by the Chairman of Gombe Revenue Service, Mallam Abubakar Tata in the statement made available to newsmen in Gombe.
The Chairman revealed that the amount is the highest ever IGR generated by the state since the state was created in 1996.
