Press Releases

Fashola Seeks Understanding, Cooperation Of Hotel Operators On New Law

Jul 16, 2009 - Lagos State Governor, Mr. Babatunde Fashola (SAN) on Thursday sought the understanding and co-operation of operators to ensure the successful implementation of the recently enacted Hotel Occupancy and Restaurant Consumption Law.

According to the Governor who spoke at a Stakeholders Conference on Hotel Occupancy and Restaurant Consumption Law held with managers of restaurants and events centre at the Muson Centre, Onikan, the state Government has been constrained to introduce the consumption tax because the hotels also need to return a little from what they earn from the society.

Explaining its rationale, Governor Fashola said government enacted the law to charge 5percent consumption tax on all those who make use of the service, in order to give succour to the underprivileged in the society so that they do not become threat to everyone.

Governor Fashola also explained that today most of the states in the federation can barely function economically now because the country cannot meet its oil production quota due to well known reasons adding that this has tasked governments to look for alternative means of providing infrastructure for the people.

The Lagos State Governor reiterated that Lagos with a 2009 budget of N405Billion cannot fully fund it even with its total annual earnings in terms of internally generated revenue and federation account revenue grossing about N240Billion, thus making borrowing the only option left.

He explained that even when the state decides to borrow, such loan must be repaid, adding that what is generated is still a far cry from what is needed, stressing that Lagos as a State has the capacity to implement a Trillion Naira budget , but the challenge would be in terms of how to generate the funds.

He said the present administration has plans to bridge the infrastructural deficit of over 30 years which the state is grappling with, charging that the citizens must also give a helping hand.

The Governor said one of the ways designed by the present administration to boost the business environment for the operators of hospitality business is by developing a full fledged tourism sector which would make the state the destination point.

The Governor added that the spectacular Adamu Orisha of Eyo staged recently by the State Government was aimed at boosting the tourism potential of Lagos and ensuring that operators of hospitality outfits benefit immensely from it through increased patronages.

Governor Fashola also told the gathering that the State Government has also embarked on several projects such as the expansion of the Lagos Badagry Expressway and the delivery of two light rail system which the state cannot solely fund but need additional funds from other sources to actualize.

He said the present administration is keen on ensuring that it creates a climate which would make it unattractive for Nigerians to willingly go abroad and become refugees by ensuring that services and public utilities here function effectively.

Governor Fashola said it is ironic that Nigerians are always willing to pay the Five percent consumption tax whenever they travel overseas, wondering why there should be an exception here.

The Lagos State helmsman reiterated that the street lights that have made night life spring back in Ikoyi and its environs have been powered by diesel whose cost has been borne by the State Government.

He added that likewise the many patrol vehicles that have ensured that everyone can sleep with two eyes closed round the state has been supported with thousands of liters of fuel which the State is bearing its cost.

Governor Fashola also said after each public event or entertainment show, it is always the duty of the State to clear the dirts generated at such public shows with trucks and boys who must be engaged and paid to clear the refuse at such places.

He enlightened that the new consumption tax is not directed at the operators but to be paid by the users and patrons of such outfits, saying the operators are only expected to act as collecting agents who remit to the Government.

Governor Fashola who said he is not unmindful of the difficult conditions under which the business men operate in Nigeria, however asked rhetorically: “if things do not get better. Have we asked ourselves if it could get worse?”

On the issue of double taxation raised by the Hoteliers Association of Nigeria and the Fast Food Operators of Nigeria, Governor Fashola said the provisions of the Nigerian Constitution as decided in the Aberuagba case is very clear that all matters of domestic consumption taxes were state or residual matters once they occur within the vicinity of the areas.

He said the only Sales tax law that was ever enacted in Lagos was the one enacted by the administration of Alhaji Lateef Jakande in 1982, adding that it is very ironic that the military rulers were responsible for the lopsided nature of some of the laws passed down .

Governor Fashola said the meeting was convened because the Government believes that things can get better as it indeed owes the people explanations on why the new law has become necessary.

Earlier while giving an overview of the views expressed by stakeholders at the meeting, the Special Adviser on Taxation and Revenue, Mr Ade Ipaiye said the joint position paper adopted by the Hoteliers Association of Nigeria and Fast Food Operators claim that it is only the central government that can impose consumption tax as opposed to the state government is not tenable as there is a subsisting court judgment to the effect that all consumption taxes at the state level is residual.

On the allegation of the new law being discriminatory, Mr Ipaye explained that the new consumption tax can only be discriminatory if it leaves some people and targets some who enjoy same service, saying the new law only affects all those who patronize hotels and events centres.

On the issue of other taxes such as Pay As You Earn, Fire and Safety and Land Use Charge already being paid by the operators in addition to the new five percent consumption tax, Mr Ipaiye told the gathering that tax is universally always broken down and not charged in one lump sum

Mr Ipaiye also said the State has already taken note of the issue of multiplicity of the taxes raised, adding that Lagos has already approached the Supreme Court for an interpretation of the VAT law.

Also Speaking, the Chairman of the Lagos Internal Revenue Service, (LIRS), Mr Tunde Fowler called on the operators to join hands to make the new law on the charging of five percent consumption tax on services in hotels, restaurants and events centres work.

Over 25 hotels and events centres who have already registered with the State Government as collecting and remitting agents under the new law were presented with certificates of registration with Governor Fashola personally presenting five of them at the event.