The Nigeria Governors’ Forum (NGF) has strongly supported modernizing Nigeria’s tax laws and proposed a revised VAT sharing formula. According to the new formula, 50% of VAT revenue will be distributed based on equality.
In a communique issued by NGF Chairman, Kwara State Governor AbdulRahman AbdulRazaq, the forum emphasized the urgent need to reform the tax system. This aligns with global standards and aims to enhance fiscal stability.
The announcement followed a subnational consultation with the Presidential Tax Reform Committee in Abuja, addressing critical fiscal issues.
Tax Reform Bills Sent to the National Assembly
President Bola Tinubu, with Federal Executive Council approval, sent four tax reform bills to the National Assembly in October 2024. The bills aim to overhaul Nigeria’s tax system.
These include:
- Nigeria Tax Bill 2024
- Nigeria Tax Administration Bill
- Nigeria Revenue Service (Establishment) Bill
- Joint Revenue Board (Establishment) Bill
However, the proposed reforms sparked mixed reactions nationwide. Northern leaders opposed the VAT provisions, citing potential adverse impacts.
Northern Governors and Leaders Express Opposition
On October 29, the Northern Governors’ Forum opposed the tax bills during a meeting with the Northern Traditional Rulers Council in Kaduna. They urged the National Assembly to reject bills that could harm citizens’ welfare.
The National Economic Council later advised President Tinubu to withdraw the bills for broader consultation.
Southern Leaders and Lawmakers Back Tax Reform
In contrast, southern leaders and lawmakers supported the tax reforms. They argued that the bills would drive growth and reflect equity.
Prominent southern figures, including Lagos State Governor Babajide Sanwo-Olu and Pan Niger-Delta Forum leader Chief Edwin Clark, expressed their approval.
Senate Advances Bills Despite Opposition
Despite opposition, the Senate passed the tax reform bills for a second reading in November. However, pressure from 19 northern governors led the House of Representatives to suspend debate on the bills indefinitely.
NGF Proposes Revised VAT Sharing Formula
After meeting with the Presidential Tax Reform Committee, the NGF endorsed a new VAT sharing formula. The proposed distribution includes:
- 50% based on equality
- 30% based on derivation
- 20% based on population
The NGF also recommended no terminal clauses for TETFUND, NASENI, and NITDA in allocating development levies.
Experts and Stakeholders Respond
Economic experts welcomed the NGF’s proposal, highlighting its political and economic benefits. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, called it a necessary political consensus.
Professor Richard Mayungbe, a forensic accounting expert, described the formula as equitable, encouraging states to seek innovative revenue sources.
ASUU and Other Critics Voice Concerns
The Academic Staff Union of Universities (ASUU) opposed aspects of the tax bills, citing threats to public tertiary education funding. ASUU warned that replacing the Development Levy with the Nigeria Education Loan Fund could undermine TETFUND’s operations.
Broader Consultations Continue
Stakeholders, including lawmakers and civil society groups, have called for wider consultations. The National Assembly is expected to deliberate further, considering public input.
Those who because of religion destroyed alcohols will now enjoyed more v.a.t through their overbloated population.
No. Let derivation be50%,equity 20%, and others 30%