Governors finally succumb to FG, okays tax reform bills

Nigerian governors have expressed support for the federal government’s tax reform bills while proposing a new formula for the sharing of Value Added Tax (VAT). This stance was made clear following a meeting between the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee on Thursday.

In a communique issued after the meeting, the governors emphasized their commitment to overhauling Nigeria’s outdated tax laws to promote fiscal stability and align with global standards. They proposed a revised VAT-sharing formula that would ensure fair resource distribution, suggesting 50% allocation based on equality, 30% on derivation, and 20% on population.

The governors unanimously agreed that the VAT rate should remain unchanged and that Corporate Income Tax (CIT) should not be reduced at this time to maintain economic stability. They also emphasized the need to exempt essential goods and agricultural products from VAT, highlighting the importance of protecting citizens’ welfare and boosting agricultural productivity.

Additionally, the NGF advocated for the continued inclusion of Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA) in the sharing of development levies, rejecting the introduction of terminal clauses for these institutions in the proposed reforms.

Despite the controversies surrounding the tax reform bills, the governors expressed support for the ongoing legislative process in the National Assembly to finalize the reforms. They reaffirmed their belief that the changes would benefit the country’s fiscal landscape if carefully implemented.

The proposed reforms stem from four tax bills submitted by President Bola Tinubu to the National Assembly last year, including the Tax Administration Bill, Nigeria Tax Bill, and the Joint Revenue Board Establishment Bill. Among the proposals is the repeal of the Federal Inland Revenue Service (FIRS) Act to create a new Nigeria Revenue Service.

However, the bills have faced significant opposition, particularly from northern governors and leaders, who argue that the proposals are unfavorable to their region. Critics have labeled the reforms “anti-north” and called for their rejection by the National Assembly.

Despite this resistance, President Tinubu has remained firm, insisting that the reforms are not targeted at any region. The presidency has reassured Nigerians that the tax bills are designed to enhance national economic development and ensure fairness in resource distribution.