After initial deadlock, the Nigeria Governors Forum, NGF, Thursday, finally announced its support for the tax reform bills after reaching some middle-of-the-road agreement with the Taiwo Oyedele-led Presidential Fiscal Policy and Tax Reforms Committee.
President Bola Ahmed Tinubu had, last year, submitted the four bills to the National Assembly, optimistic that if faithfully implemented, they would lead to the economic revival the administration istration so earnestly worked for.
But northern governor’s and federal lawmakers from the north vehemently opposed the bills as presented, saying the bills would further impoverish the region, advising the Presidential committee to give room for wider consultations.
But the governor’s rose from its meeting with the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, in Abuja, Thursday, announcing its satisfaction with the outcomes.
In the communique signed by the NGF Chairman and Governor of Kwara State, Mr. Abdulrahman Abdulrazaq, the forum proposed some amendments, including one providing for an equitable sharing formula for Value-Added Tax.
They announced that the revised VAT sharing formula must ensure equitable equitable distribution of resources as follows: 50% based on equality; 30% based on derivation; and 20% based on population.
Here are excerpts from the communique: “We, members of the Nigeria Governors’ Forum and Presidential Tax Reform Committee, convened on the 16th of January 2025 to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system, and arrived at the following resolutions:
“The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices.
“The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50% based on equality, 30% based on derivation, and 20% based on population.
“Members agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time to maintain economic stability. The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.”
The NFF, w powerful bloc in Nigeria’s democracy, also insisted that there should be no terminal clause for the Tertiary Education Trust Fund, TETFUND, National Agency for Science and Engineering Infrastructure, NASEI, and National Information Technology Development Agency, NITDA, in the sharing of development levies in the bills.
The governors also declared their support for the continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the tax reform bills.
The communiqué concluded: “The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices.”
President Tinubu had, on October 3, 2024, transmitted four tax reform bills to the National Assembly for their consideration and passage into law. The bills were formulated based on the recommendations of the Presidential Committee on Fiscal and Tax Reforms for the review of existing tax laws.
The bills include the Nigeria Tax Bill 2024, which aims to provide the fiscal framework for taxation in the country, and the Tax Administration Bill, which will provide a clear and concise legal framework for all taxes in the country, reduce disputes and eliminate multiple taxations.
Others are: the Nigeria Revenue Service Establishment Bill, which will repeal the Federal Inland Revenue Service Act and establish the Nigeria Revenue Service, and the Joint Revenue Board Establishment Bill, which will create a tax tribunal and a tax ombudsman.
