Nigerian governors have expressed strong support for the Federal Government’s tax reform bills, while proposing a new formula for sharing value-added tax (VAT).
This decision was reached during a meeting of the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee held on Thursday.
In a communiqué released after the meeting, the governors emphasized their commitment to overhauling Nigeria’s outdated tax laws.
The communiqué stated: “Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices.”
The NGF proposed a revised VAT-sharing formula designed to promote equitable resource distribution. According to the forum, the new formula would allocate 50% of VAT revenues equally, 30% based on derivation, and 20% based on population.
The communiqué, signed by NGF Chairman and Kwara State Governor Abdul Rahman Abdul Razaq, further outlined the forum’s stance: “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 governors also advocated for the continued exemption of essential goods and agricultural produce from VAT, citing the need to safeguard citizens’ welfare and boost agricultural productivity.
Additionally, the NGF recommended that development levies in the proposed bills should not include terminal clauses for agencies such as the Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA).
While the tax reform bills have sparked heated debates, the governors affirmed their support for the legislative process at the National Assembly, stating they anticipate the eventual passage of the bills.
Last year, President Bola Tinubu submitted four tax reform bills to the National Assembly, urging lawmakers to consider and pass them. The proposals include the Tax Administration Bill, Nigeria Tax Bill, and Joint Revenue Board Establishment Bill.
President Tinubu also proposed replacing the Federal Inland Revenue Service (FIRS) with the Nigeria Revenue Service, a move that has drawn criticism from some quarters, particularly northern governors and leaders.
Critics in the north have labeled the reforms “anti-north,” urging the National Assembly to reject the bills. Despite the opposition, the President remains resolute, with the presidency emphasizing that the reforms are aimed at improving the lives of all Nigerians and are not targeted at any region.
