Nigerian governors have expressed strong support for the Federal Government’s tax reform bills while proposing a revised formula for sharing Value-Added Tax (VAT) revenues.

The decision followed a meeting between the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee held on Thursday.

In a communiqué issued at the end of the meeting, the NGF emphasized its commitment to modernizing Nigeria’s tax laws, describing the move as essential for fiscal stability and aligning with global best practices.

Proposed VAT Sharing Formula

The governors proposed a new VAT-sharing formula aimed at ensuring a more equitable distribution of resources. According to the NGF, the formula would allocate:

• 50% based on equality,

• 30% based on derivation, and

• 20% based on population.

The forum also rejected any increase in the VAT rate or reduction in Corporate Income Tax (CIT), citing the need to maintain economic stability.

“We advocate for the continued exemption of essential goods and agricultural produce from VAT to protect citizens’ welfare and promote agricultural productivity,” the communiqué, signed by NGF Chairman and Kwara State Governor Abdul Rahman AbdulRazaq, stated.

Additional Recommendations

The NGF recommended the removal of terminal clauses for agencies such as the Tertiary Education Trust Fund (TETFUND), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA) in the sharing of development levies outlined in the bills.

Support for Legislative Process

Despite debates surrounding the tax reform bills, the governors endorsed the legislative process currently underway at the National Assembly. They expressed confidence that the process would lead to the eventual passage of the bills.

Last year, President Bola Tinubu submitted four tax reform bills to the National Assembly, including the Tax Administration Bill, Nigeria Tax Bill, and the Joint Revenue Board Establishment Bill. The proposed reforms also include repealing the Federal Inland Revenue Service (FIRS) Act and replacing it with the Nigeria Revenue Service.

Pushback and Federal Government’s Stance

The proposed reforms have faced opposition, particularly from northern governors and leaders, who argue that the bills could disadvantage their region. Some have labeled the reforms as “anti-North.”

However, President Tinubu has stood firm, assuring Nigerians that the reforms are designed to improve lives across the country and are not targeted at any specific region.