Nigerian governors have thrown their support behind the federal government’s tax reform bills, proposing a new formula for sharing Value-Added Tax (VAT) revenues.
This development follows 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In a communiqué issued at the end of the meeting, the NGF expressed strong support for the overhaul of Nigeria’s outdated tax laws.
“Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices,” the communiqué stated.
The governors proposed a revised VAT-sharing formula designed to promote equitable distribution of resources:
50% based on equality
30% based on derivation
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,” they noted.
The forum also advocated for continued VAT exemptions on essential goods and agricultural produce, emphasizing the importance of safeguarding citizens’ welfare and supporting agricultural productivity.
Additionally, the NGF recommended that development levies in the bills include no terminal clause for the Tertiary Education Trust Fund (TETFUND), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA).
Despite the contentious debates surrounding the tax reform bills, the governors endorsed the ongoing legislative process at the National Assembly, which is expected to culminate in their eventual passage.
Last year, President Bola Tinubu submitted four tax reform bills to the National Assembly, urging lawmakers to consider and approve them. These include:
The Tax Administration Bill
The Nigeria Tax Bill
The Joint Revenue Board Establishment Bill
The proposals also include repealing the law establishing the Federal Inland Revenue Service (FIRS) and replacing it with the Nigeria Revenue Service.
However, these moves have faced resistance, particularly from northern governors and leaders, who claim the reforms are unfavorable to the region. Some critics have labeled the bills as “anti-north.”
Despite the pushback, President Tinubu has remained steadfast in his commitment to the reforms. The presidency has assured that the bills are not designed to marginalize any region, emphasizing their goal of creating a fair and efficient tax system for all Nigerians.
