Toba Owojaiye reporting
Abuja, Nigeria
The Nigeria Governors’ Forum (NGF) has officially endorsed the tax reform bills proposed by President Bola Tinubu, marking a significant milestone in the administration’s push for fiscal policy reform. The decision was announced in a communique issued on Thursday following a meeting with the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, in Abuja.
Signed by NGF Chairman and Kwara State Governor Abdulrahman Abdulrazaq, the communique highlighted the governors’ approval of the reforms but firmly rejected any increase in the Value-Added Tax (VAT) rate. The NGF instead proposed a revised VAT sharing formula to ensure fairer resource allocation: 50% based on equality, 30% on derivation, and 20% on population.
Truth Live News gathered that the following was agreed upon.
Support for Tax Reform Bills: The governors praised the proposed overhaul of Nigeria’s tax laws, describing it as critical to enhancing fiscal stability and aligning with global standards.
Opposition to VAT Rate Increase: While welcoming reform, the NGF opposed raising the VAT rate or reducing Corporate Income Tax (CIT), citing the need for economic stability.
Equitable VAT Sharing Formula: The NGF recommended a revised formula to address disparities in resource distribution across states.
Protection for Essential Goods: The forum called for continued VAT exemptions on essential goods and agricultural produce to shield vulnerable citizens and promote productivity.
The governors’ stance aligns with Tinubu’s efforts to modernize Nigeria’s tax framework but introduces caution on revenue-generating measures that could burden businesses and consumers. Their proposal for equitable VAT sharing underscores the long-standing debate over fiscal federalism, with calls for resource allocation that reflects both equality and regional contributions.
President Tinubu’s reform package includes four key bills:
– Nigeria Tax Bill 2024: Establishes a new fiscal framework for taxation.
-Tax Administration Bill: Streamlines legal frameworks to minimize tax disputes.
– Nigeria Revenue Service Establishment Bill: Replaces the Federal Inland Revenue Service with a new agency.
– Joint Revenue Board Establishment Bill: Introduces a tax tribunal and ombudsman to enhance transparency.
The NGF’s rejection of a VAT hike may resonate with Nigerians concerned about inflation and the rising cost of living. However, the endorsement of a more equitable VAT sharing formula may provide a sense of fairness in resource allocation, especially for resource-rich states.
The tax reform bills, once passed, could significantly shape Nigeria’s fiscal future, balancing the need for revenue generation with the imperative of economic stability. Whether the reforms achieve the desired balance remains to be seen as the legislative process unfolds.