Nigerian governors have expressed their support for the Federal Government’s tax reform bills, emphasizing the need for a revised Value-Added Tax (VAT) sharing formula to ensure equitable resource distribution.
This resolution emerged after a meeting between the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee on Thursday.
In a communiqué issued at the end of the meeting, the NGF reaffirmed its backing for comprehensive reforms to modernize Nigeria’s outdated tax laws.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 statement read.
The governors proposed a new VAT-sharing formula: 50% based on equality, 30% on derivation, and 20% on population. They emphasized that this formula would promote fairness in resource allocation.
The NGF also called for the continued exemption of essential goods and agricultural produce from VAT to protect citizens’ welfare and bolster agricultural productivity. “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,” NGF Chairman and Kwara State Governor Abdul Rahman Abdul Razaq stated.
Additionally, the Forum recommended the removal of terminal clauses for the Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA) in the allocation of development levies under the proposed bills.
Despite the controversies surrounding the tax reform bills, the NGF endorsed the ongoing legislative process at the National Assembly, expressing confidence in the eventual passage of the reforms.
The proposed reforms, submitted by President Bola Tinubu last year, include the Tax Administration Bill, Nigeria Tax Bill, and Joint Revenue Board Establishment Bill. President Tinubu also seeks to replace the Federal Inland Revenue Service (FIRS) with the Nigeria Revenue Service, a move that has sparked opposition, particularly from northern governors and regional leaders who view the reforms as unfavorable to their region.
In response to these concerns, the presidency has assured that the reforms are designed to improve the lives of all Nigerians, emphasizing that they are not targeted at any specific region. President Tinubu has stood firm in his commitment, refusing to withdraw the bills despite the pushback.
