Governors Back Tax Reform Bills, Oppose VAT Increase

The Nigeria Governors’ Forum (NGF) has expressed its support for the tax reform bills submitted by President Bola Tinubu to the National Assembly. However, the governors firmly opposed any increase in the Value-Added Tax (VAT) rate, proposing an alternative sharing formula for equitable resource distribution.

In a communiqué issued on Thursday following a meeting with Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, the NGF emphasized their stance on modernizing Nigeria’s tax system. The meeting, held in Abuja, also highlighted critical resolutions on fiscal policies.

The communiqué, signed by NGF Chairman and Governor of Kwara State, Abdulrahman Abdulrazaq, outlined the proposed VAT sharing formula:

• 50% based on equality
• 30% based on derivation
• 20% based on population

The statement read:
“We, members of the Nigeria Governors’ Forum and Presidential Tax Reform Committee, convened on January 16, 2025, to deliberate on vital national issues, including fiscal and tax policy reforms. The Forum strongly supports comprehensive reforms to Nigeria’s outdated tax laws, aimed at enhancing fiscal stability and aligning with global standards.”

Key resolutions from the communiqué include:

1. Opposition to VAT Increase: The Forum rejected any increase in the VAT rate or reduction in Corporate Income Tax (CIT), stressing the need for economic stability.
2. Protection of Citizens’ Welfare: Governors advocated for the continued VAT exemption on essential goods and agricultural products to safeguard citizens’ welfare and boost agricultural productivity.
3. Equitable Resource Distribution: The revised VAT sharing formula was endorsed to ensure fairness in resource allocation.
4. Support for Legislative Process: The Forum backed ongoing deliberations at the National Assembly to ensure the passage of the proposed tax reform bills.

The governors also recommended the removal of terminal clauses for agencies like the Tertiary Education Trust Fund, the National Agency for Science and Engineering Infrastructure, and the National Information Technology Development Agency in the sharing of development levies.

President Tinubu had earlier submitted four key tax reform bills to the National Assembly on October 3, 2024, following recommendations from the Presidential Committee on Fiscal and Tax Reforms. These bills aim to modernize and streamline Nigeria’s taxation system:

• Nigeria Tax Bill 2024: Provides a fiscal framework for taxation.
• Tax Administration Bill: Establishes a clear legal framework to minimize disputes.
• Nigeria Revenue Service Establishment Bill: Replaces the Federal Inland Revenue Service Act with the Nigeria Revenue Service.
• Joint Revenue Board Establishment Bill: Creates a tax tribunal and ombudsman.

The NGF remains committed to modernizing Nigeria’s tax structure, emphasizing that these reforms are crucial for national development and fiscal sustainability.