Nigerian governors have expressed strong support for the Federal Government’s tax reform bills while proposing a new formula for sharing value-added tax (VAT). This decision was reached during a meeting of the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee held on Thursday.
In a communiqué released after the meeting, the governors emphasized their commitment to overhauling Nigeria’s outdated tax laws. “The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices,” the statement read.
As part of their recommendations, the governors proposed a revised VAT-sharing formula designed to ensure fair resource distribution. The new formula allocates 50% based on equality, 30% on derivation, and 20% on population.
Additionally, the governors 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. “The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity,” the communiqué, issued by NGF Chairman and Kwara State Governor Abdul Rahman Abdul Razaq, stated.
The NGF also recommended removing 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.
Despite the controversies surrounding the tax reform bills, the governors voiced their support for the legislative process currently underway in the National Assembly, aiming for the eventual passage of these reforms. “Members support the continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reform Bills,” the communiqué noted.
The tax reform effort began last year when President Bola Tinubu submitted four tax reform bills to the National Assembly. These include the Tax Administration Bill, Nigeria Tax Bill, and Joint Revenue Board Establishment Bill. The proposals also seek to repeal the law establishing the Federal Inland Revenue Service (FIRS) and replace it with the Nigeria Revenue Service.
However, the proposed reforms have faced resistance, particularly from northern governors and leaders, who argue that the bills are unfavorable to the region. Some have gone as far as labeling them “anti-north” and urging the National Assembly to reject them. President Tinubu, however, has remained firm, assuring the public that the bills aim to improve the lives of all Nigerians and are not targeted at any region.
The Presidency has reiterated that the reforms are essential for fostering economic development and ensuring a fairer tax system across the country.
