The Nigeria Governors’ Forum, NGF, on Thursday backed the tax reform bills submitted by President Bola Tinubu to the National Assembly.
The NGF made their position known in a communique issued at the end of a meeting held in Abuja with the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele.
President Tinubu on October 3, 2024, forwarded four tax reform bills which were the Nigeria Tax Bill 2024, Tax Administration Bill, Nigeria Revenue Service Establishment Bill and the Joint Revenue Board Establishment Bill to the National Assembly for approval.
The bills were the recommendations of the Presidential Committee on Fiscal and Tax Reforms saddled with the responsibility of reviewing existing tax laws.
Negative reactions followed the bill, especially from the northern part of the country. Governors, leaders and groups from the northern region voiced their disapproval, claiming the bills were to marginalise and shortchanged them in equal sharing of proceeds from VAT to states.
However, In the communique signed by the NGF Chairman and Governor of Kwara State, Abdulrahman Abdulrazaq, the governors said they were in support of the bill but proposed an equitable sharing formula for Value Added Tax.
They proposed an equitable distribution of 50% based on equality, 30% based on derivation, and 20% based on population.
“The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices.
The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50% based on equality, 30% based on derivation, and 20% based on population,” the communique read.
They however disagreed with the federal government on the proposed increase in VAT rate stating that there should be no increase in the rate.
“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. 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.”
They also agreed that ‘there should be no terminal clause for the Tertiary Education Trust Fund, National Agency for Science and Engineering Infrastructure and National Information Technology Development Agency in the sharing of development levies in the bills.
The governors expressed their strong support for the President’s efforts at reforming the ‘archaic tax laws’.
