The Bola Ahmed Tinubu administration is moving to withdraw its recently proposed Tax Reform Bills amid growing opposition from northern governors and traditional leaders.
The bills, presented to the National Assembly just two months ago, have sparked widespread debate, with critics citing potential negative impacts on the Value Added Tax (VAT) distribution model.
Sources reveal that while the presidency has agreed to withdraw the bills, there are plans to modify and eventually reintroduce the proposed legislation after further consultations.
NEC’s Recommendation and Regional Concerns
On October 31, the National Economic Council (NEC), chaired by Vice President Kashim Shettima, formally recommended that the tax bills be pulled back to allow for more comprehensive stakeholder engagement. This decision aligns with a recent resolution from governors in Nigeria’s 19 northern states, who convened in Kaduna alongside traditional leaders to voice concerns about the proposed tax changes.
The primary point of contention is the new VAT distribution model. Northern leaders argue that the proposed amendments could place their region at an economic disadvantage. Gombe State Governor Inuwa Yahaya, who chairs the Northern Governors’ Forum, explained that the current VAT system benefits states where corporations are headquartered rather than regions where products and services are actually consumed, leading to an imbalance that the proposed reforms would exacerbate.
In their communiqué, the northern governors and traditional leaders stressed that while they are open to reforms benefiting Nigeria as a whole, the amendments must promote fairness and avoid marginalizing any region. They emphasized the need for equity across all national policies.
Presidential Response and Clarification
Following the backlash, Bayo Onanuga, Special Adviser to the President on Information and Strategy, addressed misconceptions around the bills. He clarified that the proposed VAT reforms aim to balance the distribution model by basing VAT allocation on the location of consumption rather than corporate headquarters. This shift, according to Onanuga, would ensure fairer revenue distribution, particularly benefiting regions like the North that supply essential goods consumed nationwide.
“The current VAT system favors states based on corporate headquarters, which often excludes the actual consumption areas. The proposed changes aim to correct this by ensuring regions that produce and supply goods are adequately compensated in VAT allocations,” Onanuga stated.
NEC and Governors Seek Consensus on Tax Reforms
In a briefing to reporters, Oyo State Governor Seyi Makinde emphasized NEC’s commitment to addressing public concerns and fostering a broader consensus on the reforms. Accompanied by Governors Charles Soludo of Anambra and Babagana Zulum of Borno, Makinde conveyed that NEC’s recommendation is aimed at building unity and clarity around the government’s vision for tax reform.
Governor Zulum reiterated the importance of bringing all stakeholders on board to ensure that the final reforms serve the interests of all regions equitably. NEC, he noted, seeks a unified approach that reflects the needs of citizens and stakeholders across the nation.
As the administration reconsiders its approach to the Tax Reform Bills, the focus remains on balancing regional interests and promoting a fair distribution model that benefits the entire country.
