State governors under the aegis of Nigeria Governors’ Forum (NGF) Thursday announced their rejection of the proposed increase of the Value Added Tax (VAT) but expressed support for the Tax Reform Bills currently at the National Assembly.
The group, in a statement on Thursday, proposed an “equitable” sharing formula for value-added tax (VAT).
The development was an outcome of a meeting between the NGF and the Presidential Tax Reform Committee, convened on January 16, 2025, to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system.
The statement disclosed that the Governors recommended that there should be no terminal clause for TETFUND, National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA) in the sharing of development levies in the Bills.
They also supported the continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reform Bills.
Read the statement: “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.
“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 group advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.
President Bola Ahmed Tinubu, on October 13, 2024, asked the National Assembly to consider and pass four Tax Reform Bills.
The proposed legislations are the Nigeria Tax Bill, Tax Administration Bill, and Joint Revenue Board Establishment Bill.
The President is also seeking the repeal of the law establishing the Federal Inland Revenue Service (FIRS) and replace it with the Nigeria Revenue Service.
However, the northern governors urged the National Assembly to reject any legislation that might harm the region’s interests, calling for equitable and fair implementation of national policies and programmes to prevent marginalisation of any geopolitical zone.
The Presidency, on October 31, 2024, assured the northern governors that the proposed laws were not recommended by Tinubu to disadvantage any part of the country as they were designed to improve the lives of Nigerians and optimise existing tax frameworks.
