The debate over the Value Added Tax (VAT) components of Nigeria’s Tax Reform Bills has moved to the Nigeria Governors’ Forum (NGF), where governors have presented a proposal for an equitable distribution of resources. The governors, who expressed support for the four bills presented to the National Assembly by President Bola Ahmed Tinubu, have suggested adjustments to ensure a fairer allocation.
The NGF has recommended a revised VAT-sharing formula that would allocate 50% for equality, 30% for derivation, and 20% for population. This proposal contrasts sharply with the Federal Government’s original formula of 20% for equality, 60% for derivation, and 20% for population, as outlined in the bills.
At a meeting chaired by Governor AbdulRahaman AbdulRazaq of Kwara State, held at the Transcorp Hilton Hotel in Abuja, the NGF emphasized that these adjustments would promote a more equitable distribution of resources across the country. The governors also affirmed their support for the ongoing legislative process and assured that they remained open to further negotiations on the reforms.
In a communiqué signed by Governor AbdulRazaq, the NGF reiterated its commitment to reforming Nigeria’s outdated tax laws, advocating for the modernization of the tax system to improve fiscal stability and align with global standards. The governors also agreed that there should be no immediate increase in the VAT rate or reduction in Corporate Income Tax (CIT), as this could disrupt economic stability. Additionally, the forum called for the continued exemption of essential goods and agricultural products from VAT to safeguard citizens’ welfare and boost agricultural productivity.
The NGF also recommended the removal of terminal clauses for certain national development funds, including TETFUND, NASENI, and NITDA, in the sharing of development levies.
Governor Abdullahi Sule of Nasarawa, speaking to the press after the meeting, noted that the new formula would benefit the Northern region, where there were concerns over rising inflation. He emphasized that increasing the VAT rate could worsen the economic situation, especially in the North, where inflation rates are reportedly higher than in the South.
Meanwhile, civil society groups from Northern Nigeria, including youth and student organizations, have expressed support for the tax reform bills. They believe the reforms could serve as a catalyst for unlocking the region’s vast potential and improving its economic prospects.
As the debate continues, the governors have called for a balanced approach that addresses the concerns of all regions, aiming to create a fairer and more sustainable fiscal system for Nigeria’s future.
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