The Chairman of the Presidential Tax Reform Committee, Taiwo Oyedele, has expressed disappointment over the rejection of the proposed tax reform bills by northern states, a reaction he said the federal government did not anticipate.
Speaking during an appearance on Arise News Morning Show on Wednesday, Oyedele revealed that the government initially expected resistance from Lagos and Rivers states, not from the northern region.
“We had not envisaged that this would be the pushback from these states; we thought the resistance would come mostly from Lagos and maybe a little from Rivers. It’s almost like the people we are fighting for are now fighting us,” Oyedele said.
The controversy surrounding the bills largely revolves around the issue of Value Added Tax (VAT) derivation. Oyedele explained that VAT derivation differs from oil and gas derivation, which is determined by production.
“VAT derivation is a sensitive issue because it’s not based on production like crude oil. Every state consumes VAT-related goods and services, so if you share based on VAT derivation, every state benefits to some extent,” he noted.
Oyedele also emphasized that the government’s proposals are in line with constitutional provisions.
“The constitution, under Section 163, specifically states that stamp duty should be shared based on derivation. What we are proposing is not contrary to our constitution. When it comes to tax generation, we must recognize the sources of revenue, or risk scenarios where individual states secure Supreme Court judgments,” he said.
The rejection of the bills by northern states adds another layer of complexity to the federal government’s push for tax reforms aimed at enhancing the country’s revenue system and fiscal policy.
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