Governors have backed the Federal Government’s tax reform bills, while proposing a new sharing formula for value-added tax (VAT).
According to the NGF, the new VAT sharing formula would be 50 per cent based on equality, 30 per cent on derivation, and 20 per cent on population.
Following a meeting of the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee on Thursday in Abuja, the NGF “reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws”.
The governors acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices”.
On VAT, they proposed a revised sharing formula, which they said would ensure equitable distribution of resources.
“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 communique issued by NGF Chairman, Governor AbdulRahman AbdulRazaq of Kwara State read”.
According to the communique signed by NGF Chairman, Governor AbdulRahman AbdulRazaq of Kwara State, 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.
The statement also read: ”The NGF recommended that there should be no terminal clause for the Tertiary Education Trust Fund (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”.
Despite the heated debates that the tax reform bills have generated, the governors said they support the “continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reform Bills”.
Last year, President Bola Tinubu sent four tax reform bills to the National Assembly, asking the lawmakers to consider and pass them.
The proposal includes the tax administration bill, Nigeria tax bill, and joint revenue board establishment bill.Tinubu also wants to repeal the law establishing the Federal Inland Revenue Service (FIRS) which he is seeking to replace with the Nigeria Revenue Service.But the move has been met with pushback from several sections of the country notably the northern governors and some leaders in that part of Nigeria.They asked the National Assembly to reject the bills, claiming they were against the region. Some labelled them anti-north.President Tinubu, however, vowed not to withdraw the bills with the presidency assuring that they are not against any section of the country. It said, rather, they are to improve the lives of Nigerians.
The communique read in full: “We, members of the Nigeria Governors’ Forum (NGF) and presidential tax reform committee, convened on the 16th of January 2025 to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system, and arrived at the following
resolutions:
- The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernizing 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
- o 20% based on population
3. 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.
4. The meeting recommended that there should be no terminal clause for TETFund, NASENI, and NITDA in the sharing of development levies in the bills.
5. The meeting supports the continuation of the legislative process at the National Assembly that will culminate in. the eventual passage of the Tax Reform Bills.
