Nigerian Governors Back Federal Tax Reforms, Propose New VAT Sharing Formula

Nigerian Governors Back Federal Tax Reforms, Propose New VAT Sharing Formula

Nigerian governors have thrown their weight behind the tax reform bills proposed by the federal government, advocating for a revised formula for sharing Value-Added Tax (VAT).

PulseNets learned that this development followed a meeting held on Thursday between the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee.

In a communique issued at the end of the meeting, the governors reiterated their firm commitment to modernizing Nigeria’s outdated tax system.

“Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices,” the communique stated.

The forum proposed a new VAT-sharing formula designed to promote fairness in resource allocation. According to the proposal, the revised formula allocates 50% based on equality, 30% on derivation, and 20% on population.

Speaking to PulseNets, some governors emphasized the need for economic stability, stressing that no increase in VAT rates or reduction in Corporate Income Tax (CIT) should be considered at this time.

“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 communique further read.

Additionally, the NGF recommended that no terminal clause should apply to development levies allocated to the Tertiary Education Trust Fund (TETFUND), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA).

Despite controversies surrounding the tax reform bills, the governors reportedly expressed support for the ongoing legislative process in the National Assembly, which is expected to lead to the eventual passage of the bills.

PulseNets recalled that last year, President Bola Tinubu submitted four tax reform bills to the National Assembly, urging lawmakers to deliberate and approve them. These bills include the Tax Administration Bill, Nigeria Tax Bill, and Joint Revenue Board Establishment Bill.

Additionally, Tinubu proposed repealing the law establishing the Federal Inland Revenue Service (FIRS) to replace it with the Nigeria Revenue Service.

Also Read: Nigerian governors’ forum, LGs (ALGON) disagree over operation of sovereign wealth funds

However, PulseNets learnt that the proposals have faced resistance, particularly from northern governors and other leaders in the region, who have asked the National Assembly to reject the bills, describing them as “anti-north.”

Despite these challenges, President Tinubu has refused to back down. The presidency has assured Nigerians that the reforms are not targeted at any specific region.


Warning: A non-numeric value encountered in /home/tutobawb/pulsenets.com/wp-content/themes/Newspaper/includes/wp_booster/td_block.php on line 353