The administration led by President Bola Ahmed Tinubu has clarified that the proposed tax reform bills aim to benefit all Nigerian states, dismissing concerns that the bills target the North.
This assurance was conveyed in a statement on Thursday by Bayo Onanuga, Tinubu’s Special Adviser on Information and Strategy.
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The statement follows opposition from the Northern Governors’ Forum, representing 19 northern states, who at their meeting on October 28, 2024, rejected the derivation-based VAT distribution model proposed in the new tax reform bills under review by the National Assembly.
Governor Muhammed Inuwa Yahaya of Gombe State, chairman of the forum, issued the communiqué.
The forum’s meeting, attended by traditional rulers led by the Sultan of Sokoto, His Eminence Muhammadu Sa’ad Abubakar III, expressed concerns over the reform, particularly the VAT distribution model, which they argued could disadvantage the region.
Onanuga emphasized that the Tinubu administration values the support of the northern governors and traditional leaders in tackling national security issues but sees it necessary to clarify misconceptions about the tax reform’s intent.
“President Tinubu and the Federal Executive Council recently endorsed reforms to streamline tax administration, eliminate redundancies, and enhance efficiency across the nation,” he said, explaining that these reforms emerged after a comprehensive review of current tax laws.
Details of the Proposed Tax Bills:
- Nigeria Tax Bill – Aims to reduce multiple taxation and simplify the tax obligations for individuals and businesses, enhancing Nigeria’s economic competitiveness.
- Nigeria Tax Administration Bill (NTAB) – Seeks to unify tax administrative processes across federal, state, and local governments, easing taxpayer compliance nationwide.
- Nigeria Revenue Service (Establishment) Bill – Proposes renaming the Federal Inland Revenue Service (FIRS) to Nigeria Revenue Service (NRS) to better reflect its federal mandate.
- Joint Revenue Board Establishment Bill – Proposes the creation of a Joint Revenue Board to replace the Joint Tax Board, facilitating federal-state tax authority cooperation, with a Tax Ombudsman to handle taxpayer complaints.
Onanuga highlighted that the bills would not increase existing taxes or tax rates but instead improve the efficiency and equity of tax distribution. He noted that under the current system, tax administration is fragmented across multiple levels, leading to inefficiencies and confusion.
Regarding the contentious derivation-based VAT distribution model, Onanuga explained that the proposed system aims for a fairer allocation by considering where goods and services are supplied or consumed, rather than only where tax is collected.
“Northern states that supply food and other products should not lose out simply because these items are VAT-exempt or consumed elsewhere,” he said.
The administration sees these reforms as vital for revenue generation, job creation, and overall economic growth. Tinubu’s spokesperson assured that the bills are designed to benefit all regions, urging the National Assembly to support the reforms to fund critical development across Nigeria
