After months of lobbying, Nigerian Governors Forum, NGF, comprising all the 36 state governors in Nigeria, has approved the controversial tax reform bills forwarded to the National Assembly by President Bola Tinubu.
The bills have generated heated debates across the country over increase in Value Added Tax, VAT, and alleged plan give Lagos a favourable share in tax derivation.
At its 144th meeting on October 31, 2024, the National Economic Council, NEC, presided over by Vice President Kashim Shettima, recommended the withdrawal of the bills to enable wider consultation.
In response to the NEC decision, spokesman for the president, Bayo Onanuga, said Mr Tinubu would not withdraw the bills but would rather allow legislative process to take its course.
On Thursday, the Nigerian governors, who largely constitute the NEC, said they had now endorsed the bills, but said there should not be tax increase.
The governors also endorsed a tax sharing formula based on equality (50%), derivation (30%) and population (20%).
“We, members of the Nigeria Governors’ Forum (NGF) and presidential tax reform committee, convened on the 16h 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:
“1. 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.
“2. 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; 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,” the governors said in a statement signed by Kwara State governor, AbdulRahman AbdulRazaq.
(NAN)
