November 03, (THEWILL) – Until the Federal Government explained the details of the new tax regime on Thursday, the pervasive fear in the North about the new tax reform bills before the National Assembly was that the bills were designed to begin a subtle restructuring of the country.
The source of the fear is that the bills rest on the derivation principle rather than the prevailing population as a means of distributing revenue among the three tiers of government. There are four bills, namely the Nigeria Tax Bill, the Nigeria Tax Administration Bill (NTAB) the Nigeria Revenue Service (Establishment) Bill and Joint Revenue Board Establishment Bill, which President Bola Tinubu had on October 13, asked the National Assembly to consider and pass. Earlier on Thursday, it emerged that governors from the North that were not the only ones opposing the Bills. All the governors of the 36 states rose up against it.
On their own, the Northern Governors Forum (NGF) met last Monday in Kaduna and rejected the proposed Tax Reform Bills. They demanded equity and fairness in the implementation of all Federal Government programmes and policies.
According to them, the bills were a proposed amendment to the distribution of Value Added Tax (VAT) to a derivation- based model, saying the bill is antithetical to the interests of the North and other sub-nationals.
They called on members of the National Assembly to oppose the bill, which they fear could jeopardise the well- being of their people.
According to the Chairman of the forum and Governor of Gombe State, Mohammed Yahaya, the contents of the Bill are against the interests of the North and other sub- nationals, especially the proposed amendment to the distribution of Value Added Tax (VAT) to a derivative- based model.
“This is because companies remit VAT using the location of their headquarters and tax office and not where the services and goods are consumed. In view of the foregoing, the forum unanimously rejects the proposed tax amendments and calls on members of the National Assembly to oppose any bill that can jeopardise the well-being of our people. For the avoidance of doubt, the Northern Governors’ Forum is not averse to any policies or programmes that will ensure the growth and development of the country. However, the forum calls for equity and fairness in the implementation of all national policies and programmes so as to ensure that no geopolitical zone is short-changed or marginalised.”
Then on Thursday, all other governors joined the northern bandwagon as the National Economic Council (NEC), chaired by the Vice President Kashim Shettima advised that the Tax Reform Bill be withdrawn.
After the NEC meeting on Thursday, the Governor of Oyo State, Seyi Makinde, disclosed that the NEC decided to withdraw the bill due to disagreements and concerns raised by various groups. On Friday, Tinubu refused to shift ground. While receiving the NEC recommendation, he urged the 36 state governors to allow the process to take its full legislative process after which there could be public hearings.
Fearing that the bills were being politicised beyond the intention of the government, the Presidency, on Thursday, said that the proposed Tax Reform Bills currently before the National Assembly will benefit all states and not against the interest of the North.
Special Adviser to the President on Information and Strategy, Bayo Onanuga, said that contrary to fears and perceived marginalisation of the North, the tax reform bills would benefit all states and harmonise the country’s tax laws for greater efficiency.
While commending the governors and traditional rulers for supporting President Bola Tinubu over the success recorded in addressing the country’s security challenges, Onanuga in a statement titled, ‘Explainer: Proposed Tax Reform Bills Not Against the North; They Will Benefit All States’, highlighted the misunderstandings and misgivings around the tax reform already embarked upon by the administration.
He said President Tinubu and the Federal Executive Council recently endorsed new policy initiatives aimed at streamlining Nigeria’s tax administration processes, enhancing efficiency and eliminating redundancies across the nation’s tax operations.
These reforms, he explained, emerged after an extensive review of existing tax laws. The National Assembly is considering four executive bills designed to transform and modernise Nigeria’s tax landscape.
Explaining the intentions behind the proposed bills, Onanuga took one bill after the other. The Nigeria Tax Bill, he said, aims to eliminate unintended multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide. The Nigeria Tax Administration Bill (NTAB), proposes new rules governing the administration of all taxes in the country. Its objective is to harmonise tax administrative processes across federal, state and local jurisdictions for ease of compliance for taxpayers in all parts of the country. The Nigeria Revenue Service (Establishment) Bill seeks to rename the Federal Inland Revenue Service (FIRS), as the Nigeria Revenue Service (NRS), to better reflect the mandate of the Service as the revenue agency for the entire federation, not just the Federal Government. And the Joint Revenue Board Establishment Bill proposes the creation of a Joint Revenue Board to replace the Joint Tax Board, covering federal and all states’ tax authorities. The fourth bill also suggests establishing the Office of Tax Ombudsman under the Joint Revenue Board, which would serve as a complaint resolution body for taxpayers.
Onanuga said that the reforms will not lead to job losses. On the contrary, they are structured to stimulate new avenues for job creation by supporting a dynamic, growth-oriented economy.
“At the moment, tax administration lacks coordination among federal, state, and local tax authorities, often resulting in overlapping responsibilities, confusion and inefficiency. Without reform, this inefficiency will persist. The proposed laws aim to coordinate efforts between different tiers of government, resulting in better tax resource management and greater clarity for taxpayers,” he said.
After his detailed explanation meant to make plain the import of the bills, Onanuga addressed the main concern of the governors, saying that the proposed derivation-based VAT distribution model, which the Northern Governors oppose, it must be stressed that the new proposal, as enunciated in the Bill, is designed to create a fairer system.
He said, “The current model for distributing VAT is based on where the tax is remitted rather than where goods and services are supplied or consumed. The ongoing tax reform seeks to correct the inherent inequity in the current derivation model as a basis for distributing VAT revenue. The new proposal before the National Assembly outlines a different form of derivation which considers the place of supply or consumption for relevant goods and services. This means that states in the Northern region that produce the food we eat should not lose out just because their products are VAT-exempt or consumed in other states.
Available data shows that the derivation principle, though still cloudy, rings loudly in the proposed bills: Under the current VAT model, the revenue is distributed on a 15 percent 50 per cent and 35 per cent ratio among the federal, state and local governments. The proposed model envisages 10 per cent, 55 per cent and 35 per cent with 60 per cent to be distributed according to the principle of derivation. Meaning that location and consumption activities become major determinants in VAT collection and distribution. This is a logjam that the National Assembly will have to settle between the federal and state governments.
Felix Ifijeh is a journalist with years of professional reporting experience. Known for his keen news sense, compelling storytelling and commitment to accurate, impactful reporting, he has built a reputation for turning leads into clear, engaging, and well-structured reports that resonate with readers. His work reflects deep newsroom experience and a commitment to accurate, impactful journalism.
