January 19, (THEWILL) – After arguing back-and-forth over certain provisions in the tax reform bills, the governors of the 36 states of the federation finally took a stand and resolved lingering issues that almost resulted in controversy at a point.
Following a high-level meeting with the Presidential Fiscal Policy and Tax Reforms Committee in Abuja last Thursday, the governors took some far-reaching decisions that we think should make room for easy passage at the National Assembly, where the bills had stalled following disagreements among major stakeholders.
As major stakeholders with a wider mandate, the governors have thus stepped in to resolve matters in a manner that should be satisfactory to all and sundry. Tax experts, communities at town hall meetings and professional bodies had also their say earlier, besides social media campaigns by the relevant government agencies, thus giving the bills sufficient attention and publicity.
The Nigerian Governors’ Forum has opposed the proposed increase in Value Added Tax rates and reaffirmed its support for ongoing legislative efforts to enact comprehensive tax reform bills.
THEWILL recalls that the Chairman of the committee, Taiwo Oyedele, had earlier revealed that a proposed executive bill submitted to the National Assembly sought to increase VAT from the current 7.5 per cent to 10 per cent in 2025, with a further increment to 12.5 per cent between 2026 and 2029.
It is however pleasing to note that while the governors unanimously rejected the proposed VAT hike, citing concerns about its potential adverse effects on businesses and consumers, they also proposed and approved a revised VAT sharing formula designed to address inequities in resource distribution.
Accordingly, the new formula allocates 50 per cent based on equality, 30 per cent based on derivation and 20 per cent based on population. According to them, this framework promotes fairness and encourages revenue generation at the states level while addressing the needs of less endowed states. The revised VAT sharing formula, they say, will ensure equitable distribution of resources. Conversely, they voted for no reduction in Corporate Income Tax.
The governors also addressed another thorny issue that was to serve as another platform for the Academic Staff Union of Universities, ASUU, to threaten to go on strike. In view of this, the governors’ recommendation against introducing a terminal clause for key development levies shared by agencies like TETFund, NASENI and NITDA, is welcome.
The forum was lauded for its decision to protect vulnerable Nigerians and ensure food security by making sure that essential goods and agricultural produce are exempted from VAT.
These recommendations will definitely lead to easy passage of the tax reform bills at the National Assembly.
The debates surrounding the tax reform bills have come full circle, no doubt . All stakeholders, representatives of the people and the people themselves have participated robustly in making relevant inputs into the tax reform bills.
All the relevant stakeholders have had their say and their way as well. This was much visible in the President’s salutation to the governors on Friday, for supporting the tax reform bills.
He said, “Thursday’s productive consultation between the Nigeria Governors Forum and the Presidential Committee on Tax and Fiscal Policy is a commendable example of cooperation between the Federal and State governments.” He noted that the dialogue between the NGF and the presidential committee “highlights the power of constructive conversation in resolving differences.”
Even so, we call on the government at the federal, state and local government levels to henceforth determine to block revenue leakages, enforce relevant laws that sanction fraud and obey court rulings against fraudulent officials. It is one thing to tax the people, it is another to see that goods and services are delivered to the people, while those who become obstacles to progress are held accountable.
