In a recent National Economic Council (NEC) meeting, the governors of Nigeria’s 36 states have unanimously requested the immediate withdrawal of the National Tax Reforms Bill. The demand poses a setback to the comprehensive fiscal policy reforms spearheaded by Taiwo Oyedele’s Presidential Fiscal Policy and Tax Reforms committee. According to Oyo State Governor Seyi Makinde, the governors want more consultation and consensus-building around the reforms before they move forward.
The Tax Reforms Bill, which includes the Nigeria Tax Bill, Nigeria Tax Administration Bill, and Nigeria Revenue Service (Establishment) Bill, aims to streamline Nigeria’s tax administration and unify tax collection across federal, state, and local levels. However, the NEC’s stance signals a need to reconcile these reforms with the specific interests of all stakeholders, including the Northern Governors’ Forum, which has raised concerns about VAT distribution changes.
Understanding the Proposed Reforms
President Tinubu’s tax reforms, formulated in response to Nigeria’s current economic climate, aim to enhance tax efficiency, simplify processes, and avoid multiple taxation issues. The proposals include creating a Joint Revenue Board and renaming the Federal Inland Revenue Service as the Nigeria Revenue Service to signify its expanded mandate.
However, stakeholders in the North argue that the current reform, which emphasizes derivation-based VAT distribution, may be detrimental to states reliant on VAT exemptions, as noted by Gombe State Governor Muhammad Yahaya.
Presidency’s Response to Governors’ Concerns
In response, Presidential Adviser Bayo Onanuga assured that the reforms would not increase tax rates but instead focus on simplifying the tax structure to foster economic growth and job creation. He emphasized the importance of coordinated tax administration across government levels to prevent overlapping functions, citing these reforms as essential to strengthening Nigeria’s fiscal framework and fostering equitable economic development.
Legislative Uncertainty and Future Outlook
The National Assembly has adjourned plenary until November 19 amid ongoing consultations. With the tax reform bills still under review, lawmakers like Deputy House Spokesman Philip Agbese have expressed willingness to consider the bill’s merit to alleviate the nation’s economic challenges. However, the Northern Governors Forum and some National Assembly members may continue to push for revisions that address regional interests.
As Nigeria seeks to overhaul its tax systems, the debate underscores the critical balance between national economic growth and the diverse interests of all regions.
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