Nigerian Governors Endorse Tax Reforms, Propose New VAT Formula

• Nigerian governors support tax reform bills but propose new VAT formula.
• NGF recommends no increase in VAT or CIT for stability.
• Governors back tax reforms, despite opposition from northern leaders.

The Nigerian Governors’ Forum (NGF) has expressed strong support for the Federal Government’s tax reform bills but has proposed a revised formula for sharing value-added tax (VAT) revenue.

This was announced following a meeting between the NGF and the Presidential Tax Reform Committee on Thursday.

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EKO HOT BLOG reports that in a communique issued after the meeting, the governors emphasized the importance of modernizing Nigeria’s tax laws to enhance fiscal stability and align with global best practices. They proposed a new VAT-sharing formula: 50% based on equality, 30% on derivation, and 20% on population.

The NGF also recommended that there should be no increase in VAT rates or reduction in Corporate Income Tax (CIT) to maintain economic stability. Additionally, they advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard citizens’ welfare and promote agricultural productivity.

The forum further suggested removing terminal clauses for agencies like the Tertiary Education Trust Fund (TETFUND), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA) in the sharing of development levies in the proposed bills.

Despite some regional opposition to the tax reform bills, particularly from northern governors who labeled them as “anti-north,” the NGF affirmed its support for the legislative process at the National Assembly, which they believe will culminate in the bills’ eventual passage.

President Bola Tinubu initially submitted four tax reform bills to the National Assembly last year, which include the Tax Administration Bill, Nigeria Tax Bill, and Joint Revenue Board Establishment Bill. These bills propose replacing the Federal Inland Revenue Service (FIRS) with a Nigeria Revenue Service.

While some opposition has arisen, Tinubu has vowed not to withdraw the bills, stating that they aim to improve the lives of Nigerians and are not designed to target any region of the country.

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