Victor Ezeja
Northern Governors Forum has rejected the proposed Tax Reform Bill recently sent to the National Assembly, saying the provisions are against the interests of the north and other sub-nationals.
The governors specifically faulted the proposed model for distribution of Value Added Tax (VAT) based on point of derivation.
Join our WhatsApp ChannelThis was contained in a communiqué issued after the Northern Governors’ Forum meeting on Monday, 28 October, in Kaduna, North-west Nigeria.
Part of the communiqué signed by Muhammadu Inuwa Yahaya, executive of Gombe State and chairman of the Forum said: “Forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly.”
“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 Derivation-based Model.”
The Forum argued that many companies in Nigeria remit VAT using location of their headquarters and tax office and not where the services and goods are consumed and therefore called on members of the National Assembly oppose any bill that could hamper the wellbeing of their people.
“In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and calls on members of National Assembly to oppose any bill that can jeopardise the well-being of our people,” part of the communiqué further read.
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Prime Business Africa recalls that earlier in October, President Tinubu sent four fiscal bills to the National Assembly for consideration. These include the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
One of the bills proposes amendment of the template for sharing the Value Added Tax, reducing the federal government’s share from 15 per cent to 10 percent. However, the bill includes a caveat that the allocation among states will consider the derivation principle.
This appears to have created a fresh hurdle for the Reform Tax Bill passage. In the National Assembly, the FCT and the 19 northern states hold the majority. This means that if the region’s lawmakers in both chambers of the National Assembly vote in unison, it can have its say on any issue. The simple majority they need to successfully oppose or support a bill in both chambers will undoubtedly be exceeded by their bloc vote.
The Forum, however, explained that the Northern Governors are not against reforms being undertaken by the President Tinubu administration but want equity and fairness to be applied in policies and programmes undertaken by the government.
“For the avoidance of doubt, the Northern Governors’ Forum is not opposed to policies or programs aimed at fostering national growth and development. However, the forum calls for equity and fairness in implementing all national policies and programs to ensure that no geopolitical zone is short-changed or marginalised,” he said.
The issue about VAT payment and distribution across the 36 states has been a subject of controversy between the federal government and states over the years.
On the current economic hardship faced by Nigerians, the governors called for calm by the citizens “as the states and Federal Government are working hard to implement measures that will cushion effects of the hardship.”
Power crisis in North
The Forum called on the Federal Government and relevant agencies to urgently address the current electricity power blackout affecting many Northern States due to vandalisation of electricity transmission infrastructure.
It said power sector challenge not only underscores the vulnerability of critical infrastructure, but also the need to build additional transmission lines and diversify energy supply for better connectivity in the region.
Victor Ezeja is a passionate journalist with seven years of experience writing on economy, politics and energy. He holds a Master's degree in Mass Communication.
