Reform: Hope Rises for Passage of Four Tax Bills

It was a truce at long last, as the Governors Forum, Chairman, and members of the Presidential Committee have reached a consensus on the vexatious tax reform bills pending at the National Assembly committees.

The new agreement gives respite to all stakeholders. It included amendments to the proposed Value Added Tax law, which faced significant opposition from many state governments due to concerns about potential revenue loss and its potential to favour some states over others.

The mood and atmosphere are now right for the National Assembly to proceed with parliamentary procedures for the passage of the bills. Such procedures still allow for public hearings, where members of the public will chip in their contributions towards the making of the law.

In a five-point resolution reached after a meeting of the Governors Forum and the presidential committee on the tax reforms, the meeting states as follows:

“We, members of the Nigeria Governors’ Forum (NGF) and presidential tax reform committee, convened on the 16th of January 2025 to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system, and arrived at the following.
Resolutions:

“1. The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices.

“2. The Forum endorsed a revised Value Added Tax (VAT). Sharing formula to ensure equitable distribution of resources:
o 50% based on equality,
o 30% based on derivation, and
o 20% based on population.

“3. Members agreed that there should be no increase in the VAT rate or reduction in corporate income tax (CIT) at this time to maintain economic stability. The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.

“4. The meeting recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the bills.

“5. The meeting supports the continuation of the legislative process at the National Assembly that will culminate in. the eventual passage of the Tax Reform Bills.

The communique issued by the Governors Forum was signed by its chairman, Abdulrahman AbdulRazaq who is also the
Governor of Kwara State.

The tax reform bills have generated controversies between the presidential committee and the subnationals. The debate assumed different dimensions, pitching different parts of the country against one another. It also took on a religious dimension and posed a big political threat against the government of President Bola Tinubu.

The bills were rejected by the National Economic Council, which advised their withdrawal. The Northern Governors Forum also rejected the bills, and their rejection was supported by the Arewa Consultative Forum, thereby ruffling the political waters.

Even members of the National Assembly were beginning to speak in discordant tones. While at one of the Senate sessions, the presiding officer, who was the Deputy Senate President, announced a suspension of debate. The Senate President returned the next day and said debates on the bills would go on as they could not be suspended because they were executive bills.