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President Bola Tinubu is set to withdraw the recent tax reform bills from the National Assembly following strong opposition.
The move follows a recommendation from the National Economic Council (NEC) to suspend the bills for more consultation and review.
The tax reform bills were introduced on September 3, 2024, by President Tinubu, who was then on vacation in London. In a letter to the National Assembly, he presented four bills: the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill. These bills were aimed at restructuring Nigeria’s tax and revenue system to promote economic growth and strengthen fiscal institutions.
The president hoped that these bills would foster a fairer tax structure, increase taxpayer compliance, and boost government revenues.
However, the bills immediately sparked widespread opposition, especially from the governors of Nigeria’s northern states. These governors, alongside northern traditional rulers, strongly criticized the proposed tax changes.
At a recent meeting in Kaduna, the northern governors expressed their concerns, focusing particularly on the amendments proposed for Value Added Tax (VAT) distribution. They argued that under the tax system, businesses pay VAT based on where their headquarters are located, not where goods and services are consumed. This system disadvantages the North, which contributes significantly to the country’s food production but doesn’t see direct benefits in VAT distribution.
The Chairman of the Northern Governors’ Forum, Governor Inuwa Yahaya of Gombe State, spoke out against the new bills, declaring that they would create an unfair advantage for wealthier regions with more corporate headquarters. The northern governors believe the proposed tax changes would impact their region’s economic stability and urged the National Assembly to reject these bills.
“For the avoidance of doubt, the Northern Governors’ Forum is not averse to any policies or programmes that will ensure the growth and development of the country. However, the forum calls for equity and fairness in the implementation of all national policies and programmes so as to ensure that no geopolitical zone is short-changed or marginalised”, he added.
Governor Abdullahi Sule of Nasarawa State added his voice, stating that while the governors support President Tinubu’s leadership, they cannot support a tax system that disadvantages the North. “We are not against President Tinubu,” Sule said. “We simply believe that the proposed VAT model would be unfair to our people.”
This regional opposition contributed to the NEC’s recommendation for withdrawal. Led by Vice President Kashim Shettima, the council on Thursday recommended further consultation before any tax reform is finalized.
After the NEC meeting, Governor Seyi Makinde told reporters that the council’s goal was “fair taxation, responsible borrowing, and sustainable spending.”
According to him: “NEC today, took a presentation from the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms. Their main focus is fair taxation, responsible borrowing and sustainable spending.
“The council acknowledged that the country is underperforming on all indices as regards yield from major revenue sources, also tax to GDP ratio and so on.
“So, after extensive deliberation, NEC noted the need for sufficient alignment between and amongst the stakeholders for the proposed reforms.
“So, council, therefore, recommends the need to withdraw the bill currently before the National Assembly on tax reforms so that we can have wider consultations and also build consensus around these reforms for the benefit of the entire country.
“Also, (the action is) to give people the opportunity to know the vision and where we are moving the country in terms of a tax reform, because there is really a lot of miscommunication and misinformation.
“The bill will be withdrawn from the National Assembly and then there will be consultations afterwards,” he said.