The Nigeria Governors Forum (NGF) has thrown its weight behind President Bola Tinubu’s Tax Reform Bills currently before the national assembly for passage. The Forum however listed some changes in the proposed bills that it recommended.
The new position of the governors was made known in a communique signed by the Chairman of the Nigerian Governors Forum and Kwara State Governor, AbdulRahman AbdulRazaq at the end of what he called subnational consultations and engagement with the Presidential Tax Reform Committee, which it convene on Thursday.
“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”, the statement said.
The governors said that at the end they 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 modernizing 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:
1) 50% based on equality,
2) 30% based on derivation, and
3) 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.
This communique is the first time the Governors are making any concrete recommendations concerning the provisions of the Tax Reform Bills. The main contentious issue has always revolved around the sharing model for VAT revenue that accrues to the states.