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Governors backpedal, endorse tax reform, propose revised VAT formula

NIGERIAN Governors’ Forum (NGF) has thrown its weight behind the proposed tax reform bills currently under consideration by the National Assembly, citing the need for comprehensive fiscal modernisation and equitable resource distribution.

The development reflects a sudden change in the previous.stance of the NGF, an umbrella body of all Nigerian governors.

In a communiqué signed by its chairman and Kwara State Governor Abdulrahman Abdulrazaq, after a meeting on Thursday, January 16,, the governors emphasised their support for the reform, with key recommendations to ensure fairness and protect citizens’ welfare.

The forum proposed a revised Value Added Tax (VAT) sharing formula, allocating 50 per cent based on equality, 30 per cent based on derivation, and 20 per cent based on population. 

They also urged the Federal Government to maintain the current VAT rate and Corporate Income Tax (CIT) levels, citing the need for economic stability.

The governors stressed the importance of continued VAT exemptions for essential goods and agricultural produce to safeguard citizens and encourage agricultural productivity.



The communique reads in part, “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.

“The forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50 per cent based on equality, 30 per cent based on derivation, and 20 per cent based on population.




     

     

    “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.”

    Additionally, the communiqué recommended that development levies allocated to agencies like TETFUND, NASENI, and NITDA remain without terminal clauses in the reform bills.

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

    “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 statement added.

    Usman Mustapha is a solution journalist with International Centre for Investigative Reporting. You can easily reach him via: umustapha@icirnigeria.com. He tweets @UsmanMustapha_M

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