Nigerian state governors have unanimously endorsed President Bola Tinubu’s proposed tax reform bills, marking a significant step forward in the administration’s efforts to modernize the country’s fiscal policies. The backing comes with a proposed restructuring of the Value Added Tax (VAT) sharing formula, designed to ensure more equitable resource distribution across the federation.
During a crucial meeting in Abuja with Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, the Nigeria Governors’ Forum (NGF) demonstrated strong support for modernizing what they described as Nigeria’s archaic tax laws. The gathering, which brought together leaders from all 36 states, resulted in several key recommendations aimed at balancing economic stability with fiscal reform.
NGF Chairman and Kwara State Governor Abdul Rahman Abdul Razaq announced that the governors have proposed a revised VAT sharing formula structured as 50% based on equality, 30% on derivation, and 20% on population. This new arrangement aims to create a more balanced distribution of resources across the nation’s diverse states and territories.
A noteworthy aspect of the governors’ position is their emphasis on maintaining current VAT rates and Corporate Income Tax (CIT) levels. This stance reflects a careful consideration of the current economic climate and the need to avoid additional burden on businesses and consumers during a period of economic adjustment. The governors specifically highlighted the importance of continuing VAT exemptions for essential goods and agricultural produce, demonstrating their commitment to protecting citizens’ welfare while promoting agricultural development.
The forum also addressed concerns about educational and technological development funding by recommending against implementing terminal clauses for key institutions including the Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA). This decision underscores the governors’ recognition of these institutions’ crucial role in national development.
This comprehensive endorsement from state governors represents a crucial milestone for President Tinubu’s tax reform agenda, as it signals strong subnational support for modernizing Nigeria’s tax system. The alignment between federal and state governments on this issue suggests a coordinated approach to fiscal policy reform, which could expedite the legislative process and implementation of these crucial changes.
The proposed reforms aim to address longstanding issues in Nigeria’s tax system, including the need for modernization to align with global best practices. By supporting these reforms while advocating for specific modifications, the governors have demonstrated their commitment to both national progress and the protection of their states’ interests.
The implications of these reforms extend beyond mere tax collection, potentially impacting various aspects of Nigeria’s economic landscape. The preservation of VAT exemptions for essential goods and agricultural produce indicates a balanced approach that considers both economic growth and social welfare. This approach could help maintain stability while the broader reforms take effect.
Looking ahead, the governors’ support for continuing the legislative process at the National Assembly suggests that the tax reform bills could move forward with significant momentum. Their collaborative approach with the Presidential Fiscal Policy and Tax Reforms Committee demonstrates a unified vision for Nigeria’s fiscal future, even as specific details continue to be refined through the legislative process.
This development represents a significant step forward in Nigeria’s journey toward a more modern and efficient tax system. With both federal and state governments aligned on the fundamental principles of reform, while maintaining safeguards for economic stability and social welfare, the country appears poised for meaningful progress in its fiscal policy framework.
The consensus achieved at this meeting could serve as a foundation for further cooperative efforts between federal and state governments in implementing comprehensive economic reforms. As these tax reform bills progress through the National Assembly, the unified support from state governors may prove instrumental in their successful passage and implementation.
