Nigerian Governors Close Ranks, Back Tax Reform Bills, Propose 50, 30,20 VAT Sharing Formula
By: Olufemi Orunsola
Indications have emerged that Governors in Nigeria under the aegis of the Nigeria Governors’ Forum (NGF) have closed ranks and invariably decides to sheath the swords of resistance wielded against the proposed tax reform bills currently at the national assembly.
This development is captured in a Communique released on Thursday as signed by the Chairman, Nigeria Governors’ Forum & Governor of Kwara State, H.E AbdulRahman AbdulRazaq for the group which, inadvertently agrees to the reforms of the bills but simply proposes an “equitable” sharing formula for value-added tax (VAT).
OTN News gathered that the development the Communique was issued after a meeting between the NGF and the presidential tax reform committee, convened on January 16, 2025, to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system.
The communique titled: COMMUNIQUE ISSUED AT THE END OF THE SUBNATIONAL CONSULTATIONS AND ENGAGEMENT WITH THE PRESIDENTIAL TAX REFORM COMMITTEE, reads:
"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 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 as follows:
*50% based on equality,*
* 30% based on derivation, and
*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.
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