19 governors from Nigeria’s northern states have expressed firm opposition to the Federal Government’s newly proposed Tax Reform Bill. This proposal, currently awaiting review by the National Assembly, suggests significant changes to the way Value Added Tax (VAT) is distributed across the country.
According to the governors, the proposed bill could economically disadvantage the northern region, as it recommends shifting to a Derivation-based Model for VAT distribution, focusing on the regions where goods and services are produced rather than where they are consumed.
The northern governors voiced their concerns following a high-level meeting held in Kaduna. The session was led by the Northern States Governors’ Forum (NSGF), with the communique outlining the governors’ collective stance presented by the NSGF Chairman and Governor of Gombe State, Muhammad Yahaya. Also in attendance were northern traditional rulers, Chief of Defence Staff General Christopher Musa, and various other regional stakeholders.
The governors fear that if the bill is passed, it will limit the financial resources allocated to the northern region and other less industrialized areas, which would reduce their ability to fund essential services and infrastructure projects. Many northern states, where Sharia law prohibits alcohol, do not directly contribute to VAT revenues from alcohol sales yet still receive an equal share of the national VAT pool. This revenue-sharing approach, they argue, is essential to maintaining balanced development across the country.
However, under the new model proposed by the Taiwo Oyedele-led panel, VAT revenue would be distributed based on where products and services are produced, rather than where company headquarters are located or where the products are consumed. The northern governors believe this shift would harm their states’ economies, as many industries are headquartered and operate primarily in the southern, more industrialized regions.
The communique read in part, “The forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly. The contents of the reforms are against the interest of the North and other sub-nationals, especially the proposed amendment to the distribution of Value Added Tax to a Derivation-based Model.
“This is because companies remit VAT using the location of their headquarters and tax office where the services and goods are consumed. In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and calls on members of the National Assembly to oppose any bill that can jeopardise the well-being of our people.”
The forum further demanded equity and fairness in national policy implementation and no geopolitical zones should be shortchanged.
“For the avoidance of doubt, the Northern Governor’s Forum is not averse to any policies or programmes that will ensure the growth and development of the Country.
“However, the forum calls for fairness in the implementation of all national policies and programmes to ensure that no geopolitical zone is short-changed or marginalised.
“On the present economic hardship affecting the Country, the Forum is appealing to all citizens to remain calm, as the states and Federal Government are working hard to implement measures that will cushion effects of the hardship,” the communique stated.
