The Nigeria Governors’ Forum (NGF), representing the 36 state governors, has expressed strong support for the tax reform initiatives introduced by President Bola Tinubu.
During a consultation meeting held in Abuja with the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, the governors endorsed the legislative process surrounding the proposed Tax Reform Bills and suggested adjustments to the Value Added Tax (VAT) sharing formula.
In a communiqué issued after the meeting, signed by NGF Chairman and Kwara State Governor AbdulRahman AbdulRazaq, the governors emphasized the importance of a revised VAT sharing formula. They proposed allocating 50% of VAT revenues based on equality, 30% on derivation, and 20% on population.
This, they argued, would ensure a fair and equitable distribution of resources across the states.
The Communique read, “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:
“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.
“The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50% based on equality, 30% based on derivation, and 20% 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.
“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.”
Despite initial calls by the National Economic Council (NEC) for wider consultations, President Tinubu insisted on continuing the legislative process to allow for public input and scrutiny during the hearings. The bills have already passed the second reading in the Senate as of November 2024.
