The Federal Government has addressed concerns raised by Northern governors regarding the proposed tax reform bills currently before the National Assembly, emphasizing that the reforms are intended to benefit all states fairly.
The response comes after the Northern Governors’ Forum, led by Governor Muhammed Inuwa Yahaya of Gombe State, voiced opposition on October 28 to the derivation-based model for Value-Added Tax (VAT) distribution proposed in the bills. The Forum, which includes 19 Northern governors and traditional leaders such as the Sultan of Sokoto, Muhammadu Sa’ad Abubakar III, expressed fears that the new VAT model could disadvantage the North.
In a statement, the Federal Government clarified that the tax reforms aim to streamline Nigeria’s tax structure, increase efficiency, and eliminate redundancies without increasing the number or rates of existing taxes. The government has proposed four bills: the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board Establishment Bill. These bills seek to harmonize tax administration across federal, state, and local levels.
The government further explained that the derivation-based VAT model intends to correct the existing system’s inequity by distributing VAT revenue based on the place of consumption rather than the place of remittance. This approach would ensure that states supplying essential goods, like those in the North, are not disadvantaged if their products are VAT-exempt or consumed in other states.
The Federal Government called on the National Assembly to support the reforms, which aim to enhance revenue, promote economic growth, and create jobs for all Nigerians.