Governors of the 36 states of the federation under the aegis of the Nigeria Governors’ Forum (NGF) have agreed to accept the new Tax Reform Bill now before the National Assembly only on the condition that there would be no increase in Value Added Tax (VAT).
The governors also proposed what they called an “equitable” sharing formula for value-added tax (VAT).
This development was an outcome of 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.
In a statement signed by the Chairman of the Forum and Governor of Kwara State, Abdulrahman AbdulRazaq said: “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: 50 per based on equality, 30 per cent based on derivation, and 20 per cent 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.”
The governors of northern states had vehemently rejected the new VAT distribution formula of 60 per cent based on derivation, 20 per cent based on equality and 20 per cent based on population, proposed in the Tax Reform Bill.
The argument of the governors is that the new arrangement will work against the north.