The National Economic Council (NEC) has recommended withdrawing the Tax Reform Bill currently before the National Assembly,Daily Trust reports.
The NEC, chaired by Vice President Kashim Shettima and composed of state governors, made this decision to allow more engagement with stakeholders amid ongoing controversies surrounding the bill. Following a Thursday NEC meeting, Oyo State Governor Seyi Makinde explained to reporters that the bill’s withdrawal was necessary to address concerns and seek broader consensus.
On Sunday, the Northern Governors’ Forum (NGF), led by Governor Inuwa Yahaya of Gombe State, also expressed opposition to a derivation-based Value Added Tax (VAT) distribution model proposed in the tax bills. Governor Abdullahi Sule of Nasarawa later clarified the northern governors’ stance, stating that the VAT bill would create unfair disadvantages for the northern states.
ALSO READ: Governors set up joint committee on constitutional role for royal fathers
Governor Sule emphasized that the governors’ opposition was not directed at President Bola Ahmed Tinubu, noting that both APC and PDP leaders, as well as other representatives, collectively reached this decision. He added that the current proposal would impose further derivation-based revenue sharing, which would particularly disadvantage the 19 northern states that generate less VAT revenue.
Sule explained, “Some northern states generate very little VAT, and it would be inequitable to shift the revenue distribution further away from them. I’ve worked with multinational companies and know how VAT collection works. For instance, at Dangote in Apapa Port, we pay VAT on imported raw materials, and again on the finished products sold in the market.”
Earlier, on Thursday, Special Adviser to the President on Information and Strategy, Bayo Onanuga, addressed concerns about the ongoing tax reform. He clarified that the proposed derivation-based VAT distribution aims to establish a fairer system by accounting for where goods and services are supplied or consumed, not just where VAT is remitted.
According to Onanuga, the proposal would ensure that states contributing to food production do not lose out merely because their goods are VAT-exempt or consumed elsewhere.
