The Bola Ahmed Tinubu administration has clarified that the proposed tax reform bills are designed to benefit all states, addressing concerns raised by Northern governors. The statement was made on Thursday by Tinubu’s Special Adviser on Information and Strategy, Bayo Onanuga.
At a recent meeting on Monday, October 28, 2024, the Northern Governors’ Forum, led by Governor Muhammed Inuwa Yahaya of Gombe State, expressed opposition to a new derivation-based model for Value-Added Tax (VAT) distribution, as outlined in the proposed tax reform bills currently before the National Assembly. The meeting also included prominent traditional rulers from the North, led by the Sultan of Sokoto, His Eminence Muhammadu Sa’ad Abubakar III.
In response, Onanuga clarified that the Tinubu administration’s tax reforms aim to streamline Nigeria’s tax administration, boost efficiency, and reduce redundancies. The reforms are part of four bills under review by the National Assembly, which were crafted following an extensive evaluation of existing tax laws.
The bills include:
- Nigeria Tax Bill – This bill seeks to reduce instances of multiple taxation, making Nigeria’s economy more competitive and simplifying tax obligations for businesses and individuals.
- Nigeria Tax Administration Bill (NTAB) – NTAB proposes uniform tax administration rules across federal, state, and local jurisdictions to enhance compliance.
- Nigeria Revenue Service (Establishment) Bill – This bill would rename the Federal Inland Revenue Service to the Nigeria Revenue Service, highlighting its role as the revenue agency for the entire federation.
- Joint Revenue Board Establishment Bill – The bill proposes creating a Joint Revenue Board to coordinate federal and state tax authorities and establish an Office of Tax Ombudsman to address taxpayer complaints.
Onanuga emphasized that these reforms would not increase tax rates but are intended to optimize existing frameworks and reduce the administrative burden. The reforms, he added, would not lead to job losses but could stimulate job creation by fostering economic growth.
Addressing the contentious derivation-based VAT distribution model, Onanuga explained that the proposal aims for a fairer system. Under the current model, VAT distribution is based on where the tax is remitted, rather than where goods and services are consumed. The new proposal would base VAT revenue distribution on the location of supply or consumption, ensuring states, particularly in the North, receive fair returns on VAT-exempt products consumed outside their borders.
The administration highlighted that these reforms are critical for modernizing Nigeria’s tax system, promoting equitable revenue distribution, and supporting national development.
