FG To Withdraw Controversial Tax Reform Bill

The Bola Ahmed Tinubu administration is poised to withdraw the Tax Reform Bills presented to the National Assembly barely two months ago.

This decision comes amid widespread backlash and controversy, primarily fueled by northern governors and traditional rulers opposing elements of the proposed legislation, particularly those impacting the Value Added Tax (VAT) distribution model.

It was learnt last night that the presidency has agreed to withdraw the bills, but sources said those pieces of proposed legislations would be modified and resubmitted to the National Assembly in due course.

On October 31, the National Economic Council (NEC), chaired by Vice President Kashim Shettima, officially recommended the withdrawal of the bills.

NEC’s recommendation aligns with a resolution made by governors from Nigeria’s 19 northern states during a meeting in Kaduna.

Accompanied by prominent traditional leaders, the governors expressed concerns that the new tax proposals could negatively impact their region’s economic standing.

The opposition from northern leaders centers around proposed amendments to the VAT distribution model, which, they argue, would disadvantage the North.

Gombe State Governor Inuwa Yahaya, chair of the Northern Governors’ Forum, clarified their stance, explaining that the current VAT system unfairly favors states where businesses are headquartered rather than the regions where products and services are actually consumed. This situation, they contend, undermines the economic balance and short-changes subnational regions.

In a communiqué issued at the close of their meeting, the northern leaders called for equity in all national policies, asserting that they are not opposed to reforms that benefit Nigeria as a whole. However, they believe the proposed amendments must be fair and inclusive to avoid marginalizing specific regions.

NEC’s Intervention and Presidential Response
During a media briefing, Oyo State Governor Seyi Makinde explained that NEC’s recommendation reflects an understanding of the widespread concerns and a desire to allow more comprehensive consultations.

Flanked by Governors Charles Soludo (Anambra) and Babagana Zulum (Borno), Makinde stated that NEC sees the need to align all stakeholders on the tax reforms and to build consensus across Nigeria.

Governor Zulum reiterated that NEC’s decision aims to facilitate a more unified approach, stressing the importance of giving citizens and stakeholders clarity on the administration’s vision for tax reform.

Earlier, Bayo Onanuga, Special Adviser to the President on Information and Strategy, addressed the misunderstandings surrounding the bills.

He emphasized that the proposed VAT derivation model, rather than disadvantaging the North, intends to create a more balanced system.

The bill seeks to shift VAT distribution to a model that considers the location of consumption, ensuring that regions producing goods for nationwide use receive fair compensation.

According to Onanuga, “The current model favors VAT remittance based on corporate headquarters, not where goods are consumed. The proposed reform would ensure that all regions, particularly those in the North supplying essential products, are fairly represented in VAT allocations.”