Nigerian Governors reject VAT Increase in Tax Reform Bills, Make new proposal

The Nigeria Governors’ Forum has voiced its opposition to any impending increase in the Value Added Tax (VAT).

Their decision stems from concerns over the possible adverse economic impact on businesses and households, which are already grappling with rising inflation rates.

The decision was made during a meeting with the Presidential Tax Reform Committee in Abuja on Thursday.

In a communique issued after the meeting, the governors expressed support for the ongoing legislative process to modernise Nigeria’s tax laws but opposed a hike in VAT from the current 7.5%.

They endorsed a revised VAT sharing formula that allocates 50% of revenue based on equality, 30% on derivation, and 20% on population.

“We recognise the importance of fiscal reforms, but raising VAT at this time would place undue pressure on businesses and citizens,” NGF Chairperson and Kwara State Governor, AbdulRahman AbdulRazaq, said.

The governors also advocated for the continued exemption of essential goods and agricultural produce from VAT to protect citizens and promote food security.

In the Tax Reform Bills, they opposed including terminal clauses for development levies.

They highlighted the importance of continuous funding for agencies such as TETFUND, NASENI, and NITDA to ensure ongoing support for national development.

The tax reform bill was proposed to the National Assembly by President Bola Tinubu on October 3, 2024, they included the Nigeria Tax Bill 2024, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.

These bills aim to overhaul tax administration and revenue generation in the country.

The bills are products of a year-long effort by the Taiwo Oyedele-led Presidential Committee on Fiscal Policy and Tax Reforms, inaugurated by President Tinubu in August 2023.

Meanwhile, before the agreement of the NGF, the Senate’s Ad-hoc Committee on tax reform, led by Senator Abba Moro on Monday, announced progress in deliberations on the bills.

“We have reached some agreements after thorough discussions with government officials. Our goal is to deliver a law that meets the needs of all Nigerians,” Moro said