After some Governors’ initial rejection of the controversial tax reform bills by President Bola Tinubu, all the governors have now thrown their weight behind the Federal Government’s but with a proposal for a new sharing formula for value-added tax (VAT).
The new decision was taken after a meeting of the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee which held on Thursday.
In a communique at the end of the meeting, the governors’ 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”.
The governors proposed a revised VAT-sharing formula which according to them would ensure equitable distribution of resources.
The NGF further said the new sharing formula will be 50% based on equality, 30% based on derivation, and 20% based on population.
“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 communique issued by the Chairman of the NGF and Governor of Kwara State Abdul Rahman Abdul Razaq read.
“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.”
The NGF also recommended that there should be no terminal clause for the Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA) in the sharing of development levies in the bills.
In their new position, the governors say they support the “continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reform Bills”, despite the earlier resistance against the tax reform bills.