NEC urges Tinubu to stand down tax reform bill
…Presidency: Derivative VAT not anti-North
By Patience Ikpeme
The National Economic Council (NEC) yesterday requested President Bola Tinubu to withdraw the Tax Reforms Bills from the National Assembly to allow for wider consultations and consensus building.
Oyo State Governor, Seyi Makinde, said this formed part of resolutions reached at the 144th meeting of the National Economic Council at the State House, Abuja.
Makinde told journalists that the council members agreed that it was necessary to allow for consensus building and understanding of the bills among Nigerians.
“NEC noted the need for sufficient alignment on the proposed reforms and recommended the withdrawal of the tax reform bills,” he stated.
Makinde stated that this decision was made for the benefit of the country and emphasized the need for further consultations regarding the bills.
“We saw the gap and decided that there is a need for a wider consultation,” he added.
NEC’s decision came days after the Northern Governors kicked against the reform bills at its October 28, 2024 meeting.
Governors of the 19 Northern States, under the platform of the Northern Governors’ Forum, rejected the new derivation-based model for Value-Added Tax distribution in the new tax reform bills before the National Assembly.
A communiqué read by the Chairman of the forum, Governor Muhammed Yahaya of Gombe State, said the proposition negates the interest of the North and other sub-nationals.
Meanwhile, the presidency has, in a statement denied the tax reform bill targets the north.
Reacting to the condemnation via a statement on Thursday, October 31, the Special Adviser to the President on Information and Strategy, Bayo Onanuga, said the proposed laws will not increase the number of taxes currently in operation, noting that they are designed to “optimise and simplify existing tax frameworks”.
Onanuga stated: “The tax rates or percentages will remain the same under these reforms, as they focus on ensuring a more equitable distribution of tax obligations without adding to the burden on Nigerians.
“The reforms will not lead to job losses. On the contrary, they are structured to stimulate new avenues for job creation by supporting a dynamic, growth-oriented economy.
“Importantly, these laws will not absorb or eliminate the duties of any existing department, agency, or ministry. Instead, they aim to harmonise revenue collection and administration across the federation to ensure efficiency and cooperation.
“The proposed laws aim to coordinate efforts between different tiers of government, resulting in better tax resource management and greater clarity for taxpayers.
“Under existing laws, taxes like Company Income Tax (CIT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), Value-Added Tax (VAT), and other taxing provisions in numerous laws are administered separately, with individual legislative frameworks.
“The proposed reforms seek to consolidate these multiple taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure to reduce administrative fragmentation.
“On the proposed derivation-based VAT distribution model, which the Northern Governors oppose, it must be stressed that the new proposal, as enunciated in the Bill, is designed to create a fairer system.
“The current model for distributing VAT is based on where the tax is remitted rather than where goods and services are supplied or consumed. The ongoing tax reform seeks to correct the inherent inequity in the current derivation model as a basis for distributing VAT revenue.
“The new proposal before the National Assembly outlines a different form of derivation which considers the place of supply or consumption for relevant goods and services. This means that states in the Northern region that produce the food we eat should not lose out just because their products are VAT-exempt or consumed in other states.”
The presidential spokesman added that the tax reform bills were critical to improving the lives of Nigerians and were not put forward by President Bola Tinubu to undermine any part of the country.
“There is no better time than now for the National Assembly to give due consideration to these bills that will overhaul our tax systems and create the revenue all the tiers of government require to fund the development our country and people urgently need,” Onanuga stressed.
President Tinubu and the Federal Executive Council (FEC) recently endorsed new policy initiatives aimed at streamlining Nigeria’s tax administration processes.
