Northern Governors, Lawmakers Clash on VAT Distribution, Other Key Proposals

Members of the National Assembly are deeply divided over the controversial tax reform bills proposed by President Bola Tinubu’s administration.

The four bills, transmitted to the legislature in early September, are part of efforts to overhaul Nigeria’s tax framework, based on recommendations from the Presidential Committee on Fiscal and Tax Reforms.

The bills include the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.

At the heart of the debate is the proposed shift to a derivation-based model for Value Added Tax (VAT) distribution. Under the new model, VAT revenues would be allocated to the states where goods and services are consumed, as opposed to the current system where they are distributed based on the location of businesses’ headquarters.

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The 19 northern governors, under the banner of the Northern Governors’ Forum, have rejected the new VAT distribution formula, arguing that it does not serve the interests of northern states.

Similarly, the National Economic Council (NEC), chaired by Vice President Kashim Shettima, has recommended that the bills be withdrawn to allow for further consultations.

Despite the opposition, some lawmakers within the National Assembly have voiced support for the bills.

Senator Ali Ndume (APC, Borno South) has publicly opposed the proposed reforms, criticizing them for exacerbating the economic difficulties already faced by Nigerians.

“The timing of these bills is not right given the economic hardship people are going through,” Senator Ndume said, adding that taxes should not be increased without visible improvements in public services.

Senator Ogoshi Onawo (Nasarawa South) echoed similar concerns, arguing that the reforms would impose additional burdens on an already struggling populace.

“There is no point paying taxes when roads are bad, social amenities are lacking, and the government is not responsive to the needs of its citizens,” he said.

In contrast, lawmakers from the South-West have defended the bills. Babajimi Benson (Lagos, Ikorodu Federal Constituency) emphasized the need for tax reform, arguing that the old tax models had not been effective in generating substantial revenue.

“This reform is about transforming our tax system, eliminating multiple taxes, and creating a fairer revenue distribution model,” Benson said.

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Another lawmaker, Oluwole Oke (Osun), acknowledged the controversies surrounding the bills but stressed that the National Assembly would allow for public input and carefully consider the proposals.

“The bill is like raw gold—it needs to be shaped,” Oke said, adding that the legislative process would include consultations with governors and other stakeholders.

As the debate continues, Taiwo Oyedele, the head of the Presidential Committee on Fiscal and Tax Reforms, confirmed that efforts to engage with the public and governors are ongoing. “Yes, we plan further engagements, and some are already underway,” Oyedele said.