RMAFC Opposes President Tinubu’s Tax Reform Bills

The Revenue Mobilization, Allocation and Fiscal Commission (RMAFC) has expressed strong opposition to the controversial tax reform bills proposed by President Bola Ahmed Tinubu, currently before the National Assembly.

In a nine-page memorandum signed by RMAFC Chairman Mohammed Bello Shebi, the Commission rejected the principle of VAT derivation, which is central to the reform, as well as other constitutional, legal, and technical objections.

According to the document, which was obtained by Economic Confidential, the Commission underscored that its constitutional mandate, as outlined in Section 162(2) of the 1999 Constitution, grants it exclusive authority in determining the equitable formula for revenue sharing among Nigeria’s three tiers of government.

The memorandum stated that “the Constitution designates RMAFC as the final authority on matters of revenue allocation” and that no Act of Parliament, including the VAT Act, can override this authority without breaching the Constitution.

The RMAFC warned that any attempt to alter its role in revenue allocation, such as by introducing VAT derivation, would undermine its constitutional responsibilities and the principles of fairness and justice in revenue distribution.

The Commission highlighted that VAT, as a consumption-based tax, is distinct from oil revenue, which is shared according to the derivation principle—returning 13% of revenue from oil to oil-producing states.

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“Derivation in fiscal federalism refers to the allocation of revenue generated from specific resources to the regions where they originate.

However, VAT is consumption-based, and linking VAT to the derivation principle would create complex and unresolvable issues,” the memo argued.

While critiquing the proposed reform, the RMAFC emphasized the importance of equitable revenue sharing.

It argued that VAT should continue to be centrally collected and redistributed across the Federation, ensuring fairness for all regions, particularly less economically developed states.