Tax Overhaul Proposals: Certain States Could Face Financial Collapse

Tax Overhaul Proposals: Certain States Could Face Financial CollapseThe Governor of Zamfara State, Dauda Lawal, warned on Tuesday that some financially weaker states could struggle to survive if the tax reform bills currently before the National Assembly are passed and signed into law by President Bola Tinubu. Speaking on Channels TV, Lawal emphasized the need for careful consideration of the reforms, stating, “Some states may not be able to survive, so it is something that must be carefully studied to avoid long-term harm.”

He acknowledged that the tax reforms have both positive and negative aspects, saying, “We are studying the situation so we can advise our people on the best way forward. It’s an ongoing process, and we will continue to engage with all stakeholders.”

The tax reform proposals, introduced by the Tinubu administration, have sparked significant controversy and strong opposition, particularly from the 36 state governors under the National Economic Council (NEC). Governors from northern Nigeria, in particular, have expressed outright rejection of certain provisions in the bills.

Lawal, as a northern governor, raised concerns about the potential impact of the reforms on state finances, especially regarding the ability of many states to meet the ₦70,000 minimum wage. “Reform in a system is inevitable, and we should always expect changes. However, we must be cautious not to rush into decisions that could later harm us,” he said.

He stressed the importance of a thorough study of the proposed reforms to ensure a shared understanding and unified stance. Lawal also pointed to provisions within the bills related to derivation, which could significantly affect states’ revenue inflows, potentially making it harder for some states to meet financial obligations, including salary payments.

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