Tinubu Announces Intent To Pull Controversial Tax Reform Measure

Tinubu Announces Intent To Pull Controversial Tax Reform MeasureThe Bola Ahmed Tinubu administration is set to withdraw the Tax Reform Bills introduced to the National Assembly just two months ago. This decision follows significant backlash, particularly from northern governors and traditional rulers who oppose aspects of the legislation, especially those related to the Value Added Tax (VAT) distribution model.

Sources informed Daily Trust that while the presidency plans to withdraw the bills, they will be revised and resubmitted to the National Assembly in the future. On October 31, the National Economic Council (NEC), led by Vice President Kashim Shettima, officially recommended this withdrawal.

This recommendation aligns with resolutions made by governors from Nigeria’s 19 northern states during a meeting in Kaduna, where they were accompanied by key traditional leaders. They raised concerns that the proposed tax changes could adversely affect their region’s economic situation.

Concerns from Northern Governors

The opposition from northern leaders primarily focuses on proposed amendments to the VAT distribution model, which they argue would be detrimental to the North. Gombe State Governor Inuwa Yahaya, chair of the Northern Governors’ Forum, stated that the current VAT system unfairly favors states where businesses are headquartered rather than the regions where goods and services are consumed. This, they claim, disrupts economic balance and undermines the interests of subnational regions.

In a communiqué issued after their meeting, northern leaders emphasized their support for equitable national policies, asserting that they are not against reforms that benefit Nigeria as a whole. However, they insisted that any proposed amendments must be fair and inclusive to prevent the marginalization of specific regions.

NEC’s Intervention and Presidential Response

During a media briefing, Oyo State Governor Seyi Makinde noted that NEC’s recommendation reflects an awareness of widespread concerns and a commitment to more thorough consultations. Alongside Governors Charles Soludo (Anambra) and Babagana Zulum (Borno), Makinde highlighted the need for consensus among all stakeholders regarding tax reforms.

Governor Zulum reiterated that NEC’s decision aims to foster a unified approach, emphasizing the importance of providing clarity to citizens and stakeholders about the administration’s vision for tax reform.

Presidency Clarifies Position

Bayo Onanuga, Special Adviser to the President on Information and Strategy, addressed misunderstandings surrounding the bills. He clarified that the proposed VAT derivation model is intended to create a more balanced system rather than disadvantage the North. The reform seeks to adjust VAT distribution to reflect the location of consumption, ensuring that regions producing goods for national use receive fair compensation.

Onanuga stated, “The current model favors VAT remittance based on corporate headquarters, not where goods are consumed. The proposed reform would ensure that all regions, particularly those in the North supplying essential products, are fairly represented in VAT allocations.

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