Presidency to withdraw controversial tax reform bills

Barring any last minute changes, the Bola Tinubu Presidency will withdraw the Tax Reform Bills sent to the National Assembly barely two months ago by the president. 

This is owing to the controversy generated by the four bills, which were  sent to the parliament by President Tinubu on the 3rd of September, 2024.

Daily Trust reliably learnt last night that the presidency has agreed to withdraw the bills, but sources said those pieces of proposed legislations would be modified and resubmitted to the National Assembly in due course.

The 144th meeting of the National Economic Council (NEC), presided over by Vice President Kashim Shettima, yesterday, recommended the withdrawal of the tax reform bills.

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The recommendation came after governors of the 19 northern states, who met in Kaduna on Monday, alongside prominent traditional rulers from the region, resolved, among others, to reject the Nigeria Tax Reform Bill.

In a communiqué issued at the end of the meeting, the northern governors and monarchs decried the contents of the recent Tax Reform Bill, saying they were against the interests of the North and other sub-nationals, especially the proposed amendment to the distribution of the Value Added Tax (VAT).

President Tinubu had on September 3, transmitted four tax reform bills to the National Assembly for consideration.

Tinubu, who was on vacation in London at the time, sent the bills via a letter addressed to the Speaker of the House, Abbas Tajudeen. The letter was read on the floor of the House during plenary that day.

The bills are the Nigeria Tax Bill 2024, which is expected to provide the fiscal framework for taxation in the country, and the Tax Administration Bill, which will provide a clear and concise legal framework for all taxes in the country and reduce disputes.

The others are the Nigeria Revenue Service Establishment Bill, which will repeal the Federal Inland Revenue Service Act and establish the Nigeria Revenue Service, and the Joint Revenue Board Establishment Bill, which will create a tax tribunal and a tax ombudsman.

Tinubu said the bills were designed to support his administration’s objectives and strengthen fiscal institutions in the country.

“The proposed tax bills present substantial benefits that align with my government’s objectives and fiscal reform on the economic growth by enhancing taxpayer compliance, strengthening our fiscal institutions and fostering a more effective and transparent fiscal regime,” he said.

The president further stated that he was confident that if the bills were passed, they would encourage and stimulate the economy.

Explaining their decision to reject the Tax Reform Bill, the Chairman of the Northern Governors’ Forum, Governor Inuwa Yahaya of Gombe State,  while reading the communiqué of the forum’s meeting said: “This is because companies remit VAT using location of their headquarters and tax office and not where the services and goods are consumed. In view of the foregoing, the forum unanimously rejects the proposed Tax Amendments and calls on members of National Assembly to oppose any bill that can jeopardise the well-being of our people.

“For the avoidance of doubt, the Northern Governors’ Forum is not averse to any policies or programmes that will ensure the growth and development of the country. However, the forum calls for equity and farness in the implementation of all national policies and programmes so as to ensure that no geopolitical zone is short-changed or marginalised”, he said.

Later, Governor Abdullahi Sule of Nasarawa State further clarified the position of governors from the region, saying they were against the VAT bill because it would be unfair to the North as a whole.

Sule said that the governors were not against President Tinubu.

He said: “We can’t bring in President Tinubu and then oppose him. If you look at the composition of the meeting you will see that they are people from the APC and the PDP. Some don’t even have a political party. We sat down and took the decision together.

“Some are traditional rulers. If you look at the law, it will be unfair to the North”, he reiterated.

Why NEC intervened

Addressing State House reporters after the meeting yesterday, Governor Seyi Makinde of Oyo State, said following the controversies that arose as a result of the bills, NEC recommended that the bills be withdrawn so that stakeholders could be carried along.

Makinde, who was flanked by Governors Charles Soludo (Anambra) and Babagana Zulum (Borno), said council took the decision after extensive deliberations.

According to him: “NEC today, took a presentation from the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms. Their main focus is fair taxation, responsible borrowing and sustainable spending.

“The council acknowledged that the country is underperforming on all indices as regards yield from major revenue sources, also tax to GDP ratio and so on.

“So, after extensive deliberation, NEC noted the need for sufficient alignment between and amongst the stakeholders for the proposed reforms.

“So, council, therefore, recommends the need to withdraw the bill currently before the National Assembly on tax reforms so that we can have wider consultations and also build consensus around these reforms for the benefit of the entire country.

“Also, (the action is) to give people the opportunity to know the vision and where we are moving the country in terms of a tax reform, because there is really a lot of miscommunication and misinformation.

“The bill will be withdrawn from the National Assembly and then there will be consultations afterwards,” he said.

On his part, Governor Zulum said: “This is an advice that was given by the council to withdraw the bill, so as to give more time for consultation and I think the language is very clear.”

Bills not against the North – Presidency

Earlier yesterday, Bayo Onanuga, Special Adviser to the President on Information and Strategy, had spoken about the “misunderstandings and misgivings around the tax reform already embarked upon by the administration.”

Speaking specifically on the proposed derivation-based VAT distribution model, Onanuga 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 inequality 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,” he had said.

Daily Trust reports that the NEC, headed by the vice-president, has all the governors as members.

Among those that attended the meeting were: the Minister of Finance and Coordinating Minister of the Economy, Wale Edun and the Minister of Budget and Economic Planning, Atiku Bagudu.