Northern groups demand VAT reduction to 3%

The Coalition of Northern Groups (CNG) Kaduna State chapter, in collaboration with civil society organisations (CSOs) and critical stakeholders, have opposed the tax reform bills being pushed by the federal government.

They made their intention known at a town hall meeting convened in Kaduna yesterday to discuss the bills even as they called for the reduction of VAT to three per cent instead of the proposed 15 per cent.

The town hall brought together a cross-section of policymakers, academics, civil society actors, community leaders, youth groups, and concerned citizens to deliberate on the implications of the proposed tax reform bills.

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Participants expressed profound concerns over the potential socioeconomic consequences of the reforms, highlighting the heavy burden they may impose on already struggling citizens and businesses in the region.

In a communique issued at the end of the meeting and signed by Comrade Muhammed Sanusi Ali on behalf of 134 Kaduna based CSOs/NGO, they raised concern around the proposed amendment to the Value Added Tax (VAT) distribution formula, defunding of NITDA, TETFUND and NASENI.

According to the communique, “The bills lack a clear definition of some key terms such as ‘derivation, family wealth, ecclesiastic’. The current system allocates VAT revenue based on the location of the company’s headquarters and tax office, rather than where the goods and services are consumed.”

The groups observed that the proposed tax reform bills were far from being catalysts for economic growth, and would increase the existing economic challenges facing the North and Nigeria as a whole.

“The reforms are likely to deepen poverty, increase unemployment, and stifle local businesses already grappling with economic hardship,” the communique added.

It however called on the FG to halt the proposed VAT increases and instead reduce the current VAT rate to 3% as the reduction, he said, will provide relief to citizens and businesses while encouraging economic activity.

The communique reads, “Following deliberations, the town hall meeting recommended the relocation of banks and telecommunication companies’ headquarters to Abuja being the Federal Capital of Nigeria.

“It is unjust for banks and telecommunication companies to situate their headquarters in certain states and allow those states to disproportionately benefit at the expense of contributions from other regions when the Federal Ministries of Finance, Information and Communications as well as parastatals like Nigeria Communications Commission (NCC) and the Central Bank of Nigeria (CBN) have their head offices in Abuja.

“Therefore, the town hall recommends that all banks and telecommunication companies relocate their corporate headquarters to Abuja and remit their revenues directly to the federal government to ensure equitable distribution of benefits. All Northern governors, business leaders and organisations are urged to exclusively engage banks that comply with this recommendation in all financial transactions.”

The meeting further recommended the reopening of land borders saying, “The continued closure of land borders has had a devastating impact on the economy and livelihoods of citizens, particularly in border communities.”