President Bola Tinubu is poised to retract the recent tax reform bills submitted to the National Assembly, responding to significant public opposition.
The move aligns with a recommendation from the National Economic Council (NEC), which advised suspending the bills for further consultation and review, allowing for broader stakeholder input and adjustments to the proposed reforms.
The tax reform bills were introduced on September 3, 2024, by President Tinubu, who was then on vacation in London. In a letter to the National Assembly, he presented four bills: the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill. These bills were aimed at restructuring Nigeria’s tax and revenue system to promote economic growth and strengthen fiscal institutions.
The president hoped that these bills would foster a fairer tax structure, increase taxpayer compliance, and boost government revenues.
However, the bills immediately sparked widespread opposition, especially from the governors of Nigeria’s northern states. These governors, alongside northern traditional rulers, strongly criticized the proposed tax changes.
At a recent meeting in Kaduna, the northern governors expressed their concerns, focusing particularly on the amendments proposed for Value Added Tax (VAT) distribution. They argued that under the tax system, businesses pay VAT based on where their headquarters are located, not where goods and services are consumed. This system disadvantages the North, which contributes significantly to the country’s food production but doesn’t see direct benefits in VAT distribution.