Yesterday, the debate on the Value Added Tax (VAT) components of the Tax Reforms Bills shifted to the Nigeria Governors’ Forum (NGF).
The governors, who drummed support for the four bills presented to the National Assembly by President Bola Ahmed Tinubu, proposed some adjustments “to ensure equitable distribution of resources.”
The VAT-sharing formula suggested by the governors is 50 per cent for equality, 30 per cent for derivation and 20 per cent for population.
The NGF proposal contradicts the Federal Government’s 20 per cent for equality, 60 per cent for derivation and 20 per cent for population contained in the bills.
At the NGF meeting held at Congress Hall, Transcorp Hilton Hotel, Abuja, chaired by Governor AbdulRahaman AbdulRazaq (Kwara), the governors said the adjustments, if adopted, would ensure equitable distribution of resources.
President Tinubu had, during his maiden presidential chat, reflected on the raging controversy over the VAT components of the bills.
He said although the tax reforms had come to stay, the Federal Government was open to negotiation.
A communiqué signed by AbdulRazaq said the governors supported the continuation of the ongoing legislative process at the National Assembly that will lead to the passage of the bills.
The communiqué reads: “We, members of the Nigeria Governors’ Forum (NGF) and presidential tax reform committee, at a meeting convened on the 16th of January 2025 to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system, arrived at the following resolutions:
“The forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws.
“Members acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices.
“The forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50 per cent based on equality, 30 per cent based on derivation, and 20 per cent based on population.
“Members agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time, to maintain economic stability.
“The forum advocated for the continued exemption of essential goods and agricultural produce from Friday, January 17, 2025”