Nigerian governors have thrown their weight behind the Federal Government’s tax reform bills. But they are proposing a new sharing formula for value-added tax (VAT).
The decision followed a meeting of the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee which was held on Thursday.
In a communique at the end of the meeting, the governors’ forum “reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws.
“Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices”.
The governors proposed a revised VAT-sharing formula which they said would ensure equitable distribution of resources.
According to the NGF, the new sharing formula will be 50% based on equality, 30% based on derivation, and 20% 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 communique issued by the Chairman of the NGF and Governor of Kwara State Abdul Rahman Abdul Razaq read.
“The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.”
The NGF recommended that there should be no terminal clause for the Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA) in the sharing of development levies in the bills.
Despite the heated debates that the tax reform bills have generated, the governors say they support the “continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reform Bills”.
