Governor Dapo Abiodun of Ogun State has attributed the resistance to the Federal Government’s proposed tax reform to widespread misinformation and misunderstanding.
Speaking on Thursday at the Africa Investment Forum Market Days 2024 in Rabat, Morocco, Abiodun emphasised the reform’s potential to significantly enhance the financial well-being of Nigerian states. The event, themed ‘Leveraging Innovative Partnerships for Scale’, highlights transformative investments across Africa through strategic collaborations.
The governor made these remarks after a closed-door meeting with Dr Akinwunmi Adesina, President of the African Development Bank Group. Abiodun stated that the proposed tax reform, if properly understood, would be more beneficial than the current system.
“From what we’ve observed and the feedback we’ve gathered, the reform is designed to improve the fortunes of states much better than the status quo,” he said. “The misconception arises from a lack of detailed interrogation of the reform and suspicion around its intent.”
Abiodun reassured stakeholders of ongoing discussions at the Governors’ Forum, aimed at clarifying the reform’s objectives. He expressed optimism that a clearer understanding would emerge in the coming weeks, leading to broader acceptance.
“By next week, I believe stakeholders will have a better appreciation of the reform’s true benefits,” the governor noted.
VAT Reform to Address Disparities
Central to the reform is the Value Added Tax (VAT), which Abiodun described as consumption-oriented and intended to address longstanding disparities in revenue allocation.
“The current system puts Ogun State, as Nigeria’s industrial hub and leading non-oil revenue generator, at a disadvantage,” he explained. “Production takes place in Ogun, but VAT often accrues to states like Lagos, where many companies have their head offices.”
Abiodun advocated for a fairer approach, where value-added processes, such as production and packaging, are given greater weight in determining revenue allocation.
He highlighted the importance of fine-tuning the reform to ensure it reflects the contributions of states like Ogun, which play critical roles in the production value chain.
The Africa Investment Forum, now in its second day, continues to attract leaders and stakeholders committed to fostering economic growth and partnerships across the continent. Governor Abiodun’s remarks underscore the importance of constructive dialogue in addressing fiscal challenges and driving equitable growth in Nigeria.
