Gov. Sule: Northern Concerns Over New Taxes Misguided, Reforms Focus On Efficiency

Nasarawa State Governor, Abdullahi Sule, clarifies that the 2024 Tax Reform Bills do not introduce additional taxes, addressing concerns that many Northerners have been misled into believing otherwise. Speaking on Politics Today on Channels Television, Sule explains that the reforms focus on eliminating inefficiencies within the tax system, rather than imposing new taxes.

“Many people in the North have been sold the idea that new taxes will be introduced. However, the agreement reached today confirms that there are no new taxes,” Sule states. He adds that the endorsement of a revised Value Added Tax (VAT) sharing formula by the Nigeria Governors’ Forum (NGF) will reassure the public and clear any misunderstandings about the relationship between Northern governors and President Bola Tinubu’s administration.

“The endorsement of these reforms settles the dust. It proves that there is no conflict, and the reforms are being made in Nigeria’s best interest,” Sule further asserts.

Governor Sule emphasizes that the reforms address critical areas such as VAT, stamp duties, and royalties. The objective is to simplify the tax system, reduce inefficiencies, and create a more business-friendly environment that encourages investment in Nigeria.

“The ultimate goal is to pass these reforms for the benefit of Nigeria,” says Sule. “The reforms will address multiple taxation and incentivize businesses to stay in the country.”

The NGF has endorsed a revised VAT-sharing formula designed to promote a fairer distribution of resources across states. The new formula allocates:

  • 50% based on equal distribution among states,
  • 30% based on derivation (revenue generated by a state),
  • 20% based on population.

In a communiqué signed by NGF Chairman AbdulRahman AbdulRazaq, the forum supports the tax reforms, which are based on the recommendations of the Presidential Committee on Tax Reform led by fiscal policy expert Taiwo Oyedele.

The proposed 2024 Tax Reform Bills include:

  • Nigeria Tax Bill (NTB): A comprehensive reform aimed at harmonizing and simplifying Nigeria’s tax code.
  • Nigeria Tax Administration Bill (NTAB): A framework designed to improve tax collection efficiency.
  • Nigeria Revenue Service Establishment Bill (NRSEB): Establishes a unified federal revenue service for overseeing tax collection.
  • Joint Revenue Board Establishment Bill (JRBEB): Encourages collaboration between federal, state, and local revenue agencies.

The NGF also recommends removing terminal clauses concerning the allocation of development levies under tax reform bills for TETFUND, NASENI, and NITDA.

The tax reforms are set to:

  • Eliminate the burden of multiple taxation on businesses.
  • Address inefficiencies in the collection of stamp duties and royalties.
  • Promote a more investment-friendly environment that encourages businesses to remain in Nigeria.
  • Harmonize the tax system to foster equitable resource distribution and stimulate economic growth.

The tax reform bills have sparked controversy, particularly among Northern elites who worry that their region may not benefit. The proposed reforms aim to balance revenue generation with fostering a more favorable business environment. Under the current VAT Act, VAT revenue is allocated as follows: 15% to the federal government, 50% to states and the Federal Capital Territory (FCT), and 35% to local governments, with a minimum of 20% allocated based on derivation.

With the NGF’s endorsement, the reforms are now set to advance to the legislative stage for approval.