Governors Oppose VAT Increase, Advocate Fairer Tax Reforms

The Nigeria Governors’ Forum (NGF) opposes any plan to increase the Value Added Tax (VAT) rate, emphasizing the need for balanced fiscal policies that do not worsen economic challenges.

During a meeting with the Presidential Tax Reform Committee on Thursday, the governors reaffirm their commitment to comprehensive tax reform while rejecting measures that could negatively impact businesses and citizens.

In a statement signed by NGF Chairman and Kwara State Governor, AbdulRahman AbdulRazaq, the governors stress the importance of economic stability.

The forum unanimously agrees that:

  • VAT should not increase, and Corporate Income Tax (CIT) should not decrease to maintain economic balance.
  • Essential goods and agricultural produce should remain exempt from VAT to protect citizens’ welfare and support agricultural productivity.

To ensure fairer revenue distribution, the governors propose a revised VAT-sharing formula:

  • 50% based on equality among states,
  • 30% based on derivation (revenue generated by each state), and
  • 20% based on population.

They also advocate removing terminal clauses affecting development levies allocated to agencies such as the Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA).

The governors express support for the ongoing legislative process at the National Assembly to finalize the Tax Reform Bills.

Governor AbdulRazaq underscores the need for fairness and equity in tax reforms, stating, “Our fiscal policies must prioritize economic stability while safeguarding the welfare of Nigerians, especially in these challenging times.”

  • The Tax Reform Bills before the National Assembly propose a gradual VAT increase from 10% in 2025 to 12.5% (2026–2029) and 15% from 2030 onward.
  • The reforms originate from the Presidential Committee on Tax Reform, chaired by fiscal policy expert Taiwo Oyedele.
  • The proposed reforms include four bills: the Nigeria Tax Bill (NTB), Nigeria Tax Administration Bill (NTAB), Nigeria Revenue Service Establishment Bill (NRSEB), and Joint Revenue Board Establishment Bill (JRBEB).
  • Several governors previously expressed opposition to aspects of these reform bills.