… Wants Extant Sharing Formula Retained
Political leaders and power brokers in the 19 northern states are mounting pressure on President Bola Tinubu to tinker with the Value Added Tax (VAT) component in his Tax Reform Bills.
While the regional leaders are said to be persuaded to support some aspects of the VAT bill, they are however opposed to the sharing formula being proposed in the bill.
It was reliably gathered that the regional leaders and governors of the 19 states are rallying their members in the Senate and House of Representatives to achieve a desired end.
They are asking Tinubu to expunge the revenue sharing formula content of the VAT bill or forget the support of the North for his presumed 2027 re-election bid.
A source privy to the discussions told our correspondent on Monday that the power brokers have mandated the Borno State Governor, Babagana Zulum to be the face and voice of their collective agitation.
They welcome the aspect that seeks to abolish VAT on food, medicare, education, agriculture, accommodation and public transportation.
However, they are insistent on the retention of the extant VAT revenue sharing that confers immense benefits on Northern states and other weak states in the South.
In the extant sharing formula, all the 19 northern states and other weak ones in the South receive about five times above the VAT revenue they generate.
On the other hand, Lagos State, which generates more than 65 percent of the entire national VAT revenue receives about a quarter of the revenue it generates.
The sharing formula as contained in the proposed VAT reform bill, seeks to limit revenue accruable to each state to the amount of VAT they generate.
The agitation by the North is centred around pressuring Tinubu to adjust the VAT reform bill to what is acceptable to the region.
At the same time, the region’s political leaders are rallying their members in the two chambers of the National Assembly to ensure strict compliance with their position during subsequent legislative actions on the bill.
The North, which gave Tinubu more that 60 percent of the votes that brought him to power in the 2023 election, is tying the region’s support for the President’s 2027 re-election bid to having its way on the VAT bill.
Borno Governor, Zulum, who is leading the charge, has declared at various fora, that the bill, if passed and implemented in its present form, will drag the North backwards economically.
Stating that only Lagos State stands to benefit from the proposed VAT reform, the governor said other states in the Southwest like Oyo, Ondo, Osun and Ekiti which also have relatively low VAT revenue generation, will suffer similar fate.
“We condemn these bills sent to the National Assembly. They will drag the North backwards and also affect the South East, South West, and some South-Western states like Oyo, Osun, Ekiti, and Ondo,” the governor was quoted as saying.
Although Zulum did not state explicitly that the North would withdraw its support for Tinubu’s re-election in 2027, he warned the President not to take the region’s support for granted.
Apparently in agreement with the position of the Northern leaders, the House of Representatives has shelved further legislative actions on the bill.
A memo to that effect, dated November 30, 2024 and issued on the directives of the House leadership, gave no definite date for continuation of legislative actions on the bill.
The memo added that the suspension of action on the bill by the House was to allow for broader consultations on the bills, a position earlier taken by the National Economic Council (NEC).
The NEC, chaired by the Vice President, Kashim Shettima, has all the 36 state governors as statutory members. The NEC, rising from a meeting in Abuja on October 31, 2024, had called on President Tinubu to withdraw the tax bills to allow for further consultations.
The Senate had, last Wednesday, granted audience to members of the Presidential Fiscal Policy and Tax Reform Committee to explain the reforms to the Senate-in-session.
The upper legislative chamber had followed it up the next day with a debate on the general principles of the the reform bills.
Federal lawmakers from the North, including the Deputy President of the Senate, Jibrin Barau, are getting a backlash for their perceived favourable disposition to the tax reform bills.
The Senate, which passed the bills for second reading last Thursday, has referred the documents to its appropriate standing committee with a mandate to prepare and submit a report in six weeks.
Meanwhile, the Senate may still be observing its annual end of the year recess by the end of the six weeks, which ends by mid January 2025.
This will allow the agitators enough time to lobby President Tinubu and to
mobilise their members in the National Assembly and other stakeholders to rally support for their position.
President Tinubu had, earlier in October, forwarded the tax reform bills to the National Assembly for consideration and passage.
Other components of the bills included the Nigeria Tax Bill 2024, which aims to provide the fiscal framework for taxation in the country.,
There is also the Tax Administration Bill, which seeks to provide a clear and concise legal framework for all taxes in the country and minimise disputes therefrom.
Another component is the Nigeria Revenue Service Establishment Bill, seeking to repeal the Federal Inland Revenue Service Act and replace it with the Nigeria Revenue Service.
Also on the card is the Joint Revenue Board Establishment Bill, which seeks to create a Tax Tribunal and a Tax Ombudsman to address taxpayers’ complaints.
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North Mounts Pressure On Tinubu To Tinker With VAT Bill As Condition For Support In 2027 is first published on The Whistler Newspaper