President Bola Ahmed Tinubu’s administration is set to withdraw the Tax Reform Bill presented to the National Assembly two months ago, following significant backlash. The opposition, led by northern governors and traditional rulers, centers on concerns about proposed changes to the Value Added Tax (VAT) distribution, which they believe could disproportionately affect the North’s economic interests.
Backlash from Northern Leaders
The proposal faced strong resistance from governors of Nigeria’s northern states, accompanied by prominent traditional rulers, who raised concerns that the VAT distribution model would favor regions where companies are headquartered rather than where products are consumed. Gombe State Governor Inuwa Yahaya, chairman of the Northern Governors’ Forum, criticized the proposed model, stating it would place the North at an economic disadvantage.
In a communiqué, northern leaders highlighted the need for tax reforms to be fair and avoid regional marginalization. They emphasized their support for reforms benefiting the entire nation but underscored the importance of equity in national policy.
National Economic Council’s (NEC) Intervention
On October 31, Vice President Kashim Shettima chaired a NEC meeting that recommended the bill’s withdrawal, reflecting the governors’ and traditional leaders’ concerns. Oyo State Governor Seyi Makinde, alongside Governors Charles Soludo (Anambra) and Babagana Zulum (Borno), emphasized NEC’s commitment to achieving consensus on tax reform. Makinde pointed out that the administration seeks broad-based consultations to ensure all voices are represented.
Presidential Response and Clarifications
Special Adviser on Information and Strategy, Bayo Onanuga, clarified that the bill’s goal was to make VAT allocation fairer by shifting towards a consumption-based model. He explained that under the current VAT distribution, funds go to areas where businesses are headquartered rather than where goods are actually used, thus disadvantaging regions providing essential goods for the whole country.
The administration plans to reintroduce a modified version of the Tax Reform Bill after further consultations to ensure a balanced and inclusive approach to tax reform.
