For Broader Consultation, NEC Advises Tinubu to Withdraw Tax Reform Bills

* FG assures 19 Northern govs, insists proposed reforms will benefit all states

Deji Elumoye and Olawale Ajimotokan in Abuja

The National Economic Council (NEC) yesterday rose from its monthly meeting at the State House, Abuja recommending to  President Bola Tinubu the need to withdraw the current tax reform bills before the National Assembly.
The body stated that this is in order to pave way for more comprehensive consultation and consensus building among key stakeholders.

Making the recommendation in response to a presentation by the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, the council called for more extensive consultation with stakeholders to align on the far-reaching impacts of the proposed tax reforms.
Shedding light on the issue while speaking with newsmen after the Council meeting presided over by Vice President Kashim Shettima at the Council Chambers,  Governor Seyi Makinde of Oyo state explained that the council members in their recommendation, agreed that it was necessary to allow for consensus building and understanding of the bill among Nigerians.
According to him, the decision was made for the benefit of the entire country irrespective of political affiliations and interests.

The governor further stressed that NEC noted the need for sufficient alignment on the proposed reforms and recommended the withdrawal of the tax reform bills.
He said: “NEC today took a presentation from the chairman of the presidential committee on fiscal policy and tax reforms. Their main focus is fair taxation, responsible borrowing and sustainable spending.
“The council acknowledged that the country is underperforming on all indices as regards yield from major revenue sources, also tax to GDP (Gross Domestic Products) ratio and so on.

“So, after extensive deliberation, NEC noted the need for sufficient alignment between and amongst the stakeholders for the proposed reforms.
“So, council therefore recommends the need to withdraw the bill currently before the National Assembly on tax reforms so that we can have wider consultations and also build consensus around these reforms for the benefit of the entire country, and also to give people, for them to know the vision and where we are moving the country in terms of a tax reform, because there’s really a lot of miscommunication, misinformation.

“So, the bill will be withdrawn from the National Assembly and then there will be consultations afterwards.”
 Tinubu and the Federal Executive Council (FEC) had recently endorsed new policy initiatives to streamline Nigeria’s tax administration processes, saying that the new laws were meant to enhance efficiency and eliminate redundancies across the nation’s tax operations.

The reforms emerged after a review of existing tax laws since August 2023. The National Assembly is considering four executive bills containing these tax reform efforts.
NEC’s recommendation came days after the Northern Governors kicked against the reform bill.  At a meeting on October 28, 2024, governors of the 19 Northern states, under the platform of the Northern Governors’ Forum (NGF), rejected the new derivation-based model for Value Added Tax (VAT)  distribution in the new tax reform bills before the National Assembly.

A communiqué read by the Chairman of the forum, Governor Muhammed Yahaya of Gombe State, said the proposition negates the interest of the North and other sub-nationals.
Meanwhile, the federal government yesterday allayed the fear of the 19 Northern governors to the new derivation-based model for VAT distribution in the new tax reform bills before the National Assembly.
The governors under the platform of NGF, led by Yahaya of Gombe State, had met  to express their opposition to the new tax bill.

The Sultan of Sokoto, Muhammadu Sa’ad Abubakar III, and other traditional rulers were in attendance at the meeting.
But in a statement yesterday, the Special Adviser to the President on Information and Strategy, Bayo Onanuga said the new proposal before the National Assembly outlines a different form of derivation which considers the place of supply or consumption for relevant goods and services.

He said the bill seeks to amend the extant model for distributing VAT that is based on where the tax is remitted rather than where goods and services are supplied or consumed.
According to Onanuga, the ongoing tax reform sought to correct the inherent inequity in the current derivation model as a basis for distributing VAT revenue.
In line with the current model, distribution of VAT is based on where the tax is remitted rather than where goods and services are supplied or consumed.

“This means that states in the Northern region that produce the food we eat should not lose out just because their products are VAT-exempt or consumed in other states,” Onanuga said.
He described the reforms as critical to improving the lives of Nigerians and were not put forward by President Tinubu to undermine any part of the country.

He added that there was no better time than now for the National Assembly to give due consideration to these bills that will overhaul the tax systems and create the revenue all the tiers of government require to fund the development the country and people urgently need.
Onanuga said: “While we commend the governors and traditional rulers for supporting President Bola Tinubu over the success recorded in addressing the country’s security challenges, we consider it necessary to address the misunderstandings and misgivings around the tax reform already embarked upon by the administration.

“President Tinubu and the FEC recently endorsed new policy initiatives aimed at streamlining Nigeria’s tax administration processes, enhancing efficiency and eliminating redundancies across the nation’s tax operations.”
The presidential spokesman noted that the reforms emerged after an extensive review of existing tax laws, stressing the National Assembly was considering four executive bills designed to transform and modernise Nigeria’s tax landscape.

The first, according to him, was the Nigeria Tax Bill, which aimed to eliminate unintended multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide.
The second was the Nigeria Tax Administration Bill (NTAB), which proposed new rules governing the administration of all taxes in the country.

Its objective, he said , was to harmonise tax administrative processes across federal, state and local jurisdictions for ease of compliance for taxpayers in all parts of the country.
The third, the Nigeria Revenue Service (Establishment) Bill sought to rename the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS) to better reflect the mandate of the service as the revenue agency for the entire federation, not just the federal government.

The fourth was the Joint Revenue Board Establishment Bill that proposed the creation of a Joint Revenue Board (JRB) to replace the Joint Tax Board (JTB)  covering federal and all states’ tax authorities.
 Onanuga added: “The fourth bill also suggests establishing the Office of Tax Ombudsman under the Joint Revenue Board, which would serve as a complaint resolution body for taxpayers.

 “It is instructive to note that these proposed laws will not increase the number of taxes currently in operation. Instead, they are designed to optimise and simplify existing tax frameworks.
“The tax rates or percentages will remain the same under these reforms, as they focus on ensuring a more equitable distribution of tax obligations without adding to the burden on Nigerians”.

He also assured that the reforms would not lead to job losses, saying on the contrary, they were structured to stimulate new avenues for job creation by supporting a dynamic, growth-oriented economy.
The presidential aide equally clarified that the laws will not absorb or eliminate the duties of any existing department, agency, or ministry, noting rather they aim to harmonise revenue collection and administration across the federation to ensure efficiency and cooperation.

“At the moment, tax administration lacks coordination among federal, state, and local tax authorities, often resulting in overlapping responsibilities, confusion, and inefficiency. Without reform, this inefficiency will persist.
“The proposed laws aim to coordinate efforts between different tiers of government, resulting in better tax resource management and greater clarity for taxpayers,” he said.

He added that under existing laws, taxes like Company Income Tax (CIT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), VAT and other taxing provisions in numerous laws were administered separately, with individual legislative frameworks.

He said the proposed reforms sought to consolidate these multiple taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure to reduce administrative fragmentation.
 “On the proposed derivation-based VAT distribution model, which the Northern governors oppose, it must be stressed that the new proposal, as enunciated in the Bill, is designed to create a fairer system,” Onanuga explained.