Governors back Tinubu’s tax reform bills, reject VAT increase

Governors of the 36 states have declared their support for tax reform bills initiated by President Bola Tinubu.

They, however, rejected the move by the Federal Government to increase Value-Added Tax (VAT).

The governors made public these positions in a communiqué issued at the end of a meeting with the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, on Thursday in Abuja.

In the communique signed by the Chairman of the Nigeria Governors’ Forum, Abdulrahman Abdulrazaq, the governors acknowledged the importance of improving the tax system to enhance fiscal stability and align with global best practices.

They also demanded an equitable sharing formula for VAT.

Governors of the 19 states in the North in October last year rejected the tax reform bills over fears that they would disadvantage the regions and other less industrialised zones.

They demanded equity and fairness in national policy implementation, saying no geopolitical zone should be shortchanged in any way.

READ ALSO: ‘You lack moral right to attack Tinubu over tax reform bills’, Bauchi cleric, Abdulaziz tells Gov Mohammed

The communiqué read: “We, members of the Nigeria Governors’ Forum and Presidential Tax Reform Committee, convened on the 16th of January 2025 to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system, and arrived at the following resolutions:

“The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices.

“The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50% based on equality, 30% based on derivation, and 20% based on population.

“Members agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time to maintain economic stability. The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.”

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