NEC recommends withdrawal of Tinubu’s tax reform bills

The National Executive Council has recommended the withdrawal of the four tax reform bills sent to the parliament by President Bola Tinubu.

The NEC, presided over by Vice President Kashim Shettima, took the decision at its meeting held at the Presidential Villa on Thursday. Membership of the NEC includes the governors of Nigeria’s 36 states.

Governor Seyi Makinde of Oyo State, who was one of the attendees who briefed journalists after the meeting, said the NEC called for the withdrawal so that “we can have wider consultations and also build consensus around these reforms…”

PREMIUM TIMES reported the controversy the bills have generated with the Northern Governors Forum rejecting them.

President Tinubu sent the four bills to the National Assembly as part of efforts to overhaul Nigeria’s tax system.

The bills seek to, among others, create a central revenue service that will collect all government revenues including those currently being collected by agencies like the customs and the ports authority.

The bills also seek to allocate more VAT revenues to states but would allow states where the VATs are generated to get the lion’s share. It is that latter position that northern leaders believe would not favour states in the region.

At its meeting, the NEC noted the need for sufficient alignment between and amongst the stakeholders for such proposed reforms, Mr Makinde said, noting that, there’s really a lot of miscommunication at the moment.

Earlier, President Tinubu’s spokesperson said the 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,” Mr Onanuga said.

He added that the reforms will not lead to job losses. On the contrary, they are structured to stimulate new avenues for job creation by supporting a dynamic, growth-oriented economy, he said.

“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.”

On concerns raised among government agencies, Mr Onanuga said the proposed laws aim to coordinate efforts between different tiers of government, resulting in better tax resource management and greater clarity for taxpayers.

“Importantly, these laws will not absorb or eliminate the duties of any existing department, agency, or ministry. Instead, they aim to harmonise revenue collection and administration across the federation to ensure efficiency and cooperation.”

On the proposed derivation-based VAT distribution model, which the Northern governors oppose, Mr Onanuga said the new tax model is designed to create an even fairer system.

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.

“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,” Mr Onanuga said, adding that, the ongoing tax reform seeks to correct the inherent inequity in the current derivation model as a basis for distributing VAT revenue.

By Kabir Yusuf, Premium Times