Governor Dauda Lawal Dare of Zamfara State has raised concerns about the potential consequences of the new tax reform bills currently before Nigeria’s National Assembly.
Speaking on Channels Television’s Politics Today program, the governor warned that the tax reforms, if passed, could push financially weaker states to the brink of collapse.
“Some states may not be able to survive, so it is something that must be carefully studied so that we don’t hurt ourselves in the long run,” Lawal said.
His comments come at a time when the proposed tax bills, introduced by the administration of President Bola Tinubu, have ignited fierce debates across the country. Many critics, including several state governors, have expressed deep concerns about the potential negative impact on the finances of states, particularly those that are already struggling to meet their financial obligations.
Financial Strain for States
Governor Lawal, a member of the group of northern Nigerian governors, stated that the tax bills could make it even more difficult for states to maintain public sector wage payments, especially the recently approved N70,000 minimum wage.
“If the tax reforms are implemented, many states may find it difficult to pay the new minimum wage,” the governor warned.
He explained that the issue of tax reform has many components, some of which are beneficial, while others could hurt states that depend heavily on federal allocations. According to him, it is crucial for state governments to carefully analyze the situation to avoid future financial problems.
“There is a component of the bill that talks about derivation, and if that is approved, it will affect some states in terms of their income,” Lawal said. “States that depend on federal transfers may find it even more difficult to meet their obligations, including paying salaries.”
State Governors Unite in Opposition
Lawal’s remarks reflect a broader concern among Nigerian governors regarding the potential impact of the tax reform bills. The bills have faced strong opposition from the National Economic Council (NEC), an advisory body that consists of all 36 state governors.
The governors have raised alarm over the possible effects of the reforms on state revenues and their ability to fund critical services. A significant point of contention is a proposal in the tax reforms related to resource derivation — a matter that could reduce the revenue inflows to states that are not resource-rich.
The 19 northern governors have also expressed strong disapproval of parts of the tax reform bills. The governors have questioned the fairness of some provisions and have warned that their states could face severe financial hardships if the reforms are passed without further adjustments.
Tax Reforms: A Double-Edged Sword?
Despite the criticism, the Tinubu administration has argued that the tax reforms are necessary to increase government revenues and improve the country’s economic standing. The government has emphasized that reforms are inevitable to address Nigeria’s ongoing fiscal challenges.
Governor Lawal acknowledged that reforms are needed but urged caution. “Reform in a system is inevitable, and we should always expect reforms,” he said. “However, we must be careful not to rush into something that will later cause more harm than good.”
The Zamfara governor stressed the importance of studying the potential impacts of the reforms in detail. He called for a thorough engagement with all stakeholders, including state governments and the general public, to ensure that the reforms do not have unintended consequences.
Widespread Public Concerns
The proposed tax bills have also sparked public outcry. Many Nigerians are concerned about the burden the new taxes could place on ordinary citizens. Critics argue that the tax reforms, if implemented, could exacerbate poverty levels, particularly in poorer regions of the country.
In addition to the challenges faced by state governments, there are fears that the tax bills could lead to higher costs of living, particularly for low-income earners. Some fear that the reforms could make it harder for people to afford basic goods and services.
A Call for Caution
Governor Lawal’s comments underscore the need for a balanced approach to tax reform. He urged the federal government and lawmakers to take a step back and carefully consider the potential impacts on the country’s most vulnerable states.
“We must not be in a hurry to implement something that could hurt us in the long run,” Lawal said. “We need to have a clear understanding of the situation and take a collective stand on the best way forward.”
