In a bid to address growing concerns over the controversial Tax Reform Bills, the Senior Special Assistant to the Presidency on Media and Publicity, Temitope Ajayi, issued a statement on Wednesday, shedding more light on the objectives of the proposed legislation.
The Tax Reform Bills, transmitted to the National Assembly by President Bola Tinubu, have sparked a wave of criticism, particularly from northern governors. President Tinubu, however, has responded by directing the Ministry of Justice and the National Assembly to work together in refining the bills to address the concerns raised by critics.
“The government has nothing sinister to warrant the suggestion that the process is being rushed,” said Minister of Information and National Orientation, Mohammed Idris. “In line with the established legislative procedure, the Federal Government welcomes meaningful inputs that can address whatever grey areas there may be in the bill.”
These tax reforms, designed to strengthen Nigeria’s fiscal structure, have raised alarm, especially in northern regions, with some critics arguing that they would disproportionately harm their states. The most vocal among these critics has been Borno State Governor, Professor Babagana Zulum, who has consistently led the resistance against the bills, citing fears that the northern states could suffer economically.
However, Ajayi insists that these concerns are largely unfounded. “Human beings naturally resist change,” he explained, referring to the reluctance of some to embrace the tax reforms. “When comfortable where we are, we find it extremely difficult to embrace an uncharted path or seek greater glory.”
Ajayi noted that the pushback from northern governors stems from a lack of understanding of the provisions in the Tax Bills. He specifically pointed to Governor Zulum’s objections, which, according to Ajayi, do not accurately reflect the benefits of the reforms. “If Governor Zulum and other voices of resistance had actually examined the four executive Bills, they would see how progressive and transformative they are,” Ajayi added.
The Tax Bills aim to improve fiscal strength both at the federal and state levels. Ajayi highlighted several key provisions that would empower states to generate more revenue and improve their financial autonomy.
One of the major benefits outlined is that the federal government will cede 5% of its current 15% share of VAT revenue to states. Additionally, the new laws propose to transfer income from the Electronic Money Transfer levy directly to the states, further increasing their revenue streams.
The reforms also seek to repeal outdated stamp duty laws and introduce a simplified framework to help states generate more revenue. States would also benefit from taxation on Limited Liability Partnerships and enjoy tax exemptions on bonds, putting them on par with federal government bonds.
Under the proposed changes, the model for VAT attribution and distribution would be more equitable, resulting in higher VAT income for states. The reforms also include the integration of tax administration systems, which will provide states with tax intelligence, improve capacity development, and resolve taxpayer disputes more efficiently.
Furthermore, the bills grant powers to the Accountant General of the Federation to deduct unremitted taxes from federal government agencies and remit them directly to the states. These measures are designed to strengthen fiscal federalism and enhance the collaboration between state and federal tax authorities.
Ajayi stressed that the Tax Bills are not harmful to the states. “Apart from streamlining the tax system and catalyzing economic output, the reforms provide incentives for states to become economic powerhouses,” he said.
Despite the strong resistance from some governors, Ajayi remains confident that the reforms will significantly benefit the states. “The challenge for governors will be to invest in manpower and infrastructure that will support businesses and socio-economic activities,” he urged.
The tax reform push has put President Tinubu at odds with several northern governors, but the presidency remains resolute in its position, hoping to transform Nigeria’s tax system into one that benefits all regions. With the involvement of the National Assembly and Ministry of Justice, there is still room for adjustments to address concerns, though the government insists that these reforms are crucial for the nation’s long-term economic development.