The Nigeria Governors’ Forum, NGF, has rejected the 60% sharing of revenue to states based on derivation as contained in President Bola Tinubu’s Tax Reform Bills.
The governors also rejected any increase in Value Added Tax, VAT, as proposed in the bills.
Similarly, the forum of 36 governors in the country disagreed with the provision in the Bills to stop the funding of Tertiary Education Trust Fund, TETFUND; National Agency for Science and Engineering Infrastructure, NASENI, and National Information Technology Development Agency, NITDA by 2030.
They also modified the revenue sharing formula to federal, states, and local governments.
The governors took the decision on Thursday at a consultation meeting with the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele.
A communique signed by the NGF chairman and Governor of Kwara state, AbdulRahman AbdulRazaq said their decision must be incorporated into the bills currently before the National Assembly.
The revised VAT sharing formula agreed by the governors is 50% based on equalty, 30% derivation, and 20% population.
In opposing increase in VAT rate or reduction in Corporate Income Tax (CIT), the governors said doing so now would upset the country’s economic stability.
They however agreed to the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.
They also said there should be no terminal clause for TETFUND, NASENI, and NITDA, agreeing with the position of the Academic Staff Union of Universities, ASUU, and other workers unions in the education sector.
The communique reads in part: “The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws.
“Members acknowledged the importance of modernizing 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.
“The meeting recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the bills.
“The meeting supports the continuation of the legislative process at the National Assembly that will culminate in. the eventual passage of the Tax Reform Bills.”
