Nigeria’s Southeast Senate Caucus Withholds Endorsement of Tinubu’s Tax Reform Bill, Calls for Wider Consultation

The South-East Caucus of the Nigerian Senate has refrained from endorsing President Bola Tinubu’s controversial tax reform bill, citing the need for broader consultations with stakeholders and constituents.

Following a closed-door meeting on Monday, senators from the five Southeast states, led by Senator Enyinnaya Abaribe (APGA, Abia South), voiced concerns over the perceived lack of inclusivity in the process leading up to the bill’s drafting.

While the caucus clarified that it does not oppose the reforms outright, it stressed the importance of engaging stakeholders to ensure that the final framework reflects equity and addresses the concerns of the region.

“As senators from the South-East, we are not against the Tax Reform Bills. However, we insist on wider consultations with our constituents across the 15 senatorial districts, state governments, and other critical stakeholders in our zone,” Abaribe stated during a briefing after the meeting.

The caucus noted that the proposed tax reforms hold significant implications for all regions and must be approached cautiously to ensure fairness. Abaribe emphasized the need to engage with constituents, state governments, and other critical actors to develop a framework that aligns with the interests of the South East and the country at large.

“We have reviewed the bills and feel it is essential to share our insights with stakeholders in the South-East to ensure the final framework reflects equity and addresses regional concerns. Consultation is vital for inclusiveness and effective legislation,” he said.

The South-East senators’ stance mirrors broader sentiments of caution expressed by other regions. While the South-West and South-South have largely shown support for the tax reform bills, opposition has come from the North, where governors and other stakeholders have argued that the proposed value-added tax (VAT) sharing formula disproportionately disadvantages the region.

Background of Opposition to the Tax Reform Bills

The tax reform bills, central to President Tinubu’s economic agenda, aim to enhance Nigeria’s fiscal performance by expanding the tax base and addressing revenue shortfalls. However, the reforms have faced significant resistance from various quarters.

In the North, governors have criticized the proposed VAT sharing formula, which allocates 10% of VAT revenue to the federal government, 55% to states, and 35% to local governments. They argue that the formula fails to consider regional economic disparities, warning it could widen the gap between the resource-rich South and the North.

However, the South-East’s stance has drawn criticism from economists, who argue that the region’s hesitation could undermine national progress. Kalu Aja, a prominent economist, described the caucus’s position as “short-sighted,” urging the region to adopt the reforms while identifying specific areas of concern for negotiation.

“There is nothing in that tax bill that impedes the progress of the South-East in particular and Nigeria in general. The South-East should have adopted the bill and detailed where they have issues,” Aja stated in a critique of the caucus’s approach.

Aja’s comments reflect a broader sentiment among economic analysts, who see the reforms as a necessary step toward improving Nigeria’s revenue-to-GDP ratio and reducing reliance on oil revenue.

However, Abaribe noted that the caucus intends to engage stakeholders across the 15 senatorial districts in the region, as well as state governments, to ensure that the final framework addresses regional concerns.

“We need to consult with our constituents across the 15 senatorial districts in the zone, with our state governments, and with other critical stakeholders,” he said.

The outcome of these consultations is expected to influence the trajectory of the tax reform agenda, which has been put on hold, particularly in addressing concerns about equity and fairness.