President Bola Tinubu has taken a strong stance against the recent recommendation by the National Economic Council (NEC) to withdraw his administration’s tax reform bills, which are currently under consideration in the National Assembly.
Headed by Vice President Kashim Shettima and comprising governors from across the country, NEC recommended withdrawal of the bills, suggesting that more engagement with stakeholders is needed to address these concerns before proceeding.
However, Tinubu’s decision means that the federal government is staying the course against regional interests, particularly as governors from Nigeria’s 19 northern states and influential traditional rulers have voiced sharp opposition to the proposed reforms, arguing that the new tax framework could disproportionately impact their regions.
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The tax reform bills in question, four in total, were transmitted to the National Assembly in early September while President Tinubu was on a brief vacation in London. The bills—the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill—are designed to reshape Nigeria’s fiscal framework.
If passed, the reforms would streamline tax administration processes, overhaul tax operations, and establish institutions such as the Nigeria Revenue Service, a tax tribunal, and a tax ombudsman to replace the existing Federal Inland Revenue Service (FIRS). According to Tinubu, these changes are critical to advancing his administration’s goal of fostering economic growth through a modernized and efficient tax system.
Following their review of the bills, the northern governors convened in Kaduna, releasing a communiqué that criticized aspects of the proposed legislation. They were particularly opposed to amendments in the Value Added Tax (VAT) distribution system, which, they argued, could disadvantage the North by shifting revenue from the federal pool to wealthier states that generate more economic activity, such as Lagos and Rivers.
“We find that the recent Tax Reform Bill does not take into account the unique circumstances of the North and other sub-nationals,” read the communiqué. “We cannot, in good conscience, support a reform that could further marginalize our people economically.”
The communiqué also had the endorsement of traditional rulers from the region, signaling a unified northern stance.
Despite the resistance from NEC and regional leaders, President Tinubu, through his media aide Bayo Onanuga, expressed a commitment to see the legislative process through.
“President Tinubu commends the National Economic Council members, especially Vice President Kashim Shettima and the 36 State Governors, for their advice,” Onanuga stated. “He believes that the legislative process, which has already begun, provides an opportunity for inputs and necessary changes without withdrawing the bills from the National Assembly.”
Tinubu stressed that public hearings in parliament could provide a forum for further discussion and refinement of the proposed reforms.
“Further inputs can be made during public hearings at parliament,” the statement continued, emphasizing that the tax committee responsible for the proposal had conducted a wide-reaching consultation process.
“When President Tinubu set up the Presidential Committee on Tax and Fiscal Policy Reform in August 2023, he had only one objective: to reposition the economy for better productivity and efficiency and make the operating environment for investment and businesses more conducive,” the statement elaborated. “This objective remains more critical even today than ever before.”
The statement clarified that the tax bills were crafted after consultations across Nigeria’s geopolitical zones, involving diverse voices, including trade associations, professional bodies, government agencies, governors, and representatives from the organized private sector.
President Tinubu’s decision to stand by the reform package underscores his commitment to structural fiscal change, which he views as crucial for Nigeria’s economic stability. However, the growing resistance from northern leaders suggests that the administration may face significant hurdles as it pushes forward with its agenda.
Northern states, which often depend on VAT redistributions from economically vibrant states, are concerned that changes in the tax distribution system could reduce their share of federal revenues.
For Tinubu, the broader objective of the tax reforms is to address Nigeria’s fiscal challenges and foster a tax regime that aligns with international standards.
“The tax reform bills before the National Assembly aim to streamline Nigeria’s tax administration processes, completely overhaul the nation’s tax operations, and align them with global best practices,” the statement from his office emphasized.
Tinubu contends that these reforms will not only boost efficiency within Nigeria’s tax system but will also attract foreign investment by creating a more predictable fiscal environment.
Onanuga’s statement further emphasized Tinubu’s openness to regional feedback, suggesting that NEC’s advice had not gone unheeded but rather would be channeled into the legislative process.
“The president welcomes further consultations and engagement with key stakeholders to address any reservations about the bills while the National Assembly considers them for passage,” the statement read, inviting all concerned parties to participate in the legislative review process.
Looking ahead, the public hearings scheduled in the National Assembly will likely serve as the next battleground for the tax reform debate. While Tinubu has indicated he is open to adjustments, his firm stance on the overarching goals of the reforms suggests he is unlikely to allow any changes that would significantly dilute the impact of the bills.
For Nigeria, the outcome of these reforms carries significant implications. Should the tax reform bills pass with minimal changes, they could mark a shift toward a more fiscally autonomous framework, potentially reducing the country’s reliance on oil revenue and paving the way for diversified economic growth.