Tax Reform Bills: BetweeN Oyedele’s Boldness and Governors’ Interests, by Ajibade Esther Mosunmola
The introduction of President Bola Tinubu’s Tax Reform Bill has ignited widespread debate across the country, dividing opinions between supporters and critics. Tax reform is generally pursued to enhance tax administration and boost economic efficiency, and President Tinubu has reiterated the necessity of these bills to restructure the Nation’s economy.
Since the proposed laws were submitted to the National Assembly, significant concerns have been raised, particularly by lawmakers from the North. The 19 northern state governors have expressed strong opposition, notably against the proposed shift to a derivation-based model for Value Added Tax (VAT) distribution.
The reform bill seeks to overhaul Nigeria’s tax collection and administration systems to create a more equitable and efficient taxation framework. Central to the bill are transformative provisions, including revisions to the VAT revenue-sharing formula and tax exemptions for small businesses and low-income earners. These measures have the potential to revitalize the economy and alleviate financial burdens, aligning with the president’s promise of a brighter economic future.
However, the reforms have also exposed longstanding structural imbalances in Nigeria’s federal system. The proposed VAT revenue-sharing model, which allocates 60% of VAT revenue to the state where goods and services are consumed, 20% based on population, and the remaining 20% equally shared among all states, has faced intense criticism. Northern governors and stakeholders feel this formula disproportionately disadvantages their states.
Despite the criticisms, the proposed reforms offer notable benefits. Exempting individuals earning less than ₦800,000 annually from income tax and small businesses with turnovers below ₦50 million from corporate tax could ease the financial burden on vulnerable groups, stimulate economic activity, and enable small enterprises to grow and reinvest.
Amid these developments, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has revealed challenges in engaging state governors. In a recent interview with Arise TV, Oyedele disclosed that the Nigeria Governors’ Forum (NGF) canceled meetings with his team four times, delaying critical discussions on the reform bills. When a meeting eventually occurred, the governors allocated only 15 minutes to the committee.
Oyedele countered claims that governors were not consulted during the drafting process, showcasing that the committee had engaged extensively with finance ministers and state internal revenue services. “The governors’ forum invited us four times and canceled four times. The fifth time, we were kept waiting until 1:30 a.m. When they finally met with us, we were given 15 minutes. Meanwhile, we had held multiple engagements with finance commissioners and heads of internal revenue services nationwide,” he stated.
The four contentious bills: Nigeria Tax Bill 2024, Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and Joint Revenue Board Establishment Bill—were transmitted to the National Assembly in October 2024. While these bills present an opportunity to address longstanding fiscal challenges, northern states face legitimate hurdles, including weak industrial bases and insecurity, that require attention.
To foster economic self-reliance, states must leverage their unique resources; such as agriculture in the North, to build thriving local economies. The Tax Reform Bill represents a pivotal moment for Nigeria, offering a chance to create a tax system that funds essential services while promoting trust, inclusivity, and collaboration.
For this legislation to succeed, all stakeholders must engage in transparent dialogue and ensure fair and effective implementation.
Ajibade Esther Mosunmola is a PRNigeria Fellow: [email protected]
