President Bola Tinubu’s tax reform proposals, presented to the National Assembly in September, have sparked intense opposition from northern politicians, who argue that the bills are detrimental to their region. While the government views the reforms as necessary economic stimulants, critics claim they will exacerbate regional inequalities and burden already struggling economies in the North.
The President introduced four major tax bills to the National Assembly on September 3, 2024, in line with recommendations from the Presidential Committee on Fiscal and Tax Reforms. These include the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill. The goal of the reforms is to improve tax administration, reduce disputes, and address tax evasion and avoidance.
However, northern politicians, including governors and lawmakers, have united in opposition, particularly over provisions that could impact the region’s economic stability. One contentious aspect of the reforms is the proposed change in the Value-Added Tax (VAT) sharing formula. Under the new plan, the federal government’s share would decrease from 15% to 10%, with a redistribution based on the derivation principle. Critics argue this could negatively affect northern states, where many companies register their headquarters but do not generate a proportionate share of the VAT from goods and services consumed in the region.
In October, the Northern Governors Forum, which includes influential leaders like Inuwa Yahaya of Gombe and Babagana Zulum of Borno, rejected the tax bills, warning that they could harm the region’s economy. Their position was echoed at the National Economic Council meeting, where all 36 state governors voiced their concerns.
A significant voice of opposition has come from former Vice President Atiku Abubakar, who, in response to the tax reform bills, called for a fiscal system that is fair and just. He emphasized the importance of transparency and inclusivity in policy-making, particularly for reforms that could disproportionately affect certain regions. Atiku’s comments align with those of Senator Aminu Tambuwal, who also expressed concerns about the timing of the proposed tax hikes, citing the economic hardships caused by the devaluation of the naira and fuel subsidy removal.
Amidst growing tension, over 70 northern lawmakers have pledged to resist the bills, joining their governors in urging President Tinubu to withdraw them for further consultation. One lawmaker, speaking anonymously, criticized the lack of regional discussions before the bills were introduced, warning that ignoring northern concerns could have political ramifications.
Adding to the complexity, former Secretary General of the Arewa Consultative Forum, Anthony Sani, suggested that the President reconsider the proposals to allow for more extensive consultation. Sani argued that the opposition to the bills was not solely a northern issue, pointing out that the National Economic Council also called for a review of the reforms.
In response to the controversy, the Civil Society Legislative Advocacy Centre (CISLAC) has called for an inclusive and transparent process in the consideration of the tax bills. CISLAC’s Executive Director, Auwal Rafsanjani, emphasized the need for the bills to address existing economic disparities, particularly in VAT distribution and poverty alleviation. He suggested that an equalization fund could help support poorer states and recommended maintaining the current VAT rate of 7.5% until the economy stabilizes.
The debate continues as lawmakers from the North prepare to oppose the bills if they are brought forward for debate in the House of Representatives. With the potential for significant political fallout, all eyes are on President Tinubu’s next move as he navigates these complex regional dynamics. The bills’ future in the National Assembly will depend on whether the President can address the concerns of northern lawmakers or if he opts for a broader consultation before proceeding.
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