The National Economic Council (NEC), chaired by Vice President Kashim Shettima, has called for withdrawal of the tax reform bills transmitted to the National Assembly by President Bola Tinubu.
On October 3, President Tinubu transmitted the Nigeria Tax Bill, Nigeria Tax Administration Bill (NTAB), Nigeria Revenue Service (Establishment) Bill, and the Joint Revenue Board Establishment Bill to NASS.
NEC’s call for the bills’ withdrawal followed their rejection by the Northern Governors’ Forum on Sunday.
Governors of the 19 northern states claimed that the proposed derivation-based model for the distribution of Value Added Tax (VAT) is against the region’s interest.
“Forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly. The contents of the bill are against the interests of the north and other sub-nationals especially the proposed amendment to the distribution of Value Added Tax (VAT) to Derivation-based Model. This is because companies remit VAT using location of their headquarters and tax office and not where the services and goods are consumed. In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and calls on members of National Assembly to oppose any bill that can jeopardise the well-being of our people,” the Forum had said in a communique signed by its Chairman and Governor of Gombe state, Muhammed Inuwa Yahaya.
Governor Seyi Makinde of Oyo State, speaking to state House Correspondents after a NEC meeting on Thursday, said the council called for withdrawal of the bills to allow for deeper stakeholder consultation.
“NEC noted the need for sufficient alignment on the proposed reforms and recommended the withdrawal of the tax reform bills…We saw the gap and decided that there is a need for a wider consultation,” he stated.
NEC’s recommendation is coming moments after President Tinubu’s Special Adviser on Information and Strategy, Bayo Onanuga, defended the bills as seeking to “create a fairer system.”
“On the proposed derivation-based VAT distribution model, which the Northern Governors oppose, it must be stressed that the new proposal, as enunciated in the Bill, is designed to create a fairer system.
“The current model for distributing VAT is based on where the tax is remitted rather than where goods and services are supplied or consumed. The ongoing tax reform seeks to correct the inherent inequity in the current derivation model as a basis for distributing VAT revenue,” Onanuga clarified.