The controversy over the Federal Government’s tax reform bills raged further on Monday, with different stakeholders offering insight into the reasons for the endless brick bats.
Amid the swelling opposition to the bills, Mr Taiwo Oyedele, the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, and a former speaker of the House of Representatives, Yakubu Dogora, offered explanations on why the bills should be allowed to sail through.
DAILY POST reached out to the Executive Director of the Centre for the Promotion of Private Enterprise, Muda Yusuf.
In an exclusive chat with our correspondent, Muda advised President Bola Ahmed Tinubu, the National Assembly, and Northern Governors on the measures out of the current disagreement.
He told all the parties involved in the controversies to maintain the Value Added Tax sharing formula of 50 percent based on population, 30 percent on equality, and 20 percent on derivation.
According to Muda, the biggest bone of contention in the bills that had put the whole tax reform process at risk is the VAT derivation.
He noted that the National Assembly should not make the mistake of discarding the bills on the grounds of opposition from different quarters, rather, a common and inclusive decision should be reached.
This comes as Muda backed the bills on the ground that their aim is to replace the country’s archaic tax laws.
Muda also noted that the bills have laudable propositions beneficial for all Nigerians, such as plans to address the problem of multiple taxation, proposals to cut income tax, plans to improve the efficiency of tax administration, and reduction of tax burden on small businesses.
He said, “This tax reform process needs to be managed carefully so that we don’t end up throwing away the baby with the bathwater.
“As much as possible, we need to make the process as democratic and inclusive as possible. The bills have good positions to address archaic laws in our tax legislatures and to address the problem of multiplicity of taxes.
“There is a proposal to reduce income tax. There is a proposal to improve the efficiency of tax administration, which is for the benefit of the entire country.
“Also, there is a proposal to reduce the burden of taxation on small businesses. There are laudable propositions on the bills.
“That is not to say that the bills are perfect, and that is why they are before the National Assembly. There is nothing that says everything on the bills should be passed.
“So the controversies, I don’t think it is necessary. The whole essence of its deliberation at the National Assembly is to look at the downside for correction before it is passed”.
He added that the bills have been met with opposition because of the VAT derivation component.
He explained that moving the VAT derivation component to 60 percent will be disadvantageous to Northern Nigeria because of low per capita income and purchasing power.
“The biggest issue we are having, which is almost putting the whole tax reform process at risk, is this VAT derivation thing.
“Under the current dispensation, 50 percent of the VAT revenue is shared based on population, 30 percent is shared based on equality of states, and only 20 percent is shared based on derivation.
“If you look at the northern part of the country, they are comfortable with the arrangement where 50 percent is based on population, while 30 percent is based on equality. If you moved the derivation component to 60 percent as it is being proposed in the law, the North will be at a disadvantage. Whether you look at it from the point of view of consumption.
“What is the per capita income of most states in the North, and what is their purchasing power and buying capacity?
“Any legislatures that will put any path at a disadvantage should expect this kind of pushback,” he stated.
He added: “My suggestion is that we should leave the sharing formula the way it is so that we will not create a problem for the entire reform process.
“There are many provisions that are beneficial to the economy and businesses in the tax reform.
“Another good thing is adding 5 percent VAT revenue to the states, because the 15 percent being enjoyed by the federal government will be 10 percent, this will increase the allocation to states by 55 percent.”
90% of Nigerians support tax bills – Oyedele
On his part, Oyedele, the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, on Monday at Channels Television’s Townhall on Tax Bills explained that the majority of Nigerians support the bills, emphasising that the contentious area in the bills could be removed by the National Assembly.
“Guess what? Among those who participated in person, the approval rate was 100 percent. For those who participated online or watched the recorded session, the approval rate was 92 percent.
“Even among those who only followed our updates without participating, the approval rate stood at 76 percent. Overall, more than 90 percent of Nigerians support these reforms,” he said.
He added that the bills contain over 200 transformative provisions aimed at setting Nigeria on the path of prosperity.
According to him, one or two provisions that can be easily discussed and agreed upon should not become bottlenecks.
“These bills contain over 200 transformative provisions aimed at setting Nigeria on the right path to prosperity.
“We should not allow one or two provisions, which can be easily discussed and agreed upon, to become bottlenecks,” he said.
Stop your sectional bias against Tax reforms bills – Dogora to Northern Governors, others
On his part, former speaker, Dogora, at the Channels Television Townhall on Monday, told Northern governors and elites to purge themselves of regionalism and sectionalism regarding the tax bills.
“We should remove the cap of regionalism, the cap of sectionalism, and the cap of religion and put on the cup of leadership because that is what will resolve the quarrel that we have,” he said.
DAILY POST reports that the Senate last week passed the bills for second reading despite the controversies.
Recall that the tax reform bills, including the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill, were sent to the National Assembly by Tinubu for passage in October 2024.
However, both the Northern Governors’ Forum and the National Economic Council called for the bills’ withdrawal.
Earlier, DAILY POST reported that economic experts backed the tax reform bill on the ground that it will boost Nigeria’s revenue.