Nigerian governors have expressed their full support for the Federal Government’s tax reform bills, while proposing a new formula for the distribution of value-added tax (VAT) revenues. This stance was solidified following a meeting between the Nigeria Governors’ Forum (NGF) and the Presidential Tax Reform Committee held on Thursday.

In a communiqué issued after the meeting, the NGF reiterated its commitment to the overhaul of Nigeria’s tax system, acknowledging the need to modernize the nation’s tax laws to promote fiscal stability and align with global best practices.

“The comprehensive reform of Nigeria’s archaic tax laws is crucial for the economic growth of the country,” the communiqué read. “Governors are committed to supporting reforms that will benefit all Nigerians.”

One key proposal put forward by the governors was a revised VAT-sharing formula, which aims to ensure a fair and equitable distribution of the tax revenues across the country. Under the proposed formula, 50% of VAT funds would be shared equally among the states, 30% based on derivation, and 20% according to population size.

The governors also made it clear that they do not support any increase in VAT rates or a reduction in Corporate Income Tax (CIT) at this time, stressing the importance of maintaining economic stability. Additionally, they advocated for the continued exemption of essential goods and agricultural produce from VAT to protect the welfare of citizens and encourage agricultural productivity.

The NGF also recommended that no terminal clauses should be applied to the Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA) in the distribution of development levies outlined in the reform bills.

It will be recalled that last year, President Bola Tinubu submitted four major tax reform bills to the National Assembly, aiming to revamp Nigeria’s tax administration system. These include the Tax Administration Bill, Nigeria Tax Bill, and the Joint Revenue Board Establishment Bill. A key proposal within these bills is the replacement of the Federal Inland Revenue Service (FIRS) with the Nigeria Revenue Service.

However, the tax reforms have faced resistance from certain sectors, particularly northern governors and leaders, who have expressed concerns that the bills may disproportionately affect their region. Despite these objections, President Tinubu has vowed to proceed with the reform agenda, emphasizing that the bills are designed to improve the lives of all Nigerians, not to favor any particular region.