•Decision splits leaders, groups •CUPP, Afenifere, Ali Ndume, Okorie, northern coalition speak
Major stakeholders, at the weekend, disagreed on the decision of the Nigerian Governors Forum (NGF) to tinker with the provisions on derivation and Valued Added Tax, in the tax reforms bill initiated by President Bola Tinubu that is currently before the National Assembly.
While some stakeholders described the drastic adjustments made by the governors as a compromise on the bills, others viewed the action of the NGF as unfair since the proposal is meant to redress age-long injustice in the nation’s tax system.
Some of those that spoke on the adjustments carried out by the governors in the initial proposal of the president in the bills included the Coalition of United Political Parties (CUPP), pan-sociopolitical Yoruba organisation, Afenifere chieftain of All Progressive Grand Alliance (APGA), Chief Chekwas Okorie, Senator Ali Ndume, former member of the House of Representatives, Honourable Joseph Edionwele, among others.
It will be recalled that at the end of a meeting with the Presidential Tax Reform Committee last Thursday, the NGF backed the bills by proposing “a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources with 50% based on equality, 30% based on derivation, and 20% based on population.”
NGF’s percentages allocated to derivation lopsided —CUPP
The Coalition of United Political Parties (CUPP) faulted the NGF on the percentages allocated to the various elements of the reform which it noted are lopsided.
CUPP spokesperson, Comrade Mark Adebayo, said this in his reaction to the backing of the NGF for the new tax reform and all legislative processes that would lead to the passage of the bills before the National Assembly.
Adebayo suggested what should have been obtained was to have 50% based on derivation, 30% on population, and 20% on equality, adding: “That is more equitable than the proposed standards of assessment.”
He added: “The fact that the new tax regime proposes not to increase the VAT rates, and exempt essential and agricultural goods from VAT makes it look good, considering the current atrocious economic crises orchestrated by the current administration.
“However, the percentages allocated to the various elements of the tax reform are lopsided. 30% based on derivation is unfair.
“It should have, at least, been made 50%. What we believe should have obtained was to have 50% based on derivation, 30% on population, and 20% on equality. That›s more equitable than the proposed standards of assessment.
«But, the fact that there is now a consensus on the tax reform across the states and geopolitical zones rather than the earlier acrimony the proposed reform generated, is a welcome development.”
Derivation shouldn’t be more than 10 percent —Ali Ndume
A former Senate Leader, Senator Ali Ndume, has described the pronouncement of the governors to give full support to the bills as commendable.
The senator representing Borno South, who spoke to the Nigerian Tribune, however, picked holes in the 30% proposed on the principle of derivation.
According to the former Senate Chief Whip, 10 percent should be enough to be shared based on derivation.
He also faulted the four percent to be collected by the Federal Inland Revenue Service (FIRS) as administrative charges.
He said: “First of all, the move by the governors is commendable. The tax reform is long overdue. It is a good move. It is now left for the National Assembly to do the needful.
“For me, I still have issues with the 30 percent derivation. That is on the high side. Even oil producing states that bear the brunt of crude oil exploration in their communities take 13%.
“I also think four percent as administrative charges for FIRS is too much. It shouldn’t be more than 1 percent. That’s why they spend extravagantly.
“Secondly, the VAT itself should be reduced from 7.5% to 5% or even less.”
VAT increase unfair to the poor —Afenifere
On its part, Afenifere, said it remained opposed to any increase in VAT or any ‘regressive tax,’ which it noted the Tax Reform bills as fundamentally unfair «because the poor will pay a higher percentage of their income.”
Afenifere, in the statement signed by its spokesperson, Prince Justice Faloye, maintained that it is opposed to VAT increase in any form, stressing that its distribution ought to take into consideration the concept of balanced growth.
According to the organisation, any move contrary to such action will leave a section of the country poorer; inspire higher regional migration with security challenges and overburdened social services issues.
“On principle, Afenifere can’t support the increase in VAT or any regressive tax, because the poor will pay a higher percentage of their income. It is fundamentally unfair.
“Specifically, the projected increase in VAT revenue is from telecoms rates and bank charges which will further pauperise the poor and instead of stimulating our technological growth in AI and IT, the sectors will be stifled,” he said.
“The distribution of VAT needs to take into consideration the concept of balanced growth, otherwise if it leaves a section poorer, it will inspire higher regional migration with security challenges and overburdened social services issues.
“Afenifere advocates political restructuring that will empower states to make judicious use of their resources before restructuring tax sharing,” the group added.
AYDM kicks against Govs’ sharing formula
A coalition, under the aegis of the Alliance of Yoruba Democratic Movements (AYDM), faulted the governors sharing formula of 50% based on equality, 30% on derivation, and 20% based on population.
According to AYDM general secretary, Comrade Popoola Ajayi, the sharing formula should be 50% based on derivation, 40% based on derivation, and 10% based on population instead of what was proposed by the governors.
“However, against their agreed VAT sharing formula: 50% based on equality, 30% based on derivation, and 20% based on population, for us, the sharing formula should be 50% based on derivation, 40% based on derivation, and 10% based on population,” it stated.
VAT sharing should be 50% on derivation —Ex-Rep member
A former member of the House of Representatives, Honourable Joseph Edionwele, has said that the position taken by governors on the formula sharing Value Added Tax (VAT) may appear to succeed now, but will collapse in due course.
The Peoples Democratic Party (PDP) chieftain told the Nigerian Tribune in an interview that the “President is succumbing under immense political pressure” by letting the governors have their way to protect his 2027 second-term ambition.
Edionwele, a member of the 8th and 9th National Assembly, represented Esan-Central/Esan-West/Igueben Federal Constituency of Edo State up to June 2023.
According to Edionwele, the VAT sharing should “actually be 50 percent derivation and not 50 percent on equality.”
He stated: “The position of the governors is not the best at all. When you talk about 50 percent equality, it ought not to be so. It should be 50 percent of derivation.”
NGF decision to collaborate with Presidency a welcome relief —Okorie
Also speaking with Nigerian Tribune, a chieftain of the All Progressives Grand Alliance (APGA), Chief Chekwas Okorie declared that the governor’s new position as against their initial hard-line posture against the proposed legislation was heartwarming.
While he commended President Bola Tinubu for what he called his tenacity of purpose, Okorie noted that those who vehemently spoke against the bills had not read through its contents to consider its gains.
He said: “It is a welcome relief to all well-meaning Nigerians that the Nigerian governors, especially the northern governors, finally reached unanimity in agreeing to the wisdom and progressivism of the four tax reforms bills. The heated debate, acrimony, and controversy, which erupted after the presidency presented the bills to the National Assembly for legislative action, were unfortunate and avoidable.
“It is true that ultra conservatives cringe and most times are suspicious of any form of change from the status quo, but the case of the executive bills on tax reforms exposed the intellectual laziness and lack of depth of those who vehemently opposed the reforms without reading through the contents and provisions of the bills.
We welcome revised VAT sharing formula, but… —CNG
The Coalition of Northern Groups (CNG) has expressed its support to the revised VAT sharing formula, with a promise to sustain action against any other controversial provisions.
Addressing a press conference in Bauchi over the weekend, the national coordinator, Comrade Jamilu Aliyu Charanchi, said the coalition engaged with stakeholders across the 19 northern states to sensitize Nigerians on the bills.
“The governors have, collectively, done extremely well in reversing the imposed formula to a more acceptable win-win VAT formula among the three tiers of government.
“This adjustment will foster unity and fairness, ensuring no region is left behind in Nigeria’s development trajectory,” he said.
“The CNG commends the Nigerian Governors Forum (NGF) for their doggedness in championing a more equitable VAT sharing formula. The revised formula of 50% based on equality, 30% on derivation, and 20% on population, is a welcome departure from the earlier, lopsided proposal of 20% on equality, 20% on population, and 60% on derivation.
Similarly, the Arewa youths Consultative Forum (AYCF) at the weekend accused the northern governors for eventually backing bills.
In a statement signed by the national president, Yerima Shettima, the forum noted that, “After generating needless controversy and misleading the public, these governors have inexplicably capitulated to the reforms.
“The AYCF, from the outset, has maintained that these reforms, despite potential short-term challenges, are essential for Nigeria›s overall development.
“We view the governors› actions as a betrayal of the trust placed in them, a demonstration of their incompetence in managing their states› affairs, and ultimately, a disservice to the Northern people. This press statement outlines our deep concerns and calls for accountability.
The Northern Governors initially presented a united front against the proposed tax reforms, citing concerns about their potential negative impact on the already struggling Northern economy. This stance, while arguably understandable given the region’s socio-economic challenges, was fundamentally flawed. Their arguments lacked substance and failed to acknowledge the vital role of robust taxation in funding essential public services like healthcare, education, and infrastructure. Instead of engaging constructively with the government to address specific concerns and negotiate amendments, they chose to employ divisive rhetoric, fueling public unrest and hindering national progress.
“This approach reveals a lack of foresight and strategic planning, highlighting their failure to effectively represent the interests of their constituents.
“The sudden and unexplained shift in their position, without any apparent concessions or amendments achieved, casts serious doubt on their integrity and raises questions about the motives behind their initial opposition.
“We recognise that effective taxation is the cornerstone of a functioning and prosperous nation. While we acknowledge the need for sensitive implementation to minimize hardship, particularly amongst vulnerable populations, we firmly believe that the benefits of these reforms significantly outweigh any potential drawbacks.
“Increased tax revenue will allow the government to invest heavily in critical sectors, creating jobs, improving infrastructure, and enhancing the overall quality of life for all Nigerians, including those in the North.
“The governors’ initial opposition, therefore, not only hampered national progress but also demonstrated a disregard for the long-term welfare of the very people they are elected to serve.
“Their actions appear driven by short-sighted political considerations rather than a genuine commitment to the development of the North.”
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