The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has identified Lagos State as the biggest loser in ongoing tax reform efforts.
The expert made this known during a recent live appearance on Arise TV where he discussed the tax reforms proposed by President Bola Tinubu.
Tribune Online reports that President Bola Tinubu in October 2024 introduced four Tax Reform Bills to the National Assembly, aimed at overhauling Nigeria’s tax system.
The proposed laws – the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill – seek to consolidate existing tax laws, simplify tax administration, and enhance revenue generation.
However, the reforms have faced significant opposition, particularly from stakeholders in the Northern part of the country.
Oyedele explained that the committee’s proposals on Value Added Tax (VAT) were designed to benefit all regions of the country.
He said, “The people that put the Constitution together pretty much replicated 1979’s. In 1979 there wasn’t VAT. So in 1999 when they introduced the constitution, VAT was missing, but the government continued to collect VAT. Some states like Rivers State and Lagos State are in court saying that VAT should be collected by the state because they feel that they are not getting enough for the contribution they are making into the VAT pot, and therefore if they collect it as a state tax, they will be better off.”
Oyedele noted that Lagos and Rivers States have argued that direct VAT collection would better reflect their contributions. However, he warned that allowing states to collect VAT independently would create chaos for businesses.
”That is the equivalent of 100 per cent derivation. For us, as we’re working on these tax reforms. We said if we get states to start collecting VAT in Nigeria, it will be chaotic for business because we know for a fact that states in Nigeria will not respect input-output.”
According to him, Lagos is the biggest loser in the reform bill because most companies headquartered in the state currently remit their VAT there due to their centralised finance departments.
However, under the reforms, VAT collection would be adjusted to address inequities, redistributing revenue away from Lagos despite its significant contributions.
“What did we identify? As of today, when companies remit their VAT, they tend to remit from their head office because that’s where they have the finance department. So MTN, BUA, Dangote, Airtel, all the banks, most of them are headquartered in Lagos. Some of the oil companies are headquartered in Rivers State.”
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