The Bola Ahmed Tinubu administration is set to withdraw the recently submitted Tax Reform Bills from the National Assembly, just two months after their introduction.
This decision follows significant backlash and controversy, mainly from northern governors and traditional rulers who oppose aspects of the proposed legislation, particularly the distribution model for Value Added Tax (VAT).
Sources informed Daily Trust that the presidency has agreed to retract the bills, though they will likely be revised and resubmitted to the National Assembly at a later date.
On October 31, the National Economic Council (NEC), led by Vice President Kashim Shettima, officially recommended the withdrawal of these bills. This recommendation aligns with a resolution passed by governors from Nigeria’s 19 northern states during a meeting in Kaduna, where, joined by influential traditional leaders, they voiced concerns that the new tax proposals could adversely affect the region’s economic position.
The opposition from northern leaders centers around proposed amendments to the VAT distribution model, which, they argue, would disadvantage the North.
Gombe State Governor Inuwa Yahaya, chair of the Northern Governors’ Forum, clarified their stance, explaining that the current VAT system unfairly favors states where businesses are headquartered rather than the regions where products and services are actually consumed. This situation, they contend, undermines the economic balance and short-changes subnational regions.
In a communiqué issued at the close of their meeting, the northern leaders called for equity in all national policies, asserting that they are not opposed to reforms that benefit Nigeria as a whole. However, they believe the proposed amendments must be fair and inclusive to avoid marginalizing specific regions.
During a media briefing, Oyo State Governor Seyi Makinde explained that NEC’s recommendation reflects an understanding of the widespread concerns and a desire to allow more comprehensive consultations.
Flanked by Governors Charles Soludo (Anambra) and Babagana Zulum (Borno), Makinde stated that NEC sees the need to align all stakeholders on the tax reforms and to build consensus across Nigeria.
Governor Zulum reiterated that NEC’s decision aims to facilitate a more unified approach, stressing the importance of giving citizens and stakeholders clarity on the administration’s vision for tax reform.
Earlier, Bayo Onanuga, Special Adviser to the President on Information and Strategy, addressed the misunderstandings surrounding the bills.
He emphasized that the proposed VAT derivation model, rather than disadvantaging the North, intends to create a more balanced system.
The bill seeks to shift VAT distribution to a model that considers the location of consumption, ensuring that regions producing goods for nationwide use receive fair compensation.
According to Onanuga, “The current model favors VAT remittance based on corporate headquarters, not where goods are consumed. The proposed reform would ensure that all regions, particularly those in the North supplying essential products, are fairly represented in VAT allocations.”