Abuja, Nigeria – President Bola Tinubu has directed the National Assembly and the Ministry of Justice to collaborate and address concerns raised regarding the controversial Tax Reform Bills currently under consideration.
The move comes amidst criticisms from various quarters, including governors from the northern region, who argue that the bills could disadvantage their states and worsen economic hardships for Nigerians.
The presidency, however, insists the reforms are designed to strengthen both federal and state finances. Senior Special Assistant to the President on Media and Publicity, Temitope Ajayi, defended the bills on Wednesday, stating they are “progressive and transformative.”
In a statement issued Tuesday, Minister of Information and National Orientation, Mohammed Idris, dismissed suggestions that the government was rushing the legislative process. He affirmed that President Tinubu had ordered the Ministry of Justice and other relevant agencies to work with the National Assembly to resolve all “genuine concerns” before the bills are passed.
“It is pertinent to state that the government has nothing sinister to warrant the suggestion that the process is being rushed,” Idris said. “The Federal Government welcomes meaningful inputs to address whatever grey areas there may be in the bill.”
Ajayi acknowledged the resistance, particularly from Borno State Governor Babagana Zulum, who has been vocal in his opposition. However, Ajayi argued that critics of the bills had not fully examined their provisions or understood their potential benefits.
Key Benefits of tax reform bills for States
Ajayi outlined 10 ways the Tax Reform Bills would benefit state governments and enhance their capacity to generate revenue.
These include:
- Increased VAT Share: The federal government will cede 5% of its current 15% share of VAT revenue to states.
- Electronic Money Transfer Levy: Income from this levy will be transferred exclusively to states as part of stamp duties.
- Stamp Duty Reform: Obsolete stamp duty laws will be repealed and replaced with a simplified framework to boost state revenue.
- Tax on Limited Liability Partnerships: States will gain entitlement to taxes from Limited Liability Partnerships.
- Tax-Exempt Bonds: State governments will enjoy tax exemptions on their bonds, making them comparable to federal government bonds.
- Equitable VAT Model: A revised VAT attribution model will ensure higher revenue for states.
- Integrated Tax Administration: This will provide tax intelligence to states, strengthen capacity development, and extend the scope of the Tax Appeal Tribunal to state tax disputes.
- Unremitted Taxes Deduction: The Accountant General will be empowered to deduct unremitted taxes from government agencies and remit them to the appropriate states.
- Autonomy for State Revenue Services: The reforms will grant autonomy to state revenue services and enhance collaboration through a Joint Revenue Board.
- Lottery and Gaming Taxation: A legal framework will enable states to tax lottery and gaming activities, including introducing withholding tax.
- Ajayi described these measures as transformative, emphasizing their potential to position states as economic powerhouses.
Ajayi urged governors to leverage the proposed reforms by investing in infrastructure and human capital to create a conducive environment for businesses. “The challenge for governors will be to put on their thinking caps by investing in manpower and critical social and physical infrastructure in their states that will support businesses and socio-economic activities to flourish,” he said.
Resistance in the North
Despite assurances from the presidency, opposition remains strong, particularly from the northern region. Analysts attribute this to concerns over potential inequities in revenue allocation and the broader economic impact of the reforms.
Chairman of the Presidential Committee on Tax and Fiscal Policy Reforms, Taiwo Oyedele, recently defended the bills during a Channels TV Town Hall. He argued that the reforms would streamline Nigeria’s tax system, enhance economic productivity, and empower states financially.
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