By Amofokhai Williams
The Presidency has clarified that the proposed tax reform bills before the National Assembly were not intended to disadvantage Nigeria’s northern states, countering claims of potential regional bias raised by the Northern Governors’ Forum.
This response came on Thursday following the governors’ meeting on 28th October, where they voiced concerns over the proposed derivation-based model for Value-Added Tax (VAT) distribution, suggesting it could unfairly impact the northern region.
Governor Muhammed Inuwa Yahaya of Gombe State, chairman of the Northern Governors’ Forum, presented a communiqué outlining their opposition to the new VAT model, which they argued might reduce the north’s revenue share under the revised tax structure.
The meeting, attended by notable northern traditional leaders, including the Sultan of Sokoto, His Eminence Muhammadu Sa’ad Abubakar III, called for further discussion on the reform’s regional impact.
In a statement issued on Thursday, Presidential spokesman Bayo Onanuga affirmed that the tax reforms formed part of a national strategy to streamline and modernise Nigeria’s tax administration, promoting efficiency and equity without imposing additional tax burdens.
“We commend the Northern Governors and traditional rulers for their support of President Bola Tinubu’s administration in addressing the nation’s security challenges,” Onanuga stated, “but we must address misunderstandings and misgivings surrounding the proposed tax reforms.”
Onanuga outlined the four executive bills aimed at overhauling Nigeria’s tax framework, explaining their goals to reduce redundancies and simplify tax obligations for citizens and businesses.
He stated that the reforms emerged from an extensive review of existing tax laws, with the intention to foster a business-friendly environment across the country.
He mentioned that the Nigeria Tax Bill aimed to eliminate multiple taxation, simplifying Nigeria’s tax system and making it more competitive for businesses and individuals.
He added that the Nigeria Tax Administration Bill (NTAB) proposed new rules to unify tax administration across all levels of government, making it easier for citizens to navigate the tax system.
Onanuga further explained that the Nigeria Revenue Service (Establishment) Bill sought to rename the Federal Inland Revenue Service (FIRS) as the Nigeria Revenue Service (NRS), reflecting its role as a national revenue agency, while the Joint Revenue Board Establishment Bill aimed to replace the Joint Tax Board with a Joint Revenue Board to strengthen coordination among federal, state, and local tax authorities, also proposing an Office of Tax Ombudsman for taxpayer dispute resolution.
Onanuga stressed that these reforms were not intended to add new taxes or increase rates, and instead focused on improving tax coordination and efficiency, addressing the current administrative fragmentation.
“Under the existing setup, taxes such as Company Income Tax (CIT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), and VAT are managed separately, resulting in confusion and inefficiency,” he noted.
Addressing the Northern Governors’ Concerns on VAT
Onanuga explained that the proposed shift to a derivation-based VAT distribution model, which raised concerns among northern governors, was designed to allocate revenue based on where goods and services are consumed rather than where taxes are paid.
He said this model would benefit states supplying essential goods—such as agricultural products from the north—by ensuring they received fairer revenue shares.
“The reform seeks to correct the existing imbalance, so states that supply goods do not lose out on revenue simply because their products are consumed in other states,” Onanuga said.
The proposal, he added, acknowledged the contributions of every region and aimed to support an equitable tax landscape.
The Presidency assured that the reforms were structured to foster job creation and economic growth, not threaten existing jobs or services.
By clarifying tax administration roles and consolidating responsibilities, the Presidency stated that the bills aimed to create an environment conducive to business development and investment.
Onanuga urged the National Assembly to consider these reforms carefully, asserting that they held significant potential to improve the lives of Nigerians and support state-level development without disadvantaging any region.
“These reforms were not put forward by President Tinubu to disadvantage any region,” Onanuga concluded. “They aim to strengthen Nigeria’s tax framework to support development nationwide.”
The Presidency expressed optimism that the reforms would pave the way for a transparent and coordinated tax system that met the nation’s fiscal needs without regional disparities, fostering a more balanced economic landscape across Nigeria.
