Former Anambra State Governor Peter Obi has called on the federal government to secure Nigerians’ consensus before implementing the tax reform bills currently under consideration by the National Assembly.
In a statement released on Monday, Obi emphasized the importance of robust public engagement and transparent policymaking, particularly on a critical issue like tax reform, which has drawn criticism, especially from stakeholders in the northern region.
As a former presidential candidate of the Labour Party in the 2023 general election, Obi acknowledged the necessity of tax reform but stressed that any changes must be informed by extensive public debate to foster trust and legitimacy.
The Case for Transparent Engagement
Obi advocated for public hearings to ensure that Nigerians from all sectors of society can contribute to the discussion.
“Matters of this magnitude require extensive deliberation and careful consideration—they should never be rushed,” he stated.
He argued that public hearings would enable diverse opinions to shape the reform process, ensuring that policies reflect the collective will of the people.
“Furthermore, the government must sensitize the people and secure their buy-in for any policy changes. Trust and legitimacy are the foundation of effective governance, and without them, even the best-intended reforms may fail,” he added.
Consideration of Broader Impacts
Obi cautioned against focusing solely on revenue generation for the government. Instead, he urged stakeholders to evaluate the potential implications of the tax reform bills on the nation’s sustainability and equitable development.
He highlighted the need for transparency, deliberation, and public engagement as hallmarks of a participatory democracy, adding that such an approach strengthens public trust in governance.
What You Should Know
Obi’s remarks align with calls from other political leaders, including former President Atiku Abubakar, who also underscored the importance of inclusive public hearings.
“The public hearing process must facilitate open and inclusive participation by all stakeholders, including Civil Society Organizations, traditional institutions, politicians, public officials, and subject matter experts,” Abubakar said.
Overview of the Tax Reform Bills
The proposed tax reform bills before the National Assembly aim to adopt a derivation principle for allocating Value Added Tax (VAT) revenues between the federal and sub-national governments.
Currently, VAT revenues are allocated under Section 40 of the VAT Act as follows:
• Federal Government: 15%
• States and Federal Capital Territory (FCT): 50%
• Local Governments: 35%
Additionally, at least 20% of allocations to states and local governments are based on the derivation principle. Other factors influencing distribution include:
• Equality: 50%
• Population: 30%
The Federal Inland Revenue Service (FIRS) receives 4% of collections as a collection fee, while the Nigeria Customs Service (NCS) is allocated 2% for import VAT.
Controversy Over the Reforms
The proposals have sparked opposition, particularly from northern elites, who argue that the changes may disproportionately affect their region.
Obi’s intervention reflects a broader concern that tax reform should balance government revenue needs with equitable growth across all regions, ensuring inclusivity and sustainability in its implementation.
