The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has emphasized the urgency of passing the proposed Tax Reform Bills to address the economic struggles of most Nigerians. Speaking during an interview with Arise News on Wednesday, Oyedele responded to concerns raised by Borno State Governor, Professor Babagana Zulum, regarding the speed and implications of the reforms.
Zulum criticized the proposed bills, currently before the National Assembly, citing misconceptions and the need for more extensive consultations.
“There are a lot of misconceptions on this tax issue. Based on our calculations, the VAT provisions in the proposed law seem to disproportionately benefit Lagos and Rivers States, while Northern Nigeria would face losses,” Zulum said in an interview on Channels Television.
“We advised the Federal Government to pause and revise certain clauses that are unfavorable to our region. We need deeper consultations to fully understand the implications before passing these reforms into law.”
Addressing Misconceptions
In his response, Oyedele denied rushing the tax reform process and highlighted the pressing economic challenges facing Nigerians.
“We are at a point where most of our people are in multi-dimensional poverty. Small businesses are burdened with over 60 official levies and taxes, in addition to more than 200 unofficial charges,” Oyedele said.
He argued that swift action is essential to provide relief for struggling citizens, comparing the urgency to the global response during the COVID-19 pandemic.
“During COVID-19, some countries passed laws within two days because it was an emergency. This process has been ongoing for over a year. The bills have been with the National Assembly for over a month. That’s not rushing,” Oyedele explained.
Collaboration and Progress
Oyedele also addressed concerns about inadequate consultation, noting that his team had engaged with governors and shared drafts of the proposed reforms as early as May.
“We’ve conducted sessions with the governors and provided detailed drafts to their technical teams. The bills are now in the National Assembly, and it’s time for stakeholders to collaborate and finalize them so that Nigerians can receive the much-needed relief,” he said.
Controversy Over VAT Allocation
The proposed reforms, which include changes to the allocation of Value Added Tax (VAT) revenues, have sparked controversy. Northern leaders have voiced opposition, arguing that the changes could disproportionately disadvantage their region.
Under the current VAT Act, revenues are allocated as follows:
• 15% to the Federal Government
• 50% to States and the Federal Capital Territory (FCT)
• 35% to Local Governments
This allocation includes a derivation principle of at least 20% for states and local governments, alongside factors such as population (30%) and equality (50%). Additionally, 4% of VAT collections go to the Federal Inland Revenue Service (FIRS) as a collection fee, while 2% is allocated to the Nigeria Customs Service (NCS) for import VAT.
Oyedele emphasized that while the process has been deliberate, the urgency remains to address the economic realities of Nigerians and ensure that the tax reforms are both equitable and effective.
