President Bola Tinubu recently submitted four reform bills to the National Assembly as part of his attempts to overhaul the fiscal and tax regimes in Africa’s economic powerhouse.
They are: the Joint Revenue Board of Nigeria ,Establishment, Bill, 2024 -SB.583; the Nigeria Revenue Service, Establishment, Bill, 2024- SB.584; the Nigeria Tax Administration Bill, 2024-SB.585; and the Nigeria Tax Bill, 2024, SB.586.
Consequently, the bills have sparked a backlash, laying bare deep-seated regional and political tensions in the country.
The bills intend to simplify tax administration and make Nigeria, which relies on oil for 90% of its earnings, more attractive to local businesses and foreign investors.
Taiwo Oyedele, chair of Tinubu’s tax reforms committee, argued Nigeria has “over 50 nuisance taxes”, meaning levies paid in small but frequent amounts, usually by consumers.
If passed, the bills will cut down the number of levies paid by individuals and businesses to just “a few”, and slash corporate taxes from 30% to 25%geofre over the next two years.
As a country with a federal fiscal regime, some of Nigeria’s taxes are paid into a central pot before it is shared out among the federal government, 36 states and FCT as well as 774 local administrations on a monthly basis.
One of the four bills is widely seen in the northern part of the country as a ploy by Tinubu, to impoverish the region by whittling down its federal allocations derived from levies, including Value Added Tax, VAT.
Besides hiking VAT to 15 percent in the next six years, the Nigeria Tax Bill also changes the system of VAT remittances.
Under the new regime, companies will return the difference between the VAT collected from consumers and VAT paid to suppliers in the state where the goods and services are consumed, and not where the company is headquartered.
Although, the north grows most of Nigeria’s food, agricultural produce is exempt from VAT and therefore not affected by the hike, while the raw foodstuffs are then often processed in factories in Lagos and other parts of the south.
The northern political class, particularly federal lawmakers and northern state governors, have either outrightly rejected the bills or called for broader consultations.
Many in the region argue they favour Nigeria’s economic capital Lagos and Rivers State in the oil-producing Niger Delta, where the bulk of the offices of local and foreign companies are located.
The north has accused Tinubu of bias in favour of Lagos, the state he governed between 1999 and 2007.
In the last four decades northern Nigeria has seen most of its factories closed, with its population relying on goods manufactured in Lagos or imported from Asia.
Kano, the north’s economic capital, had more than 500 factories in 1980, that number has shrunk to less than 100, according to the Manufacturers Association of Nigeria, MAN.
At a meeting in the northern city of Kaduna in late October, the governors of the 19 northern states “unanimously” rejected the proposed tax bills which they said would “jeopardise the well-being of our people”.
They called on lawmakers from the region to reject the bills and ensure they were not passed into law until the controversial clauses were amended.
The government’s repeated denial that the reforms are not intended to impoverish the north has not convinced the region.
Meanwhile, the presidency has dismissed northern Nigeria’s position on the tax reform as “not grounded in facts, reality or sufficient knowledge of the bills”.
It also rebuffed allegations that the bills would make Lagos and Rivers State richer and other parts of the country poorer.
In a show of transparency Tinubu ordered Minister of Justice to liaise with lawmakers “to ensure all genuine concerns have been addressed” before the bills are passed.
The four tax reform bills proposed by President Bola Tinubu are stoking anger in northern Nigeria, with groups in the region demanding the suspension of the proposed tax reform.
Amid the storm the executive bills have passed second reading at the Senate but suffered set back in the House of Representatives as lawmakers in the green chamber independently suspended deliberations on the bills.
However, AljazirahNigeria align with the view that there should be wider consultations with a view to making the proposed tax reform bills benefit Nigeria and Nigerians devoid of political and regional interests.
