Governors Oppose VAT Hike, Take Firm Stance on Tax Reform Bills

Nigerian governors reject the proposed VAT increase and express their positions on key tax reform bills, advocating for balanced fiscal policies.

Governors from the Nigerian Governors Forum (NGF) have unanimously expressed their opposition to any hike in the Value Added Tax (VAT) rate.

This position was detailed in a statement released after a high-level meeting with the Presidential Tax Reform Committee on Thursday in Abuja.

The governors emphasized the need to maintain economic stability and safeguard citizens’ well-being amidst ongoing fiscal reforms.

To tackle imbalances in resource distribution, the forum has endorsed a new VAT sharing formula. This proposal suggests allocating 50% based on equality, 30% on derivation, and the remaining 20% according to population.

The governor stated that this adjustment is intended to enhance fairness, support smaller states, and encourage revenue generation at the subnational level.

The NGF strongly opposed increasing VAT rates, cautioning about the possible adverse effects on businesses and consumers.

The governors also supported maintaining the VAT exemption on essential goods and agricultural produce to safeguard vulnerable citizens and promote food security.

The forum also supported the ongoing legislative efforts in the National Assembly to enact comprehensive tax reforms.

Additionally, the governors suggested maintaining development levies designated for essential national agencies—specifically the Tertiary Education Trust Fund (TETFund), National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA)—without adding any expiration clauses.

The Chairman of the NGF and Governor of Kwara State, AbdulRahman AbdulRazaq, expressed that the Forum strongly supports a comprehensive reform of Nigeria’s outdated tax laws. Members recognized the necessity to modernize the tax system in order to enhance fiscal stability and align with global best practices.

Members concurred that, to maintain economic stability, the VAT rate should remain unchanged and Corporate Income Tax (CIT) should not be reduced at this time.

The Forum supported the ongoing exemption of essential goods and agricultural produce from VAT to protect citizens’ well-being and encourage agricultural productivity.

The meeting suggested that TETFUND, NASENI, and NITDA should not have a terminal clause regarding the distribution of development levies in the legislation.

“The communiqué stated that the meeting endorses the ongoing legislative process at the National Assembly, which will ultimately lead to the passage of the Tax Reform Bills.”