Tax Reform Returns to Agenda as House of Reps Holds Private Sessions

The House of Representatives revisits tax reform discussions in private sessions, signaling potential changes to Nigeria’s fiscal policies. Key stakeholders await outcomes.

After a four-month impasse between the House of Representatives and the Presidency over the tax reform bills transmitted by President Bola Tinubu, the House has shown signs of readiness to debate the general principles of the proposed legislation. The bills, which were sent to the National Assembly on September 3, 2024, are part of the recommendations by the Taiwo Oyedele-led Presidential Committee on Fiscal Policy and Tax Reforms.

The proposed legislation includes:

1. The Nigeria Tax Bill 2024: Aimed at providing a comprehensive fiscal framework for taxation in the country.
2. The Tax Administration Bill: Designed to establish a clear legal framework for all taxes, reducing disputes and improving efficiency.
3. The Nigeria Revenue Service Establishment Bill: Intended to repeal the Federal Inland Revenue Service Act and create a new Nigeria Revenue Service.
4. The Joint Revenue Board Establishment Bill: Proposing the creation of a tax tribunal and a tax ombudsman to address tax-related disputes.

However, the bills faced significant opposition from state governors, particularly from northern Nigeria, who argued that the proposed reforms could hinder their ability to pay the newly introduced N70,000 minimum wage. Prominent northern leaders, including former Vice President Atiku Abubakar, Governors Bala Mohammed (Bauchi) and Babagana Zulum (Borno), and Senator Aminu Tambuwal, openly criticized the bills, calling for broader consultations to address clauses deemed unfavorable to the region.

While the Senate debated and passed the bills for a second reading, members of the House of Representatives, especially those from northern states, resisted the legislation. They cited the failure of the Presidency to heed the National Executive Council’s advice to withdraw the bills for further consultation.

In a surprising turn of events, the governors in January endorsed a revised Value Added Tax (VAT) formula, proposing a 50% allocation based on equality, 30% on derivation, and 20% on population. This development appears to have softened the stance of some lawmakers.

Recent Developments and Legislative Progress

On Tuesday, shortly after the National Assembly adjourned plenary in honor of the late Deputy Chief Whip, Adewunmi Onanuga, who passed away on January 15, members of various regional and state caucuses met to deliberate on the tax reform bills. A lawmaker present at the meetings revealed that Speaker Tajudeen Abbas assured caucus leaders of a transparent legislative process, emphasizing that contentious clauses would be thoroughly reviewed during public hearings.

The lawmaker stated, “Members have shifted their position on the matter. I believe the bills will be debated and passed for a second reading as early as next week. The Speaker has assured us that zonal and regional caucus leaders will be part of the finance committee to ensure that recommendations from these meetings are incorporated into the final report.”

He added that adjustments would be made at the committee level to accommodate input from stakeholders, including the Nigeria Governors Forum and other interested parties.

Behind-the-Scenes Negotiations

The Tuesday meeting was a continuation of discussions that began on Monday, attended by key House leaders, including Speaker Abbas, House Leader Julius Ihonvbere, Minority Leader Kingsley Chinda, and other senior lawmakers. A source privy to the discussions revealed that the meeting focused on finding a way forward, especially in light of the governors’ revised stance on the VAT formula.

“The governors and lawmakers are representatives of the people. Now that the governors have endorsed a revised version of the reforms, there is no need for us to remain rigid on this matter,” the source said.

Lawmakers’ Perspectives

Several lawmakers shared their views on the developments:

• Sada Soli (Jibia/Kaita Federal Constituency, Katsina State) emphasized the importance of gathering aggregate views from the caucus meetings ahead of the second reading.
• Odianosen Okojie (Esan North/South East Federal Constituency, Edo State), Chairman of the House Committee on Petroleum Resources (Midstream), expressed support for the bills, stating, “The tax reforms mean well for this country, and we are prepared to support Mr. President to succeed.”
• Babajimi Benson (Ikorodu Federal Constituency, Lagos State) highlighted the consensus among caucuses to prioritize the country’s best interests through an inclusive and transparent legislative process. He noted that zonal and regional leaders would be actively involved to ensure diverse perspectives are represented.
• Kolawole Akinlayo (Moba/Ilejemeje/Ido Osi Federal Constituency, Ekiti State) confirmed that the House had resolved to pass the amended version of the bills endorsed by the governors, adding, “I believe the bills should be passed by next week, by God’s grace.”

The House of Representatives appears poised to move forward with the tax reform bills, following months of resistance and extensive consultations. With the governors’ revised VAT formula and assurances of an inclusive legislative process, the bills are expected to undergo thorough debate and adjustments to address stakeholders’ concerns. The outcome of these deliberations will be crucial in shaping Nigeria’s fiscal policy and tax administration framework for years to come.