From Adanna Nnamani, Abuja
Taiwo Oyedele, chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, has responded to the Revenue Mobilisation Allocation and Fiscal Commission’s (RMAFC) position on the proposed Value Added Tax (VAT) sharing formula.
RMAFC on Monday via a Memo sent to the National Assembly, opposed the value-added tax (VAT) sharing formula proposed in the tax reform bills, citing constitutional breaches. It argued that the 1999 constitution (as amended) grants it the sole authority to determine the formula for equitable revenue sharing among the three tiers of government.
While commending RMAFC’s support for the four tax reform bills before the National Assembly, Oyedele via his X handle on Wednesday, addressed concerns raised by the Commission.
He explained that tax predates the 1999 constitution despite having been in operation for over 5 years.
The committee chairman further said the proposed VAT revenue-sharing formula in the tax bills along with the other VAT reform proposals is meant to address key issues which are existential to the current VAT regime. He also explained that the VAT, unlike income tax, operates as a consumption-based levy, where revenue is tied to the location where goods and services are consumed, not where taxpayers reside or businesses are registered.
According to him, “The tax is not mentioned in the 1999 Constitution making it a residual matter within the purview of the states,” he said.
“As a result of the above, VAT is paid into a special pool account and not treated along with the other revenues accruable to the federation for which the RMAFC is expected to play an advisory role regarding the sharing formula as contained in section 162 of the 1999 Constitution.
“A similar revenue item is stamp duties which also belong to states and it is meant to be shared among them based on 100% derivation without any requirement for the RMAFC to be involved in determining the sharing formula.”