…Disquiet as tax reform bills scale second reading
By Seyi Babalola
President Bola Tinubu’s four tax reform bills, which include 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, are generating anger in Northern Nigeria, with groups in the northern region demanding the suspension of passage of the legislation.
The executive bills, presented by the Senate Leader, Opeyemi Bamidele, during the Senate plenary on Thursday, passed a second reading with the Senate President, Godswill Akpabio, presiding, which has generated a lot of controversies, primarily with the northern leaders asking President Bola Tinubu to withdraw the bills, describing it as anti-North, saying it would further relegate the region economically.
Ever since the proposed laws were sent by President Tinubu to the National Assembly, lawmakers of northern extraction have been expressing worries.
The executive arm of government said the bills would ensure uniformity in tax revenue administration across Nigeria, eliminate double taxation, use taxation to encourage private sector investment in critical industries and boost disposable incomes through targeted tax exemptions.
However, the North is united in its opposition, as all sections of its leadership consider the bills as being against the region’s socio-economic development.
The 19 Northern state governors expressed their extreme discontent with the federal government’s recent Tax Reform Bill, the governors notably opposed the proposed transition to a Derivation-based Model for Value Added Tax Distribution.
They argue that the suggested approach would disadvantage the northern states and other less industrialized regions.
Expressing discontent with the policy, the governors said that VAT is currently remitted based on the location of company headquarters rather than where goods and services are consumed.
They added that the measure will negatively affect the distributed revenue from the Federal Accounts Allocation Committee.
Northern governors kick against Tinubu’s tax reform bills
Following the second reading of the bill by the Nigerian senate, key critics, which include Borno State Governor Babagana Zulum, former Sokoto State Governor, Aminu Tambuwal, and Borno South Senator Ali Ndume, have voiced concerns over the bill’s socioeconomic impact on the northern region, already struggling with economic challenges, high poverty rates, and security issues.
Under mounting pressure from northern governors and 73 northern members, the House of Representatives has halted the bill’s discussion indefinitely.
The opposition believes that the planned changes would unfairly affect northern states, widening the gap between Nigeria’s affluent south and its economically vulnerable north.
The discussion highlights the larger dichotomy in Nigeria between fiscal policy and the desire for fair development.
In the same light, Ali Ndume, Senator for Borno North Central Senatorial District, has expressed his objection to the Tax Reform Bills; he criticized the measures’ timing, suggesting that governance improvements should come first, followed by tax reforms.
Ndume, on the other hand, expressed his worries about the legislation, noting difficulties such as the wrong timing, the matter of derivation, Value Added Tax, and a lack of agreement or buy-in among Nigerians.
He went on to say that recurring expenditure and debt payments account for more than half of the country’s budget.
The Senator also raised concerns that, despite being an Executive Bill, the Senate treated it as if it were a Presidential bill, reinforcing the perception of a rubber-stamp Senate.
Tax reform bills scale second reading
Amid the outcry, the Nigerian Senate passed the four Tax Reform Bills on Thursday for a second reading through voice votes.
The bills include the Nigeria Tax Bill 2024, which is anticipated to provide the fiscal foundation for taxation in the country and the Tax Administration Bill, which would give a clear and straightforward legal framework for all taxes in the country while reducing conflicts.
The other bills are the Nigeria Revenue Service Establishment Bill, which repeals the Federal Inland Revenue Service (FIRS) Act and establishes the Nigeria Revenue Service, and the Joint Revenue Board Establishment Bill, which creates a tax tribunal and a tax ombudsman.
On October 3, 2024, President Tinubu forwarded the four tax reform proposals to the National Assembly for review.
The action sparked controversy, with Northern governors opposing the tax reforms.
Concerned about the issue, the Presidency stated that the measures were not intended to benefit any area but rather to help the country prosper.
The Presidency also suggested laws to standardize, coordinate, and settle conflicts over tax management in Nigeria.
The session saw lawmakers debating the main concepts of the tax reform measures.
Tax reform bills will be of benefit to only Lagos, says Zulum
Borno State Governor, Professor Babagana Zulum has explained why the northern governors are requesting President Bola Tinubu to revisit the disputed tax reform proposals.
This comes after the tax reform measures encountered heavy opposition from many sources, particularly elites in Northern Nigeria.
The Northern Governors Forum, the Northern Elders Forum, the National Economic Council, and Senator Mohammed Ali Ndume, among others, have publicly asked for the legislation’s withdrawal since they do not represent the region’s interests.
Zulum emphasized that the northern governors are not against President Tinubu, citing the region’s important contribution to his 2023 electoral triumph, with more than 60% of his votes coming from the north.
The governor expressed fear that if the measure passes through the National Assembly, states will be disadvantaged, with Lagos State being the principal beneficiary of the scheme.
Debate suspended indefinitely by Reps over lingering controversy
Following rising pressure from the governors of the 19 northern states, the House of Representatives has halted indefinitely the discussion on the Tax Reform Bills, which had been scheduled for Tuesday.
The intended debate was cancelled in a document signed by the Clerk of the House of Representatives, Dr Yahaya Danzaria when 73 northern legislators opposed the measures.
The legislation was rejected by 48 representatives from the Northeast, 24 federal lawmakers from Kano, and Senator Aminu Tambuwal, a former governor of Sokoto State who represents the Sokoto South Senatorial District.