From Abel Leonard, Lafia
Nasarawa State Governor,Abdullahi Sule has revealed that Northern governors are uneasy with the proposed removal of Value Added Tax (VAT) from the Federal Account Allocation Committee (FAAC) under President Bola Tinubu’s tax reforms, even though they are comfortable with other aspects of the plan.
Governor Sule clarified that while Northern governors endorse the tax reforms, the VAT adjustment raises concerns. He made these remarks during the launch of a new digital tax code by the Nasarawa State Board of Internal Revenue Services (NSBIRS) in Lafia yesterday.
“Let me clarify: we are not against the tax reforms. There are so many good things about the tax reforms that Mr. President is putting forward. We just selected an item out of the tax reforms,” he said. “We are discussing the VAT, which would be removed from the FAAC. That is why we are calling for a review of that position,” he added.
According to Governor Sule, removing VAT from FAAC would redirect 60 per cent of VAT revenue to derivation, affecting states reliant on FAAC for their budgets. He raised concerns about how VAT would be collected based on consumption, sharing an example from his time as managing director in the private sector.
“A customer from Maiduguri would order 200 trucks and pay VAT accordingly, but only request delivery of 10 trucks to Maiduguri while distributing the rest from Ilorin to Sokoto. This would make it difficult for states to understand actual consumption,” he noted.”
He also noted that if VAT were derived solely at corporate headquarters, like Lagos, states consuming these goods could be deprived of fair VAT allocations.
The Northern governors, he said, were seeking a review of the VAT proposal to ensure fair distribution aligned with states’ consumption realities.