Nigerian governors have indicated support for the federal government’s tax reform bills, which propose a new sharing mechanism for value-added tax (VAT).
This follows a meeting of the Nigeria Governors’ Forum, or NGF, and the Presidential Tax Reform Committee conducted on Thursday.
At the end of the meeting, the governors’ forum issued a communique emphasizing its strong support for fundamental reform of Nigeria’s archaic tax laws.
“Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices,” they stated.
They proposed a revised VAT-sharing formula which they said would ensure equitable distribution of resources.
According to them, the new sharing formula will be 50% based on equality, 30% based on derivation, and 20% based on population.
“Members agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time, to maintain economic stability.
“The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity,” the communique read.
The NGF recommended that there should be no terminal clause for the Tertiary Education Trust Fund, TETFUND, National Agency for Science and Engineering Infrastructure, NASENI, and National Information Technology Development Agency, NITDA, in the sharing of development levies in the bills.
