Tag: Nigerian Governors Forum

  • Group faults Governors’ VAT sharing formula for states in tax reform bill

    Group faults Governors’ VAT sharing formula for states in tax reform bill

    A group, the Citizens Network for Peace and Development in Nigeria (NPDN), has faulted the Nigeria Governors Forum (NGF)’s VAT sharing formula for states in the proposed Tax Reform Bill.

    The group in its communique issued on the proposed bill at the end of its citizen’s engagement on Friday in Abuja, said that the NGF’s formula did not take into account the nation’s productivity and economic growth.

    The communique, signed by Chijoke Nwachukwu, Ben-Kalio Adokiye, Dangana Abubakar, Joachim Ikechukwu, Ali Paul and Isa Tiki, was presented by Mr Okorie Raphael, the group’s National Coordinator at a news conference.

    “We categorically reject the NGF proposed VAT sharing formula, which allocates 50 per cent based on equity, 30 per cent based on derivation, and 20 per cent based on population.

    “This formula does not take into account productivity and economic growth, which are critical factors in determining a state’s contribution to national economy.

    “By ignoring productivity, this formula may, inadvertently, penalise states that are making concerted efforts to diversify their economies and promote economic growth,” Raphael said.

    He urged the National Assembly to reconsider the proposed bill and adopt a more subtle approach that rewards productivity and economic growth.

    The NPDN coordinator said that the bill had the potential to ensure that revenues derived from taxes were channelled into critical sectors, such as education, healthcare, and rural development.

    He said that the group was driven by a collective aspiration for equity, justice, and economic progress.

    “We gather here today to express our unified position on the tax reform bill currently before the National Assembly.

    “We are guided by the principle that a hungry man cannot be patriotic, and therefore, assert that taxation must serve the common good and prioritise the most vulnerable in our society,” he said.

    Raphael said that when enacted into law, the legislation would provide opportunity for a fairer redistribution of wealth and allow government to prioritise the needs of the underprivileged.

    “The true measure of any society is how the society treats its most vulnerable members,
    “The beauty of the tax reform bill lies with its intent to make richer individuals and entities to contribute proportionally more.

    “This will definitely reduce the tax burden on the poor and ensure that funds are available for public services that benefit marginalised communities, ” he said.

    He further said that in addition to making the rich pay more taxes, the bill sought to promote equity and fairness.

    Raphael described the bill as a proposed game changer designed to ensure that high-income earners and large corporations contributed proportionally to national development.

    This, he added, corroborated the assertion that “from whom much is given, much is expected”.
    He commended President Bola Tinubu and his economic team for conceiving the idea of the bill, noting that it would reduce poverty and inequality.

    He expressed optimism that the bill, if passed into law and implemented with the right focus and fairness, had the potential to be a cornerstone for poverty alleviation and just economic redistribution.

    He called on the National Assembly to uphold the pro-poor agenda and urged all stakeholders to prioritise the interests of the common man over parochial interests.

    “As law abiding citizens, it is only right to allow the course of lawmaking prevail.

    “As such, the public hearing stage of this process is positioned to collate various inputs and enhance the people’s input into decision making that affects them.

    “Therefore, those calling for reviews must have a rethink and allow the lawmaking process to commence instead of appearing to scuttle a legitimate democratic process,” he said.

  • Nigerian Governors Reject VAT Hike, Advocate for Equitable Distribution

    Nigerian Governors Reject VAT Hike, Advocate for Equitable Distribution

    The Nigerian Governors’ Forum has thrown its weight behind the ongoing tax reform efforts in the National Assembly but with a crucial caveat: no increase in Value Added Tax (VAT).

    This stance, articulated in a communique issued following their recent meeting in Abuja, directly contradicts the federal government’s proposal to raise the VAT rate from 7.5% to 10%.

    “We cannot, in good conscience, support any measure that could further burden our citizens during these challenging economic times,” Governor AbdulRahman AbdulRazaq of Kwara State, Chairman of the Forum, declared. “An increase in VAT would undoubtedly impact the cost of living for ordinary Nigerians and hinder economic growth.”

    The governors emphasized the need for economic stability and expressed concerns about the potential inflationary pressures of a VAT increase. They strongly advocated for the continued exemption of essential goods and agricultural produce from VAT, recognizing the critical role these sectors play in the lives of Nigerians.

    “We must prioritize the welfare of our people,” Governor AbdulRazaq stressed. “Exempting essential goods and agricultural produce from VAT is not merely a matter of social justice; it is crucial for ensuring food security and supporting our agricultural sector.”

    Furthermore, the governors proposed a revised VAT-sharing formula that they believe would ensure a more equitable distribution of resources across the country. This formula, they suggest, should allocate 50% of VAT revenue based on equality, 30% based on derivation, and 20% based on population.

    “The current VAT sharing formula is inherently unfair and does not adequately reflect the diverse needs of our states,” Governor AbdulRazaq argued. “Our proposed formula will ensure that all states, regardless of their size or economic output, receive a fair share of this critical revenue stream.”

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    Beyond the VAT increase issue, the governors also expressed their support for the continued funding of key institutions such as the Tertiary Education Trust Fund (TETFUND), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA). They urged the National Assembly to ensure that these institutions continue to receive their share of development levies.

    The governor’s position now sets the stage for a potential showdown with the federal government over the direction of tax reform. While the federal government seeks to increase revenue through higher taxes, the governors prioritize economic stability and social welfare, arguing that a VAT increase %would be detrimental to both.

    This issue will undoubtedly be a key point of contention in the ongoing dialogue between the federal and state governments as they work to navigate the complex challenges of economic growth and fiscal sustainability.

    The outcome of these discussions will have significant implications for the Nigerian economy and the lives of millions of citizens.