The governors who claimed that the proposed model would be at the disadvantage of the northern states and other less industrial regions, were also against the recent Tax Reform Bill the Nigerian government submitted to the National Assembly for approval.
Nigerian 19 state governors, under the auspices of the Northern States Governors’ Forum (NSGF) have rejected the proposed shift to a derivation-based Model for Value Added Tax (VAT) distribution, proposed by the President Bola Tinubu’s government.
The governors who claimed that the proposed model would be at the disadvantage of the northern states and other less industrial regions, were also against the recent Tax Reform Bill the Nigerian government submitted to the National Assembly for approval.
The governors disclosed this in a communique issued after a strategic meeting in Kaduna State on Monday, read by the Chairman of the NSGF and Governor of Gombe State, Muhammad Yahaya.
The meeting included northern traditional rulers, the Chief of Defence Staff, General Christopher Musa, and other key stakeholders. Demanding for equity and fairness in national policy implementation and no geopolitical zones
should be shortchanged.
The governors explained that VAT is currently remitted based on the location of company headquarters rather than where goods and services are consumed.
He stated that the measure would negatively affect the distributed revenue from the Federal Accounts Allocation Committee (FAAC).
The communique read in part, “The forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly. The contents of the reforms are against the interest of the North and other sub-nationals, especially the proposed amendment to the distribution of Value Added Tax to a Derivation-based Model.
“This is because companies remit VAT using the location of their headquarters and tax office where the services and goods are consumed. In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and calls on members of the National Assembly to oppose any bill that can jeopardise the well-being of our people.
“For the avoidance of doubt, the Northern Governor’s Forum is not averse to any policies or programmes that will ensure the growth and development of the Country.
“However, the forum calls for fairness in the implementation of all national policies and programmes to ensure that no geopolitical zone is short-changed or marginalised.
“On the present economic hardship affecting the Country, the Forum is appealing to all citizens to remain calm, as the states and Federal Government are working hard to implement measures that will cushion effects of the hardship,” the communique stated.
The latest development comes amid multiple debates surrounding resource control and the distribution of Value Added Tax revenue among states.
Many northern states where Sharia law is practiced prohibit the sale of alcoholic beverages but still receive a share of VAT collected from alcohol sales.
However, in the new tax reform bill, the Taiwo Oyedele-led panel proposed the amendment of the distribution formula to a Derivation-based Model.