National Assembly divided over President Tinubu’s tax reform bills

Members of the National Assembly are currently divided over the controversial Tax Reform Bills introduced by President Bola Tinubu’s administration.

On September 3, President Tinubu submitted four tax reform bills to the National Assembly for consideration. These proposed reforms stem from recommendations made by the Presidential Committee on Fiscal and Tax Reforms, led by Taiwo Oyedele, which aimed to review and update existing tax laws.

The four bills include the Nigeria Tax Bill 2024, intended to establish a comprehensive fiscal framework for taxation, and the Tax Administration Bill, which seeks to create a clear legal structure for all taxes to minimize disputes.

The Nigeria Revenue Service Establishment Bill proposes repealing the Federal Inland Revenue Service Act to create a new Nigeria Revenue Service. Meanwhile, the Joint Revenue Board Establishment Bill aims to establish a tax tribunal and a tax ombudsman.

Central to the debate is the proposed shift to a derivation-based model for distributing Value Added Tax (VAT). This model would allocate tax revenue to states based on where goods and services are consumed, rather than where companies have their headquarters. The proposal has met with significant resistance.

The 19 northern governors and traditional rulers rejected the bills, citing concerns that the derivation-based VAT distribution model does not align with the interests of northern states and other subnational entities.

The Northern Governors’ Forum made it clear that the bills would be detrimental to the region’s economic standing.

Adding to the controversy, the National Economic Council, led by Vice-President Kashim Shettima, recommended that the bills be withdrawn to allow for broader consultations and consensus building.

Although the bills are yet to be presented for a second reading where their principles will be debated, lawmakers have voiced differing opinions.

Senator Ali Ndume (APC, Borno South) recently openly opposed the bills in a television interview and pledged to rally other northern lawmakers to resist their passage.

Speaking with Sunday PUNCH, Senator Ogoshi Onawo of Nasarawa South Senatorial District kicked against the bills, saying it was unfair for the government to continue imposing taxes on Nigerians who were battling economic hardship.

He berated the Tinubu-led administration for being insensitive to the plights of Nigerians, insisting that the tax reforms would worsen the hardship in the country.

Onawo called on Tinubu to heed the advice of NEC and either withdraw the bills or rework them to capture the recommendations of Nigerians.

“I think the timing of the bills is not right because of the economic hardship being experienced by all Nigerian citizens. The bill is just to impose more hardship on Nigerians. Generally, all over the world, when tax is imposed on an economy, it is the consumers that bear the brunt.

“Tax generally is a good thing if the government is responsive enough to the yearnings of the people. There is no point for me paying tax when the roads are bad, and there are no basic social amenities, and if the government is not responsive enough to provide those things that I’m supposed to enjoy and I’m paying tax on, I think it is unfair for the government to be taxing people left, right and centre.

“Every Nigerian is paying multiple taxes now on so many things, if those multiple taxes can be streamlined and made affordable for Nigerians to live a comfortable life, I don’t think tax is a bad idea, but when the government is collecting tax and the people are not seeing the effect of the tax, then I think it needs a rethink,” the lawmaker said.

A senator from the North-Central, who spoke on condition of anonymity, said the bills were still under consideration, but assured that Nigerians would have a say in their outcome.

The lawmaker said, “We will do justice to the bills; we will allow Nigerians to have a say and take part in the process and a true reflection on of our constituents that will prevail.”

However, lawmakers from the South-West dismissed fears over possible marginalisation of any region in the implementation of a new tax regime.

Defending the bills, a House of Representative member from the Ikorodu Federal Constituency, Lagos State, Babajimi Benson, said a rejig of tax management strategies had become imperative because the old models did not yield much in recent years.

He said the bills reflected a pragmatic approach by the Tinubu government to address longstanding challenges in the tax administration.

According to him, not all the governors are opposed to the bills, adding that some merely asked for clarifications in the proposals by the President.

He pledged the readiness of the Green Chamber to thoroughly scrutinise the bills before passage.

“This reform is designed to transform our tax system, providing exemptions to the most vulnerable businesses and individuals, eliminating the burden of multiple taxation, and enhancing the effective mobilisation and management of the nation’s revenue.

“Regarding the derivation policy, which mandates that a portion of revenue generated within a state is returned to that state, I believe that no state will be disadvantaged. Significant revenue streams come from various states across the federation, including Kano, Kaduna, Rivers, and Lagos.

“To ensure fairness, the proposed five per cent set aside by the Federal Government could be used as an equalisation transfer to prevent any state from receiving less revenue than it would have under the current distribution formula”, Benson said.

In his contribution, a federal lawmaker from Osun State, Oluwole Oke, said controversies trailing the bills were not unexpected, adding that the National Assembly would do its part and subject them to public inputs.

He reminded those opposing the bills not to forget that “tax bills/laws usually stem from tax design which is based on the peculiarities of a society and several other factors.”

“A bill is like raw gold at the goldsmith workshop. The governors are bound to have their opinions and positions perhaps based on well-researched positions.

“We will all meet at the public hearing and in the committee of the whole vis-a-vis voting and fortunately, it’s my area of specialisation,” he said.

When Sunday Punch reached out to Oyedele and asked if there were plans to engage Nigerians and the governors on the bills, he said, “Yes, we plan for further engagements and some are ongoing.”

Meanwhile, debate on the bills is expected to dominate proceedings in both chambers of the National Assembly when it resumes from its one-week oversight recess on November 19.