AS the debate rages on the Tax Reform Bills, which passed second reading in the National Assembly last week, more stakeholders and organisations have differed over what those opposed to the bills as the potential danger in the reforms initiated by the administration of President Bola Tinubu.
While the Coalition of United Political Parties (CUPP) accused the critics of the bills of entrenching an unjust system based on the existing fiscal arrangement, the Coalition of Northern Groups said the proposed amendments of the existing tax laws are capable of worsening economic disequilibrium and tension in the country.
CUPP explained that it was in support of the Value Added Tax (VAT) Reform Bill because each state deserves its fair share of the amount it generates and contributes to the national pool.
According to the national spokesperson of the coalition, Comrade Mark Adebayo, while the Tinubu government’s economic reforms are not working in favour of regular Nigerians, the North shot itself on the foot by its discrimination against certain products.
He posited that the North should not expect to benefit from the revenues accruing from the consumption of liquor having banned the sale of alcohol in its domain.
“The contradiction in the northern opposition to the tax reform is glaring. While the Tinubu government’s so-called economic reforms are not working in favour of regular Nigerians, the North has shot itself on the foot by its discrimination against certain products.
“For instance, if you have banned alcohol in your domains, you can’t expect to share accruable taxes from alcohol.
“Moreover, it is my personal opinion that each state deserves its fair share of the VAT generated by it but can’t expect to share equally with states that generate lesser or more.
“The percentage must be in accordance with each state’s contribution to the national pool, methinks,” Adebayo said.
“Of course, I’ll consider that Governor Zulum of Bono State and Senator Ali Ndume are fighting for the entire North. That’s the idea.”
However, the Coalition of Northern Groups (CNG) warned that the proposed changes in taxation could disproportionately favour more economically advanced states, leaving states in the North, including Gombe, at a disadvantage.
The Gombe State chapter of the CNG expressed serious concerns over the potential economic disparities and regional inequalities.
CNG’s opposition is that the bill’s proposed VAT sharing formula places greater emphasis on derivation—allocating VAT revenues based on the state where the revenue is generated, stating that this would significantly benefit states like Lagos, which generates substantial VAT revenues, while northern states with lower economic activities, will face reduced revenue shares.
“This reform threatens to widen the economic gap between the North and South. It could lead to increased social unrest, migration, and further marginalisation of northern states. This is not the path to national unity or economic stability,” the CNG stated.
The coalition also criticised the lack of transparency in the decision-making process, emphasising that no comprehensive data or analysis has been provided to justify the changes.
According to the CNG, without clear evidence and transparent decision-making, it is impossible to accurately assess the potential negative impacts of the reform.
“We cannot allow policies to be implemented without a thorough understanding of their implications. The government must ensure that any tax reform is fair and equitable for all states,” it added.
The CNG outlined three key demands, including transparent and equitable revenue sharing stressing that the government must ensure fairness in revenue allocation to prevent further marginalisation of economically weaker states.
It stated that clear data and analysis should be presented to justify the proposed changes to the VAT formula, as well as a consultative approach, with the government engaging with civil society organisations, experts, and other stakeholders to ensure the tax reform aligns with the needs of all Nigerians.
The CNG urged the Senate to suspend further consideration of the Tax Reform Bill until all the grey areas are addressed.
“We must stand together to demand a fair tax system that does not deepen existing regional disparities. Our future depends on it,” it stated.
Meanwhile, a chieftain of the Peoples Democratic Party (PDP), Dr Adetokunbo Pearse, said opposition by the North against the Tax Reform Bills is based on the belief that the derivation model is skewed against the states with weak Internally Generated Revenue (IGR) which are mostly found in the region.
He said the priority for the country now is not tax reform, but economic reform that will impact on the lives of the citizens.
Pearse added that what the North needed today is an economic policy that will devolve powers to the regions and enable the North to utilize its vast mineral resources of gold, phosphate, among others, as the over-centralised governmental system had aggravated the raging insecurity and endemic poverty in the North.
Pearse acknowledged that President Tinubu’s Tax Reform Bills contained some positives that could help to harmonise tax collection and reduce the tax burden on low-income earners.
“Most of President Tinubu’s Tax Reform bills will be beneficial to the nation, but the changes in the area of Value Added Tax in particular are skewed against the states with weak Internally Generated Revenue, IGR. Most of these poorer states can be found in the North, hence the most virile opposition to the changes are emanating from up North.”
He added: Pearse who noted that the North has since independence not been as economically buoyant as the South, asserted that the way to correct the imbalance was not to introduce legislation that would further impoverish the region, but through an economic policy that would devolve powers to the region and enable it “to utilize its vast mineral resources of gold, phosphate, bauxite, uranium, and lithium as well as its rich agricultural produce to develop its economy.”
“It is common knowledge that since independence, the North has not been as economically buoyant as the South. The way to correct this imbalance is not to introduce legislation that would further impoverish the North.
“What the North needs is an economic policy which would devolve powers to the region, and that would enable it to utilize its vast mineral resources of gold, phosphate, bauxite, uranium, and lithium as well as its rich agricultural produce to develop its economy.
“It is Nigeria’s over-centralized governmental system which has aggravated the North’s raging insecurity and endemic poverty. Tax policies which demonize one group of people only deepen disunity and mutual distrust.
“A genuine leader should know that the problem of the North is not a northern problem, but a Nigerian problem. In order to resolve the country’s most pressing economic and security challenges, we must strive to modernize the North. This is in our overall national interest.’
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