The Presidential Tax Reform Committee led by Mr. Taiwo Oyedele has been engaged in townhall meetings, talks with state governors, chief finance officers, journalists in a concerted effort to elucidate and the intricacies of the proposed tax reform bills, CHIMA NWOKOJI, while highlighting the townhall hosted by Channels TV, dissects various views in this report.
The Presidential Tax Reform Committee, led by Mr Taiwo Oyedele, has embarked on a rigorous campaign to explain the provisions and implications of the proposed tax reform bills. Through town hall meetings and engagements with stakeholders—state governors, chief finance officers, journalists, and private sector representatives—the committee has sought to clarify its intentions and address criticisms. While the proposed reforms have sparked debates across the nation, this dialogue reflects an opportunity for collective progress and the need for balanced consensus.
Some analysts have said that the current sharing formula has made many states lazy as they collect federal money, pay salaries, do white elephant projects and only 7 out of 36 states are viable; the rest survive on handouts.
The analysts said derivation-based model for tax will force states to wake up, get productive, and earn their share. They argue that most opposing voices had not read the bill, they are only repeating what they are told by their political and religious leaders.
While stakeholders expressed varying perspectives, several points of consensus emerged:
The reforms aim to streamline and simplify the tax system, reducing inefficiencies and fostering business growth. It is clear that increment in the sharing formula based on derivation and consumption are the most striking issues.
By assigning taxing rights to states and focusing on consumption-based revenue allocation, the reforms promote sub-national autonomy. The proposed system addresses regional disparities, particularly benefiting historically underserved areas like Northern Nigeria Stakeholders agree that Nigeria’s fiscal system requires immediate restructuring to support sustainable development.
However, challenges remain, particularly around communication and stakeholder engagement. Critics argue that the lack of extensive pre-submission consultations with governors and other key players has created unnecessary friction.
A herd of analysts agreed that the proposed tax reforms represent a significant opportunity to modernise Nigeria’s fiscal framework, promote economic equity, and foster sustainable growth. However, achieving these goals requires constructive dialogue and collaboration among all stakeholders.
Yakubu Dogara: A Northern perspective on wealth creation
A former Speaker of the House of Representatives, Yakubu Dogara, positioned himself as a strong advocate for the proposed reforms. At a town hall meeting organised by Channels Television, Dogara emphasised that the North stands to benefit significantly, particularly because the bill proposes-revenue sharing based on consumption rather than corporate headquarters locations.
“I am 100% for it,” Dogara stated, urging the North to seize this opportunity to foster wealth creation and self-reliance. He cited historical successes like the groundnut pyramids and cotton production as examples of the North’s economic potential. Dogara believes the bill, if implemented, would encourage northerners to harness the region’s natural resources, including livestock, which could position Nigeria as a global dairy and beef exporter.
Dogara praised President Bola Tinubu for initiatives like the creation of the Ministry of Livestock, which he sees as pivotal for the North. He noted that the global dairy market is projected to reach $2.5 trillion in three years, arguing that capturing even 5% of the market could generate $250 billion for the region.
He also called for unity, urging Northerners not to label the reforms as “anti-North” and dismissing suggestions to withdraw the bill, which he argued would be interpreted as cowardice. “President Tinubu has done something significant for the North,” Dogara said, underscoring the broader potential of the reforms for Nigeria’s economic restructuring.
Taiwo Oyedele: Chairman’s Vision for tax equity and prosperity
As chairman of the Tax Reform Committee, Oyedele has consistently emphasised the transformative potential of the proposed bills. According to Oyedele, the reforms aim to modernise Nigeria’s tax system, shifting focus from revenue generation to economic growth and shared prosperity.
This bill will repeal the old stamp duty law of 1939 and introduce a broad-based, easy-to-collect stamp duty law, with all revenue going to the states,” Oyedele explained. He highlighted other key provisions, such as assigning taxing rights for limited liability partnerships to states, thereby empowering sub-national governments.
Oyedele dismissed fears that the reforms would disproportionately burden low-income earners. “Exempting low-income earners from personal income tax doesn’t mean they won’t contribute through other taxes like VAT. Globally, middle-class citizens, not the poorest, hold governments accountable,” he clarified.
Oyedele also underscored the committee’s inclusivity, noting that over 100 members, including university students and representatives from all geopolitical zones, contributed to the reform process. He acknowledged the urgency of addressing Nigeria’s economic challenges, stressing that the reforms are designed to foster business growth and income generation, with taxation as a natural outcome of prosperity.
The committee chairman explained that Lagos State share under derivation decreased significantly from 80.26 percent to 15.28 percent. For Kano State, currently contributing just 0.89 percent, the corrected data shows an attribution of 6.17 percent, a remarkable 594 percent increase.
On NRS and tax administration
“I want to clarify an earlier point. The Nigerian Revenue Service (NRS) will not collect customs duties under the proposed bills before the National Assembly. Currently, over 60 federal agencies collect taxes, and the bills aim to consolidate and streamline this process. However, only a few agencies will have their tax collections reassigned to the NRS. While this consolidation is the ideal destination, it’s a gradual process that may take 5-10 years.
“Inclusivity is a priority. We’re working to simplify tax filing, reduce the need for compliance, and incorporate technology like AI. For instance, we’re exploring systems where taxpayers can file returns through voice interaction or pre-filled forms using third-party data. We aim to translate the laws into multiple languages, including Igbo, Yoruba, Pidgin, Braille, and audio formats. While these efforts won’t solve all challenges for people with disabilities, they represent a step forward.
“Over 50 percent of the average household income in Nigeria is spent on food. To alleviate this, we’ve proposed removing taxes on food in the bills, which directly helps reduce hunger.
By 2030, TETFund will no longer receive a special levy, redirecting these funds to a Student Loan Fund. This raises concerns about rising school fees. However, TETFund’s contributions are insufficient, with less than $1 billion annually—an amount one university alone could require. A sustainable education system involves higher fees for the wealthy, while the poor benefit from scholarships and loans. This model, coupled with endowments and foreign student enrolment, could generate significant funding.
“On Implementation and Oversight, the proposed bills include frameworks for implementation, safeguards, and regular reporting. For instance, the Ombudsman will report quarterly to both the public and the National Assembly. Additionally, the Tax Appeal Tribunal now extends to sub-national disputes. These measures aim to ensure effective implementation and accountability, “ Oyedele stated.
Paul Alaje: Advocacy for increased VAT
Paul Alaje, Chief Economist at SPM Professionals, expressed support for the reforms, particularly advocating for an increase in Value Added Tax (VAT) from the current 7.5% to 15% in the medium term. “Nigeria’s VAT rate is among the lowest globally,” Alaje argued, emphasising that a higher VAT could generate critical revenue for public services while aligning Nigeria with international standards.
Baba Yusuf: A call for public understanding
Baba Yusuf, CEO of Global Investment Trade Company, urged Nigerians to familiarise themselves with the bill, emphasising its equitable and data-driven approach. Yusuf noted that the reforms would particularly benefit northern Nigeria, balancing regional revenue allocation and fostering economic equity.
“This reform speaks to balance and equity. It provides a platform for improvement moving forward,” Yusuf stated, encouraging constructive dialogue among stakeholders.
Governor Abdullahi Sule: The need for state-Level engagement
Governor Abdullahi Sule of Nasarawa State underscored the importance of involving governors in discussions about the reforms. Joining the Channels TV town hall meeting via telephone, Sule highlighted concerns about VAT allocation, suggesting that early engagement with governors could have preempted misunderstandings.
While supporting the bill’s objective to eliminate multiple taxation, Sule critiqued the timing and communication of the reforms. He emphasised that governors, many of whom are former CEOs, are well-versed in tax issues and should have been more actively consulted. Sule commended the bill’s emphasis on consumption-based tax distribution but urged for better collaboration moving forward.
Samuel Agbeluyi: Revenue sustainability and business growth
The President of the Chartered Institute of Taxation, Samuel Agbeluyi, applauded the government’s focus on tax revenue as a sustainable funding source. Agbeluyi emphasised that the reforms would reduce the cost of doing business by addressing inefficiencies like multiple taxation.
Agbeluyi also highlighted the importance of building trust between taxpayers and the government, suggesting that the reforms could foster voluntary compliance. “Voluntary compliance is far better than enforcement,” he argued, adding that a simplified and transparent tax system would encourage more individuals and businesses to enter the tax net.
The committee’s outreach efforts have laid a foundation for understanding, but more work is needed to address lingering concerns and build consensus. By fostering trust, simplifying processes, and emphasising shared prosperity, Nigeria can chart a course toward a more inclusive and robust economy.
The reforms, if implemented with transparency and cooperation, have the potential to redefine Nigeria’s fiscal landscape for generations to come.
Distribution controversy in tax reform Bills
In the new Tax Reform Bills, Sharing based on equality is reduced from 50 percent to 20 percent. Sharing formula based on Population reduced from 30 percent to 20 percent and sharing based on Derivation increased from 20 percent to 60 percent.
Current distribution of VAT proceeds:
- FG – 15%
- States – 50%
- LGs – 35%
85% for States and LGs shared as follows:
- Equality – 50%
- Population – 30%
- Derivation – 20%
New/Proposed VAT sharing formula:
- FG – 10% (reduced from 15%)
- States – 55%
- LGs – 35%
90% for States and LGs to now be shared as follows:
- Equality – 20%
- Population – 20%
- Derivation – 60%
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