THE 36 state governors under the aegis of Nigeria Governors’ Forum (NGF) on Thursday expressed overwhelming support for the continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reform Bills.
The Forum, however, endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitab;e distribution of resources of 50 percent based on equality, 30 percent based on derivation and 20 percent based on population.
The resolution was contained in a Communiqué issued at the end of the subnational consultations and engagement between NGF and Presidential Tax Reform Committee held in Abuja.
According to the Communiqué issued and signed by the NGF Chairman, Governor AbdulRahman AbdulRazaq of Kwara State, the governors during the high-level meeting expressed support for a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources on 50% based on equality, 30% based on derivation and 20% based on population.
The governors also agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time to maintain economic stability.
The Communiqué reads: “We, members of the Nigeria Governors’ Forum (NGF) and presidential tax reform committee, convened on the 16th of January 2025 to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system, and arrived at the following resolutions:
“The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws.
“Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices.
“The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50% based on equality, 30% based on derivation, and 20% based on population.”
The communique further read: “The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.”
The stakeholders also recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the bills.
“The meeting supports the continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reform Bills,” it said.
Meanwhile, members of the Academic Staff Union of Universities (ASUU), Bauchi zone have called on the speaker of the House of Representatives, Honourable Tajudeen Abbas, to halt further debate regarding the Tax Reform Bill, claiming it portends danger to the sanctity of the TETFund Act 2011.
Zonal chairman of the union, Professor Namu Timothy, who made call while addressing newsmen at the ASUU secretariat, University of Jos, cautioned the Federal Government to jettison any calculated attempt of replacing Tertiary Education Trust Fund (TETFund) with the Nigeria Education Loan Fund (NELFund).
He pointed out that such moves will not only undermine but also abrogate the modest gains which TETFund have been made in repositioning Nigerian universities to enable them to compete with their peers globally.
Professor Timothy enjoined Nigerians to rise against government anti-people policies as most Nigeria’s tertiary education cannot survive without TETFund intervention.
“The bill, if passed into law, will replace the Development Levy, a major source of funding of TETFund projects, so that all the funds generated from the education tax will be ceded to the newly-established Nigeria Education Loan Fund (NELFund). This is dangerous and unpatriotic.
“Meanwhile, Section 59(3) of the proposed Nigeria Tax Bill 2024 stipulates that only 50% of total collection from the Development Levy will be accessed by TETFund in 2025 and 2026 while the remaining part will be shared by National Information Technology Development Agency (NITDA), Nigeria Agency for Science and Engineering Infrastructure (NASENI) and NELFund.
“In 2027, 2028 and 2029, TETFund will receive 66.7% of total collection while in 2030 TETFund will get zero allocation. The far-reaching implication of this toxic bill is that by 2030 all the funds generated from the Development Levy will be accessed solely by NELFund.
“This portends danger for the survival of TETFund and, consequently, the Nigerian tertiary education system. It is noteworthy that TETFund has been the backbone of infrastructural development, postgraduate training, research and capacity building in public tertiary institutions in Nigeria since 1993”, professor Namu posted.
According to him, taking any portion of the education tax to fund another agency not known to the TETFund Act 2011 is not only illegal but inimical to our national development objective.
“Giving zero allocation of the Development Levy to TETFund as from 2030 is tantamount to passing a death sentence on the agency. Admonishing TETFund to seek innovative ways of generating it’s funds is absurd and ill-conceived as TETFund itself is a product of innovation of the Union during the 1992 Federal Government of Nigeria, FGN/ASUU negotiation,” he said.
However, chairman, Presidential Committee on Fiscal Policy and Tax Reforms, Dr Taiwo Oyedele, has said that in 2025, there will be reforms on budget processing, medium-term expenditure framework, and fiscal strategy paper to support economic rebasing.
Oyedele said this at the Lagos Chamber of Commerce and Industry (LCCI) 2025 Economic Review and Outlook Conference on Thursday in Lagos.
The News Agency of Nigeria (NAN) reported that the National Bureau of Statistics had announced plans to rebase Nigeria’s Gross Domestic Product (GDP) using 2019 as the new base year instead of 2010.
Rebasing means to base GDP against a benchmark of prices from a particular year over a duration of years to determine the GDP for current periods.
Oyedele said that rebasing the economy would make an impact on the country’s projected tax-to-GDP ratio and measurement of per capita income, and improve investors’ perception of the country.
According to him, rebasing the economy gives signal to investors to have second thoughts about the country and take investment in the country more seriously.
“The Consumer Price Index (CPI) basket will also be rebased to impact inflation, giving a clearer indication of where the country is going.
“On the tax reforms bills, we are engaging with key stakeholders and we believe we are making progress and expect that the bills should be enacted into law by the end of the first quarter of 2025.
“There are significant provisions in the tax reform bills that hold possibilities for the country from business reforms to cost and tax reduction while ensuring that small businesses can thrive without excess burdens.
“I am positive about 2025 and what it holds for businesses, families and individuals, and by complementing the other sound fiscal policies by the Federal Government, I think it can only get better,” he said.
The chairman said that, in 2025, inflation would start to moderate and foreign exchange rate stabilise since factors that pushed up costs might no longer be there.
He added that there would be more inflow of foreign exchange to the federation account.
Oyedele said that beyond the CPI, in 2025, the Federal Government might start producers cost index which would impact sales, measure monetary policy interventions and provide more reliable survey on inflation.
Dr Tope Fasua, Special Adviser to the President on Economic Affairs, said that implications of the rebasing included changes in the size and structure of the economy and increased tax-to-GDP ratio.
Fasua emphasised the value of optimism, saying that bad news costs African countries about 3.2 billion pounds yearly.
“Every problem is an opportunity for value.
“We must think about a campaign to promote Nigeria’s image as the cleanest, safest and most organised country in Africa,” he said.
Chief Francis Meshioye, President, Manufacturers Association of Nigeria (MAN), said that the manufacturing sector, in 2024, encountered micro-economic challenges that severely impacted its performance and contributions to the nation’s GDP.
Meshioye, represented by Dr Segun Alabi, Head, Corporate Communications, MAN, said the challenges included high inflation rate, Naira depreciation, rising interest rates, and increased electricity tariff.
He called for collective efforts to find solutions to the challenges in order to boost productivity and facilitate national development.
The MAN president stated that the outlook for the manufacturing sector would be largely dependant on the success of ongoing economic reforms, including the proposed tax reforms and stabilisation of critical macro-economic indicators.
He urged the Federal Government to remove the constraints to the growth of the economy and expedite action on the reforms to achieve the desired results.
“I am truly inspired by the resilience demonstrated by our business community, especially in the face of the numerous challenges that we encountered in recent years.
“I am confident that, together, we can overcome these challenges and build a more prosperous and sustainable future for our country.
“Let us harness our collective strength and expertise as organised private sector to drive economic growth, create jobs, and improve quality of life for all Nigerians, as the government can no longer be left to tackle these challenges alone,” he said.
READ ALSO: Governors give National Assembly thumbs up on tax reform bills