A coalition of civil society organizations, the Citizens Network for Peace and Development in Nigeria, has rejected the Value Added Tax, VAT, sharing formula proposed by the Nigeria Governors Forum, NGF.
Arogidigba Global Journal reported that the NGF had, at a recent meeting in Abuja, backed President Bola Tinubu’s controversial tax reform bills, which are pending at the National Assembly.
The governors also rejected moves by the Federal Government to increase VAT.
As part of their input in the legislation on the tax reforms, the Nigerian Governors Forum proposed a new VAT sharing formula.
According to the sharing formula proposed by the governors, 50 percent of VAT would be allocated on the basis of equity, 30 percent on the basis of derivation, and 20 percent on the basis of population.
However, in a communique released after a town hall meeting in Abuja on Friday, where it outlined the ‘citizens position on the tax reform bills’, the Citizens Network for peace and Development in Nigeria rejected the VAT sharing formula proposed by the governors.
The communique was jointly signed by Okorie Ikechukwu Raphael, National Coordinator, Citizens Network for Peace and Development in Nigeria, Chijioke Nwachukwu, Ben-Kalio Adokiye, Dangana Abubakar, Joachim Ikechukwu , Ali M. Paul and Alhaji Isa Usman Tiki.
Backing the tax reform bills, the network noted that the VAT sharing formula proposed by the governors would not encourage productivity and economic growth.
“We categorically reject the Nigeria Governors Forum’s proposed VAT sharing formula, which allocates 50% based on equity, 30% based on derivation, and 20% based on population.
“This formula does not take into account productivity and economic growth, which are critical factors in determining a state’s contribution to the national economy.
“By ignoring productivity, this formula may inadvertently penalize states that are making concerted efforts to diversify their economies and promote economic growth.
“We urge the National Assembly to reconsider this proposal and adopt a more nuanced approach that rewards productivity and economic growth,” the communique said.
Stressing that taxation must serve the common good and prioritize the most vulnerable in the society, the network observed that, when enacted into law, the tax reform legislation would provide opportunity for a fairer redistribution of wealth, allowing the government to prioritize the needs of the underprivileged.
“If we consider the notion that the true measure of any society is how the society treats its most vulnerable members, then the beauty of the Tax reform Bill lies with it’s intent to make richer individuals and entities to contribute proportionally more.
“This will definitely reduce the tax burden on the poor and ensure that funds are available for public services that benefit marginalized communities.
“In addition to making the rich pay more taxes, the Bill seeks to promote equity and fairness. This proposed game changer is designed to ensure that high-income earners and large corporations contribute proportionally to national development. It no doubt, corroborates the assertion that from whom much is given, much is expected.
“There is no gainsaying the fact that this Bill has the potential to ensure that revenues derived from taxes are channelled into critical sectors such as education, healthcare, and rural development, thereby reducing poverty and inequality.
“As we all know, the wealth of a nation lies in the health of its people,” the communique added.
Noting that the proposed law focuses on inclusive taxation, the communique explained that the reform is aimed at stimulating small and medium-scale enterprises, SMEs, encouraging grassroots entrepreneurship, and fostering economic diversification, as well as sustainable growth for the future generations.
“Specifically, we commend the Tax Reform Bill’s provisions that exempt individuals and households earning less than N1 million per year and companies earning less than 50 million per year from taxation. This bold initiative demonstrates the government’s commitment to alleviating poverty and promoting economic inclusivity.
“By shielding low-income earners and small businesses from the tax burden, the Bill will undoubtedly stimulate economic growth, create jobs, and improve living standards.
“Given its pro-poor orientation, we strongly advocate for an accelerated passage of the Tax Reform Bill to ensure its timely implementation and realization of its benefits for the most vulnerable segments of our society.”
In the same vein, the network advocated that revenues generated through the tax reform must be transparently managed and accounted for in order to ensure they serve their intended purpose.
Calling on Nigerians, and particularly members of the National Assembly, to support the tax reforms, the network asserted, “The Tax Reform Bill, if passed into law and implemented with the right focus and fairness, has the potential to be a cornerstone for poverty alleviation and just economic redistribution in Nigeria.”