Our Nigeria News Magazine
The news is by your side.

Tax Reforms: Fruits Of Resilience

Tax Reforms: Fruits Of Resilience

49

Tax Reforms: Fruits Of Resilience

By Tahir I Tahir Talban Bauchi

Nothing in recent times has elicited so much attention and controversy in public discourse as much as the tax reforms debate. As usual it was laced with the traditional sensationalism that government decisions as such generate. It was Inescapable that it was greeted with regional and tribal sentiments, some even religious, which form the primary prism through which govt policies and actions are viewed. It was ready material for govt’s opposition to latch onto, and lynch as anti-people. It was also tagged anti-north, which has become the opposition’s shoe horn, in a concerted effort to make sure that govt’s policies fit into their narrative that everything they do is anti-north.

Previous statements by a few northern governors did not help matters in this regard. But most importantly, the tax reforms affect everyone, both in the north and in the south. The latest statement by the Nigeria Governors Forum, NGF, clarifies that their position, is not a northern governors position, but that of the entire Nigerian governors in general. Their position finally throws their weight and support to the tax reforms, proposing a few alterations to the VAT sharing formulae for derivation (which is the main controversy), equality, and population.

President Bola Ahmed Tinubu GCFR’s response to the governors forum has confirmed his support for their proposals. He said that the consensus transcends regional, ethnic, and political barriers to advance Nigeria’s development. He commended the NGF, the Progressive Governors Forum, and the Northern Governors Forum, for reaching a bi-partisan resolution to the controversy stirred by the tax bills. He also noted that the dialogue between the NGF and the Presidential Committee on Tax and Fiscal Policy Reforms, highlights the power of constructive conversation in resolving differences.

The President also encouraged other stakeholders with ideas and suggestions for refining the tax bills to engage with the ongoing legislative process at the National Assembly. He also called on the National Assembly to expedite the legislative process for these crucial bills so that the country can reap the benefits of the reforms.

This means that the President has not foreclosed further contributions and adjustments to the bills and the process is still not yet concluded. However, major strides have been made in the advancement of the reforms that had hitherto been subjected to stiff opposition by the NGF. The Nassarawa State Governor, who was one of the critics to the bill, has confessed that many aspects of the bill were gravely misunderstood by a lot of them, clarifying that the Tax Reforms Committee did a good job of educating them on the contentious issues.

The so called disadvantaged states are both in the North and South of the country. The new formulae will not further ‘disadvantage’ them. This has been established by the NGF, and the tax committee. Neither the tax committee proposal, nor the new NGF proposition will reduce their share from the VAT proceeds. The VAT percentage from alcohol is less than 15% of total VAT revenue. Even if it is expunged from northern sharia states, the drop in VAT revenue to those states would not be significant. This was never proposed, even though it made it to the front burner of the debate. Low VAT proceeds are found in both northern and southern states.

The tax committee did illustrate that the new formulae would not disenfranchise any particular states.The new formulae proposed by the NGF has put a nail to the coffin carrying the corpse of the disenfranchisement agenda. The states however, need to structure and embolden their tax collection systems, to boost revenue generation. The tax reforms would be giving more power to state and local government structures, primarily to make more tax revenue.

NASENI, NITDA and TETFUND would not be scrapped or defunded in the new bills, as feared in the previous proposals. The NGF highlighted this in their statement. The NGF also supported the idea of maintaining the current VAT rate for economic stability. Their efforts have truly emboldened the political stability of our democratic structures. Mr. President’s sagacity in not withdrawing the bills in their entirety, but subjecting them to rigorous debates by stakeholders, and in this instance, the entire country, has improved our participation and grasp of debates in national issues, our maturity, and tolerance. His resilience has paid off. The entire process has churned out positions that are acceptable to all. Even the peculiar and ever dissenting voices have been mute on the statements by the NGF, and Mr. President. It is now imperative on the Tax Reforms Committee to improve tax collection, especially by widening the tax net. This is the main drain pipe of tax revenue in the country. The new tax agencies as proposed should be saddled with this responsibility. Tax revenues are draining away at the local and state govt levels to unscrupulous officials, as well as poor and porous collection systems.

The new tax reforms have enlightened us all about the complicity of state govts in poor revenue generation, for the states, and as contribution to the federation.

State govts must wake up to this call. Our attention for ages is largely on the Federal Govt, but most of our problems and solutions lie in the state governments.

Tax Reforms: Fruits Of Resilience

Leave A Reply

Your email address will not be published.