Tax Reform Bills: How Tinubu, Governors struck deal
More facts have emerged as to how President Bola Ahmed Tinubu and the 36 state governors of the federation finally arrived at a consensus on the contentious tax reform bills.
The president, on Thursday Evening, issued a statement praising the governors who, speaking under the umbrella of the Nigeria Governors Forum (NGF), announced some adjustments to the tax bills.
Thereafter, less than 24 hours after they came up with a communiqué, President Tinubu poured encomiums on the governors, saying it was clear that they meant well for Nigeria.
Sources privy to how the governors and the president agreed to move on told our correspondent that the deal was sealed in Lagos.
“The deal was perfected when the governors paid a New Year visit to Tinubu in his house in Lagos,” one of the sources, who is close to a governor, said.
“The president told them that he meant well, and he wanted them to give him the benefit of doubt,” one of the sources said.
Another source corroborated, saying the governors, while agreeing to endorse the tax reform bills, nonetheless asked the president to also make some concessions.
“There was little push back from some northern governors who said they have to have something tangible to give their people.
“The governors said the general sentiment in the region was that all the bills were targeted at pauperising the region,” another source said.
He said at the end of the day, it was agreed that the governors would go back to Abuja and meet with the Presidential Committee on Tax and Fiscal Policy Reform.
It was reported that after their meeting with the president, the governors restated their commitment to partner with his administration in advancing the nation’s development.
Speaking on behalf of the governors, Lagos State Governor Babajide Sanwo-Olu, emphasised their shared resolve to support the president’s leadership and vision for the country.
Sanwo-Olu highlighted the governors’ appreciation for President Tinubu’s leadership and their determination to align with his government’s goals to deliver social and economic transformation to Nigerians.
“It was a New Year’s visit to Mr President. It was a good time to come in and felicitate him, to wish him well in the period of the season and today, we thank God. It is the first day of the new year, and as his committed co-journeyers in this country’s leadership agenda, it is important that the forum of the governors come around and felicitate him, wish him well, and listen to him. Pretty much, that was what transpired today and I am happy that I am part of it.
“The Progressives’ chairman spoke on behalf of all of us, thanking him and giving our collective commitment that we will continue to work under his leadership, work with his government, and appreciate the strength of leadership that he puts right now and also congratulate him on his very recent nomination as Man of the Year of one of the foremost daily newspapers,” Sanwo-Olu said.
On the issue of the tax reform bills, Sanwo-Olu said the matter was not discussed during the meeting, as it remained under consideration by the National Assembly.
He, however, stated that extensive consultations had already been conducted, ensuring that the final bill would serve the best interests of all Nigerians.
But the sources said the matter actually came up.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, had at the height of the crisis pushed back on allegations that the panel did not consult with Nigerian governors, disclosing that the heads of the sub-national governments cancelled four scheduled meetings.
Oyedele, who appeared on Arise Television, also disclosed that in the course of consultations, the committee met physically with at least 120 Muslim clerics, mostly from the North as well as the League of Democrats, to break down the implications of the ongoing tax reforms.
“We have more than 20 government institutions represented. We have the private sector, whether it’s manufacturers, whether it’s women in business. We have 45 students from 22 universities across Nigeria.
“In addition to that, we had extensive engagement with the governors. I went to the governors’ forum. We wrote and wanted to meet with six governors, one from each of the six geopolitical zones. Up until this moment, it is only the governor of Lagos State we were able to see,” he had said.
It was learnt that after their return from Lagos, a meeting was organised between the governors and the tax team, which held yesterday.
The areas of contention in the bills submitted to the National Assembly included the suggested sharing of 60 per cent of Value Added Tax (VAT) revenue based on derivation, meaning states would receive funds proportional to the VAT generated within their territories.
This had been a major source of contention from governors and lawmakers, particularly from the North.
The governors have, however, recommended a sharing formula for VAT revenue with 50 per cent based on equality, 30 per cent on derivation and the remaining 20 per cent based on population to ensure an equitable distribution of resources.
The Chairman of the NGF and governor of Kwara State, AbdulRahman AbdulRazaq, who read the communiqué at the end of the meeting, said the governors’ resolutions from the meeting included a consensus “that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time, to maintain economic stability.”
This is as opposed to Section 146 of the Nigeria Tax Bill which provides for a gradual increase in the VAT rate from the current 7.5% to 10% in 2025, 12.5% in 2026, and further increments until it reaches 15% by 2030.
Main report culled from Daily Trust Newspaper