House of Reps inches closer to passing controversial tax reform bills

When the House of Representatives resumed plenary sessions Tuesday, February 4th, it was clear that there was no more time to waste. Regional caucuses wasted no time diving into discussions surrounding the highly anticipated, but hotly-debated tax reform bills.

In this past week, regional caucus meetings were held closed-doors on the way forward for the tax reform bills, preparatory for the second reading where the general principles will be debated. It appeared that positive progress has been made and the House may be nearing a consensus judging by the mood of lawmakers and some post-meeting chats with journalists.

Babajimi Benson, representing Ikorodu Federal Constituency, emerged from his caucus meeting looking optimistic. He told journalists that the meetings resulted in a strong consensus to promote the best interests of the country through an inclusive and transparent legislative process.

Read also: Tax reforms bills: Ndume faults Govs on 30% derivation endorsement

Kolawole Akinlayo, lawmaker representing Moba/Ilejemeje/Ido Osi Federal Constituency, said the House is now ready to pass the amended version of the bills endorsed by the state governors in the coming week.

For months, the tax reform bills have been a source of contention, especially at the House of Representatives. While the Senate has since passed the tax bills for second reading and referred them to its Committee on Finance for further legislative action. The bills, however have stalled in the Green Chamber, and only managed to scale through the first reading owing to stiff opposition especially from members of the northern caucus.

The last attempt at a second reading in the Green Chamber ended in chaos, with heated debates forcing the leadership to slam the brakes and call for more consultations, as tension mounted.

But the four tax reform bills, which includes the Joint Revenue Board of Nigeria (Establishment) Bill, 2024, The Nigeria Revenue Service (Establishment) Bill, 2024, The Nigeria Tax Administration Bill, 2024 -and the Nigeria Tax Bill, 2024, may now pass second reading at the House following ongoing caucus meetings. There are also some indications that the House may pass the amended version of the bills endorsed by the state governors.

The governors have been working to find a middle ground. During recess of the National Assembly, the Nigerian Governors’ Forum (NGF) met with the Presidential Committee on Tax Policy and Fiscal Reforms, the team behind the bills, and reached a middle ground, tweaking some of the contentious proposals.

Among other alterations, 30% of Value Added Tax (VAT) revenue will be allocated based on derivation—a significant drop from the initial proposal of 60%. This change aims to address concerns about regional equity. Meanwhile, 50% of VAT revenue will now be shared equally among states, with the remaining 20% distributed based on population.

Following the compromise, Abdullahi Sule, governor of Nasarawa State stated that the governors would now seek the support of their legislators to ensure the bills’ passage in line with the agreed-upon consensus.

Read also: Tinubu’s Tax Reform Bills and Nigeria’s economic growth

Tajudeen Abbas, speaker of House has also emphasised to his colleagues on the need to move forward. He assured that contentious clauses would be thoroughly reviewed during public hearings, with inputs from the Nigeria Governors’ Forum (NGF) and other stakeholders.

The coming weeks will tell whether the newfound optimism translates to action on the House floor. For now, the stage is set for a critical second reading, and lawmakers appear ready to deliver.

Moreover, the federal government wants the National Assembly to pass these bills before the end of March, 2025. Taiwo Oyedele, chairman of the Presidential Committee on Tax Policy and Fiscal Reforms said the timeline would give government ample time to notify taxpayers to prepare themselves with capacity for implementation.

Oyedele had announced that government aims to kick off implementation early July, 2025. He also enthused that despite backlash, the bills will transform Nigeria’s economy, boost ease of doing business, while protecting vulnerable Nigerians.