Oyedele backs governors’ VAT revision, says ‘reforms are journey, not a leap’

Taiwo Oyedele, chairman of the presidential committee on tax policy and fiscal reforms, has expressed support for the Nigeria Governors’ Forum’s (NGF) newly proposed value-added tax (VAT) sharing formula, highlighting its importance as a step toward achieving fiscal equity.

Speaking at The Platform, an event hosted by The Covenant Nation on Saturday, Oyedele addressed the NGF’s recommendation for a VAT-sharing formula of 50 percent based on equality, 30 percent on derivation, and 20 percent on population. This proposal followed deliberations between the NGF and Oyedele’s committee on January 16, focusing on overhauling Nigeria’s fiscal policies and tax systems.

Previously, the committee had proposed a formula of 20 percent equality, 60 percent derivation, and 20 percent population—an approach met with opposition from northern governors, who argued it would disadvantage their region.

Oyedele emphasised the importance of compromise in implementing reforms, stating: “You also need to consider other things, including political considerations… At the end of the day, if you need to move one kilometre, you don’t have to move all of that at once; you can’t even jump one kilometre at once. Maybe sometimes you need to just move gradually.”

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According to Oyedele, the revised formula will impact all sectors positively, particularly agriculture, manufacturing, and power generation. He pointed out provisions in the proposed tax reform bills that prioritize key industries to stimulate economic growth.

“We also have a provision in those tax bills where we call them priority sectors. It’s a pointer to where the government wants to redirect the incentive regime,” Oyedele said.

The reforms align with the broader agenda of the Tinubu administration, which submitted four tax reform bills to the national assembly on October 13, 2024. These include the Nigeria tax bill, tax administration bill, joint revenue board establishment bill, and a bill to replace the Federal Inland Revenue Service (FIRS) with the Nigeria Revenue Service.

The NGF’s revised formula is seen as a middle ground to address the concerns of different regions while advancing the government’s fiscal reform agenda. Analysts note that this gradual approach reflects the complex interplay of technical, economic, and political factors in policy-making.

As the nation anticipates the passage of the tax reform bills, stakeholders are keenly observing how these changes will shape Nigeria’s fiscal future.