Ali Ndume, the senator representing Borno South, has faulted the governors’ endorsement of a 30% derivation formula in the proposed Tax Reform Bills, arguing that it is excessive and unfair to other regions.
The Tax Reform Bills, which include the Joint Revenue Board of Nigeria (Establishment) Bill, 2024; Nigeria Revenue Service (Establishment) Bill, 2024; and Nigeria Tax Bill, 2024, have sparked heated debates across the country since their introduction in the National Assembly.
The bills aim to overhaul Nigeria’s tax system, streamline revenue collection, and introduce a revised revenue-sharing formula have passed the second reading in the Senate.
After a period of vehement opposition, the Nigeria Governors’ Forum, last week standing up from a meeting with the Presidential Tax Reform Committee, threw its support behind the bills, proposing a Value Added Tax (VAT) sharing formula of 50% equality, 30% derivation, and 20% population.
This position was outlined in a communiqué signed by Kwara State Governor Abdulrahman Abdulrasaq who is the chairman of the forum.
Read also: Nigeria’s tax reforms to take effect in July, says Oyedele
However, Ndume who has been very critical of the bills, expressed dissatisfaction with the governors’ stance during a phone interview with our correspondent on Sunday in Abuja.
He questioned the justification for allocating 30% of derivation to oil-producing regions, stating, “Even in regions bearing the brunt of oil exploration, taking 30% is too much.
“Why would they take that amount when others are also in need of development funds?”
The senator also criticized the Federal Inland Revenue Service (FIRS) for charging 4% as collection fees, describing it as an exorbitant administrative cost.
“The FIRS is only performing administrative functions, so why should they be charging 4%? Collection fees should not exceed 1%,” he argued.
Ndume voiced concerns over the economic burden on Nigerians and called for a reduction in VAT rates.
He said, “At a time when people are struggling to make ends meet, tax rates should be decreased to 5% or even 3%, just as Ghana and the United States have done to support their citizens. Expanding the tax base and ensuring corporations like banks and telecom companies pay their fair share is the way forward.”
While acknowledging that tax reform is long overdue, Ndume insisted it must prioritize the welfare of ordinary Nigerians.
“We need to reform the tax system, but it should not disadvantage the masses, especially now when they are barely surviving.”
The senator urged the National Assembly to carefully review the proposed legislation to address these concerns and ensure the reforms are fair, equitable, and beneficial to all Nigerians.
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