Tinubu urges Senate to pass workable Tax Reform Laws

…RMFAC, others endorse proposed bills

…Northern group dismisses opposition claims

…30% of Nigerians don’t pay tax-Akpabio

President Bola Tinubu has called on the Senate to ensure that the tax reform bills before the National Assembly result in effective and practical legislation.

His appeal comes four months after forwarding the bills for legislative consideration and passage.

The call was made known during a public hearing organized by the Senate Committee on Finance in Abuja on Monday, where various stakeholders expressed support for the proposed laws.

Sani Musa, the Chairman of the Senate Committee on Finance, disclosed Tinubu’s position in his remarks at the hearing.

He said, “I met President Bola Ahmed Tinubu two days ago regarding the tax reform bills, and he instructed me, ‘Mr. Chairman, go and do the needful.

“ Give me a law that is workable from the tax reform bills I submitted to the National Assembly in October last year,’” Musa stated.

Tinubu had in October sent four Tax bills to the National Assembly.

The proposed bills under review include the Nigeria Tax Bill 2024, the Nigerian Tax Administration Bill 2024, the Nigeria Revenue Service Establishment Bill 2024, and the Joint Revenue Board Bill 2024.

At the dawn of the Introduction of the bills, the Northern Governors and the Nigeria Governors Forum rejected the bills describing it as anti-democracy.

The legislation sought to increase Value Added Tax distributable to the sub-national governments to 55% while reducing the federal government’s share to 10%.

The new legislative regimes also proposed zero VAT on exports and essential consumptions by the masses and grant of input VAT credit on assets and services in addition to goods consumed by businesses to lower the cost of production.

Read also: Tax hikes: Tinubu’s aggressive revenue extraction will stifle growth

The bill also proposed a huge reduction in company income tax from the current 30% to 25% that would last for at least two years.

Senate President Godswill Akpabio, who declared the public hearing open, emphasized the necessity of updating Nigeria’s revenue framework to ensure economic stability and growth.

“A nation that fails to adapt its revenue system to contemporary realities risks stagnation and decline. We must embrace this responsibility with wisdom and a steadfast commitment to Nigerians,” Akpabio stated.

He also lamented that about 30% of Nigerians do no pay taxes.

“I don’t think up to 30% of Nigerians pay tax. Yet, everyone wants good services and good governance.

“This is Nigeria. Nobody believes in the rule of law and nobody believes that tax works”, he added.

According to him, over-reliance on crude oil revenue has made many Nigerians to assume that paying taxes is unnecessary.

“At a time when oil revenue is dwindling, we have to think out of the box by sourcing money from other areas. This is a fact.

“I call on all Nigerians, who are against the bills, to come and make their contributions. Don’t follow social media commentaries to act, read the bills.

“This is the future of Nigeria. These tax reform bills. All oversights by the Senate are suspended for now for us to devote enough time to the public hearing.”

At the hearing, Wale Edun, Minister of Finance and Coordinating Minister of the Economy, assured that the reforms were designed to enhance economic prosperity, not impose additional burdens on citizens.

“The tax reform bills aim to modernize outdated tax laws, promoting efficiency, equity, and economic growth,” Edun said.

Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), also endorsed the reforms, describing them as vital for economic growth through improved tax collection.

“As Nigeria’s largest taxpayer, NNPCL has reviewed these bills and found them reasonable and necessary for an efficient tax system,” Kyari said.

Similarly, the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Shehu, reversed his earlier stance and pledged full support for the reforms, recommending adjustments in Value Added Tax (VAT) distribution to subnational governments.

Shehu said, “We are 100% in support of the bills because they will free our funds and enhance economic development across the Federation.

“However, the issue of VAT distribution needs to be looked at for a new sharing formula.

“The committee should adopt and listen to the Governors’ Forum (NGF) on the new sharing formula. We fully support the reforms”, he added.

The NGF had initially opposed the bills after they were introduced in October 2024.

However, in January 2025, the governors announced that they supported the bills and recommended a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources of 50 percent based on equality, 30 percent based on derivation and 20 percent based on population.

A communique the group issued after a meeting, reads partly, “We, members of the Nigeria Governors’ Forum (NGF) and presidential tax reform committee, convened on the 16th of January 2025 to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system, and arrived at the following resolutions:

“The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws.

“Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices.

“The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50% based on equality, 30% based on derivation, and 20% based on population.”

It noted further, “The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.”

Chairman of the Fiscal Responsibility Commission, Victor Muruako, stated that the proposed reforms align with the Fiscal Responsibility Act of 2007.

Addressing concerns about regional opposition, the Arewa Think Tank, led by convener Muhammad Yakubu, dismissed claims that the northern region was against the reforms.

“It is false to claim that the North is against the tax reform bills. We recognize their benefits and have sensitized our people accordingly,” Yakubu affirmed.

In a related statement, Professor Mohammed Bello Dogarawa, representing the Supreme Council for Sharia in Nigeria, also dismissed the notion of northern opposition.

The Executive Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji; the Governor of the Central Bank of Nigeria, Yemi Cardoso; and the Comptroller-Generals of the Nigeria Customs Service and the Nigeria Immigration Service are scheduled to present their views at the hearing on Tuesday.