The Nigeria Governors’ Forum (NGF) has strongly opposed the proposed increase in Value Added Tax (VAT) while expressing support for the ongoing legislative process concerning the Tax Reform Bills. The governors also presented a proposal for a more “equitable” VAT sharing formula.
This position emerged following a meeting between the NGF and the Presidential Tax Reform Committee on January 16, 2025, where key national issues, including the reform of Nigeria’s fiscal policies and tax system, were discussed.
In a statement released on Thursday and signed by Abdulrahman AbdulRazaq, Governor of Kwara State and Chairman of the NGF, the forum outlined its resolutions, which include:
1. Support for Comprehensive Tax Reform: The NGF reiterated its commitment to overhauling Nigeria’s outdated tax laws, emphasizing the need for a modernized system to strengthen fiscal stability and align with global best practices.
2. Proposed VAT Sharing Formula: The forum endorsed a revised VAT distribution model, which allocates 50% based on equality, 30% based on derivation, and 20% based on population, ensuring a fairer allocation of resources.
3. Opposition to VAT Increase: The NGF members agreed that the current VAT rate should remain unchanged and opposed any reduction in Corporate Income Tax (CIT) at this time, citing the need to maintain economic stability. The governors also called for the continued exemption of essential goods and agricultural products from VAT to protect citizens’ welfare and support agricultural productivity.
4. Recommendations on Development Levies: The forum recommended that there should be no terminal clause for the Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA) in the allocation of development levies in the proposed tax bills.
5. Continued Legislative Support: The NGF pledged its support for the ongoing legislative process in the National Assembly, with the aim of finalizing and passing the Tax Reform Bills.
The NGF’s stance highlights a commitment to equitable tax reforms and the protection of citizens’ interests while pushing for the modernization of Nigeria’s fiscal policies.