Amidst stiff opposition from the Northern Governors Forum to the tax reform bill submitted by President Bola Ahmed Tinubu to the National Assembly, the Federal Government has said the reform will bring about a fairer tax system in the country.
Recall that the Northern Governors had on Monday asked lawmakers of northern extraction in the National Assembly to block the reform tax bill which President Tinubu transmitted to the Assembly recently.
However, reacting to the opposition by the Forum, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, stated that there were no need for the opposition.
Oyedele disclosed this in a statement through his official X account on Tuesday.
Recall that IVNTVNEWS reported that the Northern Governors on Monday, rejected the proposed Tax Reform Bill by President Tinubu.
Their opposition was contained in a communiqué signed by the Chairman of the Northern Governors’ Forum, Muhammadu Inuwa.
The Gombe State Governor had rejected the bill on the ground that its proposed amendment to the distribution of Value Added Tax, VAT, to a derivative-based model.
Reacting to the Governors, Oyedele clarified that the proposed VAT derivation-based model takes into account the place of supply. Or consumption for goods and services rather than where VAT is remitted.
He said, “We share the sentiment expressed by the Northern Governors. Regarding the inequity inherent in the current model of derivation as a basis for distributing VAT revenue. This issue, in fact, affects many States across all geopolitical zones. Because the current derivation is mainly determined based on where VAT is remitted. Rather than where goods or services are supplied or consumed.
“Our proposal aims to create a fairer system by devising a different form of derivation that takes into account the place of supply. Or consumption for relevant goods and services. Whether they are zero-rated, exempt, or taxable at the standard rate.
“For example, a State that produces food shouldn’t lose out. Just because its products are VAT-exempt or consumed in other States. The State where the supply originates should be recognized for its contributions. The same principle should apply to services like telecommunications. VAT distribution should reflect where subscribers are located,” Oyedele explained.
He added that the Government plans to collaborate with all stakeholders to find a balanced solution that is beneficial to all.
“We will collaborate with all stakeholders to address this concern. With a view to finding a balanced solution that achieves a win-win outcome for all,” he stated.
Recall that President Tinubu forwarded Tax Reform Bills to the National Assembly on October 3, 2024.
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