Breaking: 36 Governors Propose VAT Sharing Formula, Breakdown in Video

• President Bola Tinubu's tax reform bills have finally got the support of the Nigerian governors, who earlier rejected them
• The governor, at the end of their meeting on Thursday, January 16, proposed a new VAT-sharing formula for the tax reform
• According to the governors, there should be no increase in VAT pending the completion of the ongoing economic reform

The 36 governors of Nigeria, under the umbrella of the Nigeria Governors Forum, have proposed a new tax-sharing formula to address members' concerns about President Bola Tinubu's tax reform bills.

In their communique on Thursday, January 16, following their meeting with the tax reform committee in Abuja, the governors unanimously opposed an increase in the Value Added Tax (VAT) rate.

Governors advocate economic stability

The governors emphasized the need to maintain economic stability and safeguard citizens' welfare during President Tinubu's economic reforms, explaining their rejection of an increase in VAT.

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Speaking on the inequalities in resource allocation, the forum approved a new VAT sharing formula, which indicated 50 percent based on equality, 30 percent based on derivation, and 20 percent based on population.

According to Abdulrahman Abdulrasaq, the chairman of the forum and governor of Kwara state, the revised formula would promote balance and fairness in resource distribution across the country. It addressed the needs of smaller states and incentivised revenue generation at the subnational level.

See the governors' communique here:

Why governors reject an increase in VAT

The governors cited the potential impact on consumers and businesses in their objection to the VAT rate increase.

In their resolution, the governors called for the continuation of exemption on agricultural products and other essential goods from VAT. They emphasised the need to protect the vulnerable Nigerians and promote food security.

The governors also declared their support for the ongoing legislative process at the National Assembly to enact comprehensive Tax Reform Bills.

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The governors also advocated that levies allocated to some national agencies should be retained. These included the National Information Technology Development Agency (NITDA), the Tertiary Education Trust Fund (TETFund), and the National Agency for Science and Engineering Infrastructure (NASENI).

See the video below:

Controversies on Tinubu's tax reform bills

The tax reform bills have been a subject of controversy, with many critics arguing that they will disproportionately affect the North. The bills propose a revised VAT sharing formula, corporate income tax reductions, and support for small businesses.

However, Northern leaders believe that the bills will exacerbate poverty, hunger, and insecurity in the region. Borno State Governor, Prof. Babagana Zulum, warned that the bill could stall progress in the North and other regions.

PDP senator knocks Tinubu over tax reform bills

Legit.ng earlier reported that President Bola Tinubu was criticized for his firm position on the controversial tax reform bills during his recent media chat.

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Senator Mohammed Onawo, representing Nasarawa South Senatorial District, said it was unfortunate that the president was passing a judgment on bills before the National Assembly.

Onawo maintained that Tinubu should know better about the legislative process and allow the lawmakers to do their job without any external interference.

Source: Legit.ng