President Bola Tinubu has rejected the National Economic Council’s (NEC) proposal to withdraw the controversial tax reform bill, insisting the council follow the “legislative process.”
In a statement on Friday, Tinubu’s spokesperson, Bayo Onanuga, said the president emphasized that any input from the council could be incorporated during the public hearing.
According to Tinubu, the bill has already been submitted to the National Assembly, and any revisions should be handled through the legislative branch of government.
“President Tinubu commends the National Economic Council members, especially Vice President Kashim Shettima and the 36 State Governors, for their advice.
“He believes that the legislative process, which has already begun, provides an opportunity for inputs and necessary changes without withdrawing the bills from the National Assembly.
“While urging the NEC to allow the process to take its full course, President Tinubu welcomes further consultations and engagement with key stakeholders to address any reservations about the bills while the National Assembly considers them for passage,” the statement read in part.
Backstory
Nairametrics previously reported that the National Economic Council (NEC), which includes the 36 state Governors and is chaired by Vice President Kashim Shettima, has recommended the withdrawal of the Tax Reforms Bill currently before the National Assembly.
- This recommendation was made on Thursday following the council’s 145th meeting in Abuja.
- The council’s suggestion was in response to a presentation by Mr. Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, who emphasized the need for broader consultation with stakeholders to ensure alignment on the substantial impacts of the proposed tax reforms.
The Vice President noted that the tax reforms introduced under President Bola Ahmed Tinubu’s Renewed Hope Administration aim to broaden the country’s revenue base, enhance economic stability, and lessen dependency on specific sectors.
He acknowledged that these reforms present an opportunity to address stakeholders’ concerns, particularly regarding VAT reform and its effect on sub-national revenues.
What you should know
The recommendation of the NEC comes as another stumbling block to the success of the tax reform bills which have currently passed first reading in the senate.
- Earlier in the week, Governors of the 19 Northern states, along with traditional rulers and stakeholders from the region, expressed opposition to the bill, particularly concerning the draft on the derivation-based model for Value Added Tax (VAT) distribution among the country’s federating units.
- In response to the opposition from Northern Governors, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, clarified that the current VAT distribution model also poses an injustice to Northern states, not only to their Southern counterparts.
- According to Section 40 of the VAT Act, revenue is currently allocated as follows: 15% to the Federal Government, 50% to the States and FCT, and 35% to Local Governments, with a derivation principle ensuring at least 20% is allocated based on where the VAT is generated.
Although not explicitly outlined in the VAT Act, additional factors impacting distribution include 50% allocated equally and 30% based on population. Furthermore, a 4% collection fee is allocated to the FIRS, and 2% to the NCS for import VAT.
