The former governor of Anambra State, Peter Obi, has advised the federal government to secure Nigerians’ “buy-in” (agreement) before effecting any policy changes embodied in the tax reform bills currently before the National Assembly.
He disclosed this in a statement on Monday, joining the discourse on the bills, which have faced criticism, especially from Northern stakeholders.
The former presidential candidate of the Labour Party in the 2023 general election maintained that while tax reform is a critical issue, and there is nothing wrong with pursuing it, such reform must be subject to robust and informed public debate.
Transparent Engagement
Obi argued that a public hearing on tax reform is essential, allowing Nigerians from all walks of life to engage meaningfully, adding that this is how public trust is built and inclusivity in policymaking is ensured.
“Matters of this magnitude require extensive deliberation and careful consideration—they should never be rushed.
“Public hearings must be conducted to allow for diverse opinions and inputs. Such public hearings would also enable the broadest spectrum of public opinion to be reflected in public policy.
“Furthermore, the government must sensitize the people and secure their buy-in for any policy changes.
“Trust and legitimacy are the foundation of effective governance, and without them, even the best-intended reforms may fail,” he stated.
More Insight
Lending his voice further, Obi stated that when considering tax reforms and similar issues, “it is insufficient to focus solely on the benefits to the government, particularly in terms of increasing revenue collection.”
He stated that stakeholders must also take into account the overall impact of the bills on the nation and the sustainability of all its regions if they are passed into law.
He asked the federal government to prioritize transparency, deliberation, and public engagement in charting the path forward regarding the tax reform bills, highlighting that such an approach exemplifies a truly participatory democracy.
What You Should Know
Obi’s reaction comes alongside other political actors, including former president Atiku Abubakar.
Abubakar’s position on the bills is that “the public hearing process must facilitate open and inclusive participation by all stakeholders, including Civil Society Organizations, traditional institutions, politicians, public officials, and subject matter experts.”
- The new tax bills under consideration in the National Assembly propose adopting a derivation principle in the allocation of VAT revenues between the federal government and sub-national entities.
- These proposals have sparked controversy, with northern elites openly rejecting them, arguing that the changes may not favor their region.
- Under the current Section 40 of the VAT Act, VAT revenue is allocated as follows: 15% to the Federal Government, 50% to the States and Federal Capital Territory (FCT), and 35% to Local Governments. The allocation to states and local governments incorporates a derivation principle of at least 20%.
- Although not explicitly detailed in the VAT Act, other factors influencing the distribution include 50% based on equality and 30% based on population.
Additionally, 4% of collections are allocated to the Federal Inland Revenue Service (FIRS) as a collection fee, while 2% goes to the Nigeria Customs Service (NCS) for import VAT.
