The Coalition of Northern Groups (CNG), Civil Society Organisations and other stakeholders have raised concerns over the proposed tax reform bills currently under consideration by the National Assembly, alleging that the measures could exacerbate poverty and increase unemployment across the country.
They also called on lawmakers from the North to turn down the tax reform bills by the federal government.
In a communique issued at the end of their Town Hall meeting on Thursday at Arewa House, Kaduna, the groups maintained that the bills did not reflect the realities on the ground.
According to the communique signed on behalf of the groups by Muhammed Sanusi Ali, the tax reforms could increase poverty, and unemployment, weaken educational institutions and worsen the present economic hardship.
According to the groups, “The participants observed that the proposed tax reform bills, far from being catalysts for economic growth, would increase the existing economic challenges facing the North and Nigeria as a whole.
“The reforms are likely to deepen poverty, increase unemployment, and stifle local businesses already grappling with economic hardship.”
Tax Reform Bills may defund critical institutions
“The Town Hall meeting noted with great concern the provisions in the bills that propose the defunding of pivotal national institutions such as the Tertiary Education Trust Fund (TETFUND), the National Information Technology Development Agency (NITDA), and the National Agency for Science and Engineering Infrastructure (NASENI).
“These institutions are critical to education, innovation, and technological advancement, particularly in Northern Nigeria, and their defunding would undermine regional and national development.
“It was observed that the reforms appear to disproportionately target Northern Nigeria, raising suspicions about their intent.
“The region, already lagging in economic development, would bear a significant share of the economic burden, further marginalising its population.”
What you should know
The 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.
