Tax Reform Bills: Ndume, Arewa group lock horns as NGF, traditional rulers meet

• Oyedele assures region’s govs of fair outcomes in proposed bill
• Govs, monarchs collaborate on National Security Bill

Former Senate Majority Leader Mohammed Ali Ndume and the Arewa Civil Rights Movement (ACRM) joined the heated debate over the Tax Reform Bills yesterday, issuing separate statements that further fuel the clash of opinions on the proposed reforms.

The reforms include the Nigeria Tax Bill 2024, Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and Joint Revenue Board Establishment Bill, which aim to overhaul the tax system to improve transparency, efficiency, and fairness in revenue collection.

Ndume urged the Federal Government to stabilise the economy, expand income sources, and focus on improving living standards before considering any upward tax adjustments.

“Right now, Nigeria’s middle class is shrinking, squeezed by high inflation and economic hardship,” Ndume said. “Raising taxes in this environment is not viable. Increasing taxes is not a solution until people can live comfortably rather than merely survive.”

Ndume stressed that Nigerians are already burdened with economic challenges, and the government should prioritise creating an environment where citizens have disposable income before introducing tax increases. “If Nigerians had the means to pay higher taxes, it would be acceptable. However, with current struggles, that proposal is unthinkable. Let the people get back on their feet, with stable incomes, before asking for more taxes.”

Ndume further argued that the economic advisers pushing for this tax increase risk creating a negative public perception of President Bola Tinubu’s administration. He urged Finance Minister Wale Edun, the Federal Inland Revenue Service (FIRS), and other economic managers to avoid policies that could erode public trust in the President’s leadership.

Reflecting on the recent economic challenges in the North, Ndume remarked, “The poverty in the North is overwhelming. Target tax collection efforts at those who can afford it, including large corporations that often avoid full tax obligations. Many big companies neither disclose their true earnings nor pay appropriate taxes. Yet, the burden falls on ordinary Nigerians struggling to survive.”

Ndume, who pledged his opposition to the tax bill currently before the National Assembly, stated that his stance is a defence of the average Nigerian. “I am not against paying taxes, but let us not tax those who are barely managing to survive. With minimum wage at N70,000 and fuel prices at N1,000 per litre, the burden on Nigerians is too heavy. It’s as if you are giving with one hand and taking back with the other.”

The senator called for more targeted tax policies, suggesting that the government enforce property taxes and capture untaxed assets in urban centres like Abuja. He praised Federal Capital Territory Minister Nyesom Wike for his recent crackdown on untaxed properties in the capital, saying such initiatives are a step in the right direction.

“Real estate owners, especially in Abuja, are evading taxes. Banks, too, generate significant profits yet contribute little in taxes despite charging fees for every transaction. It is unfair to focus on taxing struggling citizens when those with substantial wealth avoid taxes.”

Ndume also recalled his previous proposal for a communication tax on phone owners, arguing that those able to afford mobile phones could contribute through taxes, though his bill failed to gain traction.

“The government should start by ensuring compliance from affluent sectors rather than imposing further burdens on the struggling masses,” he concluded, calling for a more equitable tax policy that targets wealthier individuals and businesses while shielding vulnerable citizens from undue hardship.

However, the Arewa Civil Rights Movement (ACRM) criticised the Northern Governors’ Forum’s recent directive urging northern lawmakers to oppose President Bola Tinubu’s tax reform bills currently under consideration in the National Assembly.

The group expressed concerns that the governors’ counterproductive stance could impede national progress.

At a press conference yesterday in Abuja, ACRM’s National President, Dr Agabi Emmanuel, highlighted that the governors’ decision to reject all four bills due to issues with a single proposal—the Value Added Tax (VAT) sharing template—was misguided.

Under the proposed changes, the federal government’s share of VAT would be reduced from 15 per cent to 10 per cent. At the same time, allocation to states would be adjusted based on the derivation principle, incentivising states to attract businesses.

Emmanuel argued that rejecting the bills on the grounds of a perceived disadvantage for the North misrepresents the region’s stance on tax compliance and investment. “The governors’ opposition paints the North in a beggarly light, overlooking our strong history of tax compliance and willingness to attract investment,” Emmanuel said. “This is an opportunity for the North to create a more business-friendly environment.”

ACRM’s leader criticised the governors’ directive as an overreach, asserting that federal lawmakers are accountable to their constituents, not state executives. Emmanuel urged northern lawmakers to dismiss the directive and prioritise the interests of their voters. “Our lawmakers owe loyalty to their constituents, not state governors. Succumbing to the governors’ pressure would confirm a failure to serve, likely leading to recall efforts by the people,” he added.

Emmanuel further suggested that northern governors should focus on addressing local issues and accounting for the excess Federation Account allocations since taking office rather than meddling in federal legislative matters. He advised governors to abandon divisive policies that deter investment, noting that sectarian extremism contributes to the North’s underwhelming business climate.

“Our Movement is concerned with the consequences of the governors’ directive to reject these reform bills, which impacts our regional image and investor confidence,” Emmanuel remarked. “The North cannot continue to discourage investments through restrictive policies and then expect businesses to locate their headquarters here.”

ACRM also challenged the narrative that the North lacks the financial capacity to comply with tax obligations. Emmanuel noted, “Northern opposition to the tax bills creates the impression of impoverishment, yet we have a rich history of tax compliance. The governors’ stance contradicts the North’s traditional values and sends the wrong message about our economic resilience.”

The group concluded with a call to action, urging the Northern Governors’ Forum to focus on transparency and responsibility in handling state funds while fostering a stable and investment-friendly environment.

“The Northern Governors must concentrate on good governance and be prepared to account for the increased revenue received since May. This accountability, alongside efforts to reverse extremist policies, is crucial for the North’s economic growth,” Emmanuel said.

The tax reform bills are expected to be deliberated in the coming weeks, and ACRM’s appeal may influence lawmakers from the North to consider their constituents’ interests over state executive directives.

Meanwhile, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has assured the 19 northern governors that the proposed Tax Reform Bill will benefit all levels of government.

In a post on X (formerly Twitter), Oyedele said his committee shares the sentiment expressed by the Northern governors regarding the “inequity inherent in the current model of derivation as a basis for distributing VAT revenue.”

On Monday, at a meeting with traditional rulers and other stakeholders, the Northern Governors’ Forum rejected the Tax Reform Bill forwarded to the National Assembly.

The 19 governors argued that the proposed law was against the interests of the North and other sub-nationals, particularly the amendment to the distribution of Value Added Tax (VAT) based on a derivation model.

Responding, Oyedele said, “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, which considers the place of supply or consumption for relevant goods and services, whether 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 recognised for its contributions. The same principle should apply to services like telecommunications—VAT distribution should reflect where subscribers are located.

“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.”

In a separate development, a committee comprising state governors and traditional rulers has been mandated to compile key recommendations for a bill establishing a National Council of Traditional Rulers.

The 15-member committee, chaired by Governor Hope Uzodimma of Imo State, is tasked with harmonising recommendations to define traditional rulers’ role in grassroots security.

Governor Dapo Abiodun of Ogun State disclosed this decision following yesterday’s inaugural dialogue between the Nigeria Governors’ Forum and the monarchs at the State House Conference Centre in Abuja.

Governor Abiodun said the meeting discussed the need for community policing, intelligence sharing, and the role of traditional rulers in maintaining local security.

“We agreed that a joint committee of governors and our traditional rulers should be set up. This committee will ensure that the remarks and comments made here, reflecting the desires of those represented, are synthesised into a robust document.

“All of this will be compiled so that the document presented to the National Assembly will be comprehensive and inclusive, empowering our royal majesties and highnesses and involving them in governance, peace, and security across the country, including the FCT.”

When asked about the committee’s timeline, Abiodun said, “Based on the terms of reference, they have the next four to six weeks to complete the assignment and submit it before the next meeting.”

Recall that in early October, a bill to establish a National Council of Traditional Rulers, sponsored by Senator Simon Lalong of Plateau South, passed its first reading in the Senate.

Specifically, the National Council of Traditional Rulers (Establishment) Bill, 2024 (SB. 546) seeks to define constitutional roles for traditional institutions so that they can more effectively address national challenges.

It also aims to empower traditional rulers with constitutional responsibilities to address insecurity, peace-building, and inter-community disputes.

Lalong, a former governor of Plateau State and Chairman of the Northern Governors’ Forum has long advocated for the inclusion of traditional rulers within the constitutional framework.