JUST-IN: Govs Oppose VAT Increase, Approve New Sharing Formula

Governors under the aegis of the Nigerian governors Forum (NGF) have unanimously opposed any increase in the Value Added Tax (VAT) rate.

This is contained in their communiqué after the governors’ high-level meeting with the Presidential Tax Reform Committee on Thursday in Abuja.

The governors emphasised the importance of maintaining economic stability and safeguarding the welfare of citizens during ongoing fiscal reforms.

In a significant move to address inequities in resource allocation, the forum approved a revised VAT sharing formula indicating 50% based on equality, 30% on derivation and 20% based on population.

This formula is aimed at promoting fairness and balance in resource distribution across the country, addressing the needs of smaller states while incentivising revenue generation at the subnational level.

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In firmly objecting to raising the VAT rates, the NGF, citing the potential impact on consumers and businesses.

The governors also advocated for continued exemption of essential goods and agricultural produce from VAT, emphasising the need to protect the most vulnerable and promote food security.

The forum also endorsed the ongoing legislative process at the National Assembly to enact comprehensive Tax Reform Bills.

Additionally, governors recommended the retention of development levies allocated to key national agencies, including the Tertiary Education Trust Fund (TETFund), National Agency for Science and Engineering Infrastructure (NASENI), and National Information Technology Development Agency (NITDA), without terminal clauses.

Chairman of the NGF and Kwara State governor, AbdulRahman AbdulRazaq stated, “The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws.

“Members acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices.

“Members agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time, to maintain economic stability.

“The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.

“The meeting recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the bills

“The meeting supports the continuation of the legislative process at the National Assembly that will culminate in. the eventual passage of the Tax Reform Bills,” the communique read.