The League of Northern Democrats (LND) has commended the Nigeria Governors’ Forum for endorsing the tax reforms aimed at modernising Nigeria’s fiscal system, enhancing stability and aligning with global best practices.
However, the group has stressed the need for a clear definition of “derivation” as a prerequisite for its full support of the proposed reforms.
In a statement by its spokesman, Ladan Salihu yesterday, the LND emphasised that “derivation” must be explicitly tied to the place of consumption to ensure equity and fairness in resource distribution.
“For any tax reform to achieve equity, fairness and sustainability, ‘derivation’ must be clearly and unambiguously defined to mean the place of consumption. This was a cornerstone of LND’s recommendations and remains non-negotiable,” he said.
The group warned that increasing the derivation formula to 30% without addressing this critical issue could deepen regional inequalities.
It argued that such disparities would disproportionately favor certain regions over others, particularly disadvantaging the North.
“The absence of clarity on this matter undermines the principles of equity that the reform is said to seek to achieve in the first place,” Salihu added.
The LND proposed that linking derivation to the area of consumption would ensure resource allocation reflects actual economic activities, promoting accountability and incentivizing regions to enhance their economic capacities.
The group also called on the Governors Forum and the Presidential Tax Reform Committee to incorporate its recommendations, including an inheritance tax clause, to guarantee that the reforms deliver equitable benefits for all Nigerians.
“Until this critical issue is resolved, LND will withhold its full support for the tax reform agenda,” Salihu noted.
