Stakeholders Reject Govs’ Proposed VAT Sharing Formula

Some stakeholders have rejected the Nigeria Governors Forum’s (NGF) proposed Value Added Tax (VAT) sharing formula, allocating 50 percent based on equity, 30 percent based on derivation and 20 percent on population.

The stakeholders under the auspices of Citizens Network for Peace and Development in Nigeria made their position known in a communique issued at the end of a town hall meeting on the Tax Reform Bills.

The NGF at its meeting last week threw its weight behind the tax reform bills submitted by President Bola Tinubu to the National Assembly but said the revised VAT sharing formula must ensure equitable distribution of resources.

But Citizens Network in the communique signed by Okorie Ikechukwu Raphael (national coordinator), Chijioke Nwachukwu,

Ben-Kalio Adokiye, Dangana Abubakar, Joachim Ikechukwu, Ali Paul and Isa Usman Tiki, said the NGF formula did not take into account productivity and economic growth.

Presenting the communique, Okorie said when enacted into law, the tax reform legislation would provide opportunity for a fairer redistribution of wealth, allowing the government to prioritise the needs of the underprivileged.

“We, the undersigned representatives of the Nigerian populace, driven by our collective aspiration for equity, justice, and economic progress, have gathered to express our unified position on the Tax Reform Bill currently before the National Assembly. We are guided by the principle that “a hungry man cannot be patriotic,” we therefore, assert that taxation must serve the common good and prioritize the most vulnerable in our society.

“When enacted into law, the Tax Reform legislation, shall provide opportunity for a fairer redistribution of wealth, allowing the government to prioritize the needs of the underprivileged. If we consider the notion that the true measure of any society is how the society treats its most vulnerable members, then the beauty of the Tax reform Bill lies with it’s intent to make richer individuals and entities to contribute proportionally more.

“In addition to making the rich pay more taxes, the Bill seeks to promote equity and fairness. This proposed game changer is designed to ensure that high-income earners and large corporations contribute proportionally to national development. “It no doubt, corroborates the assertion that from whom much is given, much is expected.

“We categorically reject the Nigeria Governors Forum’s proposed VAT sharing formula, which allocates 50% based on equity, 30% based on derivation, and 20% based on population. This formula does not take into account productivity and economic growth, which are critical factors in determining a state’s contribution to the national economy.

“By ignoring productivity, this formula may inadvertently penalize states that are making concerted efforts to diversify their economies and promote economic growth. We urge the National Assembly to reconsider this proposal and adopt a more nuanced approach that rewards productivity and economic growth,” the group said.