The recent controversy surrounding the Tax Reform Bills in Nigeria highlights the complexities of VAT distribution and regional economic interests. The Northern Governors, led by Gombe State Governor Inuwa Yahaya, have raised concerns that the proposed VAT model could disproportionately impact their region by focusing on revenue derived from the location of consumption rather than the location of corporate headquarters. This current setup, they argue, favors regions where businesses are headquartered, often in the South, rather than where products and services are consumed.
The Northern Governors are not opposed to reform but seek fairness and inclusivity in national policies to avoid further economic disparities. This led to the National Economic Council (NEC), chaired by Vice President Kashim Shettima, recommending the withdrawal of the bills for further consultation to address these concerns.
In response, Bayo Onanuga, the President’s Special Adviser on Information and Strategy, clarified the administration’s intentions to create a VAT distribution model that ensures fairness by accounting for the regions supplying goods and services. The proposed reform aims to build a more balanced approach to VAT remittance, ensuring that all regions benefit from their contributions to the national economy.
Given the strong reaction, the administration’s decision to withdraw and modify the bills indicates a willingness to achieve consensus through further engagement with governors and traditional leaders, especially in the North.
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