Oyedele Defends New Tax Bill, Says Proposed Amendment  Meant to Usher Fairer Template for VAT Distribution

·    Jega warns FG not to heed every advice, programme from IMF

·    Ndume: govt. shouldn’t punish poor Nigerians with more taxes

Chuks Okocha and James Emejo in Abuja

Chairman of Presidential Advisory Committee on Fiscal Policy and Tax Reform, Mr. Taiwo Oyedele, yesterday, said the committee’s proposal on the derivation formula for Value Added Tax (VAT) distribution among the federal, state, and local governments was intended to “create a fairer system by devising a different form of derivation”.

Oyedele’s comments came as former Chairman of Independent National Electoral Commission (INEC), Professor Attahiru Jega, warned the federal government against taking all the advice of the Bretton Woods institutions – World Bank and International Monetary Fund (IMF).

Similarly, the senator for Borno South Senatorial District, Senator Ali Ndume, appealed to the federal government not to increase the burden of the poor with additional taxes.

Writing on his official X handle, @taiwoyedele, the presidential fiscal policy and tax reform committee chairman said the recommendations in the new tax bill took into account the place of supply or consumption for relevant goods and services, whether they were zero-rated, exempt, or taxable at the standard rate.

Oyedele’s clarification came against the backdrop of rejection of the derivation-based model for VAT distribution in the tax amendment bill currently in the National Assembly by the Northern States Governors Forum (NSGF).

He said, “We share the sentiment expressed by the northern governors regarding the inequity inherent in the current model of derivation as a basis for distributing VAT revenue.

“This issue 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.”

Oyedele added, “Our proposal aims to create a fairer system by devising a different form of derivation, which takes into account the place of supply or consumption for relevant goods and services, whether they are 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.”

Oyedele also said, “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 to find a balanced solution that achieves a win-win outcome for all.”

Oyedele also clarified that the committee did not call for a reduction in the federal government’s share of the federation account.

He said, “We did not recommend a reduction in the federal government’s share from the federation account. Our recommendation is in respect of VAT revenue, to increase the share of states and local governments from 85 per cent to 90 per cent and for states to discontinue their other forms of consumption taxes, which constitute multiple taxation on businesses and individuals.”

However, in what could be a setback for the proposed law, governors of the 19 northern states under the aegis of NSGF rejected the proposed Tax Amendment Bill.

In a communique issued at the end of a joint meeting with Northern Traditional Rulers Council at Government House, Kaduna, recently, the governors urged the National Assembly to “oppose any bill that can jeopardise the well-being of our people”.

The governor of Gombe State/Chairman of NSGF, Mohammadu Yahaya, who read the group’s communique, called for equity and fairness in the implementation of all national policies and programmes to ensure that no geopolitical zone was short-changed or marginalised.

Jega spoke in his lecture at the ongoing 2024 Annual Directors’ Conference, themed, “Good Governance as a Catalyst for Economic Recovery, Growth and Development,” organised by Chartered Institute of Directors of Nigeria (CIoD).

He said while it was good and useful to engage with the World Bank and IMF, the government must be careful not to plunge the country into a long-term problem.

The former INEC chairman also called for reform of the leadership recruitment process, saying the major challenge confronting Nigeria is that most of the leaders are not prepared for leadership.

The Bretton Woods institutions have been accused of being behind the major economic policies of the President Bola Tinubu government, especially the removal of subsidy from petrol as well as the floating of the naira, which have up-scaled inflationary pressures in Nigeria.

But IMF’s African Region Director, Abebe Selassie, at a briefing on the side-lines of the IMF and World Bank Annual Meetings in Washington DC, stated that the organisation did not advise Tinubu to remove fuel subsidy.

Selassie said, “The decision was a domestic one. It was President Tinubu’s decision. We don’t have programmes in Nigeria. Our role is limited to regular dialogue, as we have with other nations, like Japan or the UK.”

But speaking at the CIoD conference, Jega advised Nigerians to pay serious attention to nurturing and entrenching democratic governance “rather than merely good governance being promoted by the World Bank”.

According to him, this is the only way to place Nigeria “on a sustainable trajectory of what I called, ‘People-oriented development processes”.

Jega said while it was good to engage the World Bank and other organisations, “We should not swallow hook, line, and sinker what they bring to us. We must be very careful in terms of what measures they have suggested to us because if we don’t do that, we may advertently or inadvertently fall into greater medium and longer-term problems even if we think we are seeing short-term benefits from that kind of engagement.”

President/Chairman of Council of the institute, Alhaji Tijjani Borodo, said the Chartered Institute of Directors Nigeria “proudly leads the charge in promoting corporate governance across the country”.

He stated, “One of the institute’s core missions is to enhance the professional capabilities of directors and business leaders in both the public and private sectors, covering a wide range of industries.

“As the recognised voice of Directors and Corporate Governance, the CIoD empowers our members to make meaningful contributions to their organisations, communities, and the nation as a whole.

“We are committed to building connections among top business leaders and working closely with the government to shape policies that support a favourable business environment, even in challenging times, to drive wealth creation.”

Chairman of the occasion, Mr. Mutiu Sunmonu, said character was the bedrock of good governance and good corporate practices.

Sunmonu said, “If you don’t have the right character, no matter the rule and compliance, everything will fail. Parents have a role to play in bringing up children with good character.”

Meanwhile, during an appearance on Prime Time, an Arise Television programme, Ndume said he would resist any attempt to punish the poor with more taxes.

He advised the federal government to go after rich individuals and corporations, adding that millions of Nigerians are barely surviving and cannot afford to be taxed more than they already are.

He said, “We are almost losing the middle class in Nigeria. It is either you have it or you do not have it. Those that are in the middle are being squeezed out.

“If Nigerians can pay for those taxes, it is okay. But in the current situation, increasing taxes is not an alternative at all. I will not support any increase in taxes.

“Let us get things right first. Let people start living and not surviving. Let people have extra income.”

Ndume declared, “The north has more poverty, so if you want to increase taxes again, let’s be considerate. Tax those people who can afford it. Those who can afford the taxes in Nigeria are not even paying for them.

“I’m going to start campaigning against the increase in tax for now because it doesn’t only affect the northerners, it affects the average Nigerian. I’m not saying people should not pay taxes, but don’t tax people who are barely surviving.

“Let the tax authority concentrate on those who are supposed to pay tax.”

Nigeria has been grappling with its worst economic crisis in decades since Tinubu unfurled a raft of reforms, allegedly prescribed by IMF and World Bank, in 2023.