RMAFC Warns Against Tax Reform Bills, Says They Breach Constitution

President Bola Tinubu’s contentious Tax Reform Bills, which are currently before the National Assembly for consideration, are now facing a new opposition from The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) which has    cited alleged constitutional breaches.

RMAFC cited  a range of legal, constitutional, and technical objections to the proposed legislations in a nine-page memorandum signed by its   chairman Mohammed Bello Shehu.

The commission stressed  that Section 162(2) of the 1999 Constitution (as amended) grants it the sole authority to determine the formula for equitable revenue sharing among the three tiers of government. The mandate also includes ensuring that the formula reflects principles of fairness and justice.

RMAFC  said: “The Constitution designates RMAFC as the final authority on matters of revenue allocation. As such, no Act of Parliament, including the VAT Act, can infringe upon this constitutional responsibility. Any such attempt would constitute a violation of the Constitution.”

RMAFC explained  that its role as the exclusive arbiter in developing fair revenue allocation formulas must be respected, noting that  any deviation from its constitutional duties,  could undermine the integrity of the commission and compromise the principles of justice in revenue sharing.

In its submission, RMAFC called for an approach to Value Added Tax (VAT) allocation that accounts for the unique nature of VAT as a consumption tax. It proposed a formula it developed that would ensure equitable distribution among federal, state, and local governments.

RMAFC   urged the federal government to empower it to finalise a VAT allocation formula in line with its constitutional mandate, reinforcing Constitutional Mandates by ensuring that VAT allocation strictly follows RMAFC’s framework, not arbitrary provisions in the VAT Act or the proposed reform bills.

The commission urged dialogue among federal, state, and local governments to secure consensus on its  formula, thereby reducing tensions and ensuring acceptance.

It  cautioned legislative or executive measures that undermine its authority and advocated implementing systems like electronic invoicing to tag VAT collections to end-user locations, enhancing transparency and accuracy.

RMAFC  warned that the proposed tax reform bills threaten national unity and constitutional harmony.

 By adhering to its constitutional mandate, RMAFC believed it can provide an equitable solution to revenue allocation disputes while safeguarding the principles of fairness and justice.

 RMAFC is a constitutionally empowered to ensure the equitable distribution of the country’s financial resources among the three tiers of government: the federal, state, and local governments.

It is mandated that the revenue allocation formula be reviewed to ensure equitable distribution among the three tiers of government to reflect fairness, justice, and equity, taking into account.

It is also empowered to monitor the accruals and disbursements from the Federation Account to ensure compliance with the revenue-sharing formula and advise the federal, state, and local governments on fiscal efficiency and revenue diversification.