Northern governors in a meeting
By Tony Folarin
The 19 state governors in the Northern region have voiced their opposition to the recent Tax Reform Bill the Federal Government submitted to the National Assembly for approval.
The governors particularly rejected the proposed shift to a Derivation-based Model for Value Added Tax distribution.
They claim that the proposed model would be at the disadvantage of the northern states and other less industrial regions.
The governors, under the auspices of the Northern States Governors’ Forum, voiced their strong opposition in a communique issued after a strategic meeting in Kaduna.
The communique was read by the Chairman of the NSGF and Governor of Gombe State, Muhammad Yahaya.
The meeting included northern traditional rulers, the Chief of Defence Staff, General Christopher Musa, and other key stakeholders.
The latest development comes amid multiple debates surrounding resource control and the distribution of Value Added Tax revenue among states. Many northern states where Sharia law is practiced prohibit the sale of alcoholic beverages but still receive a share of VAT collected from alcohol sales.
However, in the new tax reform bill, the Taiwo Oyedele-led panel proposed the amendment of the distribution formula to a Derivation-based Model.
Disapproving this policy, the governors said that VAT is currently remitted based on the location of company headquarters rather than where goods and services are consumed.
They added that the measure will negatively affect the distributed revenue from the Federal Accounts Allocation Committee.
The communique read in part, “The forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly. The contents of the reforms are against the interest of the North and other sub-nationals, especially the proposed amendment to the distribution of Value Added Tax to a Derivation-based Model.
“This is because companies remit VAT using the location of their headquarters and tax office where the services and goods are consumed. In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and calls on members of the National Assembly to oppose any bill that can jeopardise the well-being of our people.”
