The League of Northern Democrats has underscored the necessity of aligning Nigeria’s proposed tax reforms with constitutional, religious, and cultural sensitivities.
Speaking during the public presentation of the LND’s technical committee report on the tax reform bills in Abuja on Thursday, Senator Ibrahim Shekarau, Chairman of the League and former Governor of Kano State, highlighted the critical importance of addressing concerns raised by the reforms.
Shekarau remarked, “The LND views the proposed tax reform bills as an opportunity to advance Nigeria’s economic stability while addressing constitutional, socio-cultural, and governance concerns. These reforms, if properly implemented, have the potential to transform Nigeria’s economy, unlocking opportunities for growth and development. However, significant concerns raised by these bills must not be ignored.”
The technical committee, led by Senator Bala Ibn Na’Allah, identified problematic clauses in the bills and proposed their amendment or removal.
Na’Allah elaborated, “The League expects tax reforms to broaden the narrow indirect tax bases, improve tax collection efficiency, reduce excessive tax exemptions (which accounted for 4% of GDP losses in 2021), and enhance compliance and public morale. However, some clauses in the bills infringe on constitutional rights and cultural practices, particularly regarding inheritance. Section 4(3) and 4(4) of the Nigeria Tax Bill should be expunged.”
The committee further raised concerns about the proposed sunset dates for agencies such as TETFund, NITDA, and NASENI, urging their timelines be reconsidered.
“TETFund has significantly contributed to tertiary education infrastructure and research. Similarly, NITDA has advanced digital literacy and should not sunset by 2026,” Na’Allah noted.
Concerns about transparency were also raised regarding the governance structure of the Nigeria Revenue Service.
“Sections 6 and 7 of the Joint Revenue Board Establishment Bill, which combine the roles of Chief Executive Officer and Chairman of the Governing Board, contradict principles of transparency. These roles should be separated,” Na’Allah recommended.
The League highlighted inequities in the allocation of VAT proceeds, presenting an analysis from October 2024.
“Lagos and Rivers States dominate VAT derivation shares due to their status as hosts to company headquarters. For instance, Lagos State’s 20 local governments collected 88.2% of the Southwest’s allocation, leaving 11.8% for the remaining 117 local governments.
“In the Southeast, all 95 local governments received a total less than one local government in Lagos, which alone received N915.08 million. Imo State, with 27 local governments, received the least allocation of N20.57 million.”
The League proposed amendments to Sections 77 and 143 of the Tax Administration Bill to clarify the interpretation of “Derivation” and ensure equitable revenue distribution.
Reiterating its commitment to fostering economic growth while upholding constitutional and cultural values, the League urged stakeholders to incorporate its recommendations into the legislative process.
