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Passage of contentious tax reform bills

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Passage of contentious tax reform bills
Written by Areatatafo

Passage of contentious tax reform bills

On March 18, 2025, the House of Representatives finally passed the highly contentious tax reform bills sponsored by President Bola Tinubu to upgrade our tax laws.

All was set for the Senate to do the same, but for the distractions occasioned by the declaration of state of emergency in Rivers State and the “sexual harassment” controversy involving Senate President Godswill Akpabio and Senator Natasha Akpoti-Uduaghan. However, it should be smooth sailing to the desk of President Tinubu since all the obstacles that dogged the bills have been cleared through consensus.

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The four bills are: The Nigerian Tax Administration Bill, Nigerian Revenue Service (Establishment) Bill, Joint Revenue Board Bill and Nigerian Tax Bill which repeals certain taxation acts and consolidates legal frameworks for taxation.

When the president forwarded the bills to the National Assembly in October last year, it met immediate and stiff oppositions. The 19 Northern Governors and prominent traditional rulers jointly opposed them and called for their immediate withdrawal as, according to them, the derivation model Tinubu sought would negatively affect the region.

Indeed, Borno State Governor, Babagana Zulum, a key Tinubu ally, granted a passionate television interview telling the President that his tax reforms would impoverish the North.

Tinubu however made it clear he would not withdraw them. Also, the Nigerian Governors Forum, NGF, at a meeting of the National Economic Council, NEC, chaired by Vice President Kashim Shettima, asked for more consultation and consensus building to carry all sections along. The Presidency sent its officials to explain the reforms to critical stakeholders, while the National Assembly also held consultative forums and public hearings.

Among the highlights of the bills passed by the House of Representatives are: the reduction of Tinubu’s 15 per cent Value-Added Tax, VAT, to7.5 per cent, pegging of VAT allocation to 50 per cent equality, 20 per cent population and 30 per cent consumption, with net VAT revenue distributed 10 per cent to the Federal Government, 55 per cent to States and the FCT, and 35 per cent to the LGAs.

The contentious 25 per cent taxing of inheritance was dropped while the legislative arm will henceforth approve waivers by the President and Governors respectively, among other adjustments.

If the President signs these Bills into Acts, it will be a major triumph of consensus in our democracy. The scriptures say when two agree, they can walk together. We recommend this model in solving similar national issues to cement our unity in diversity.

With this achievement, President Tinubu’s ambition of driving Nigeria to a trillion US Dollar economy can proceed. Our tax to GDP ratio will greatly improve to reduce heavy dependence on borrowing. Antiquated laws will be brought up to date and our now consolidated tax revenue framework will be beneficial to citizens and businesses.

Consensus is key!

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