Emmanuel OchayiTinubu’s Tax Bills Spark Controversy
The Presidency has defended the tax reform bills sent by President Bola Tinubu to the National Assembly, describing them as transformative measures to enhance state finances. The statement, delivered by the Senior Special Assistant to the Presidency on Media and Publicity, Temitope Ajayi, clarified misconceptions and addressed criticisms from various quarters, particularly from the northern region.
Ajayi emphasised that the bills aim to strengthen fiscal responsibility and provide states with tools to increase revenue, countering claims that they would impoverish Nigerians or disadvantage certain regions.
Join our WhatsApp ChannelCriticism from Northern Leaders
The tax reform bills have faced significant resistance, notably from northern governors. Borno State Governor, Babagana Zulum, has emerged as one of the most vocal critics, expressing concerns over the potential impact on state finances. Ajayi responded to these concerns, stating that the objections stem from a misunderstanding of the bills’ provisions.
Ajayi argued, “If Governor Zulum and other critics had examined the four executive bills closely, they would realize the transformative potential for states. These reforms are designed to make federal and sub-national governments more fiscally robust.”
He further noted that change often meets resistance but urged critics to evaluate the proposed measures with an open mind, highlighting their potential to unlock new opportunities for state governments.
Economic Gains for States
Ajayi outlined the ways Tinubu’s tax reform bills would empower states financially. He stressed that the reforms were not only aimed at streamlining the tax system but also at providing states with enhanced revenue-generating capacities.
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“Under the proposed framework, states will receive 5% more of VAT revenue previously allocated to the federal government, increasing their share significantly,” Ajayi explained. He also highlighted that income from the Electronic Money Transfer Levy would now be transferred entirely to states, boosting their fiscal autonomy.
Additionally, the bills propose changes to stamp duty laws, making them simpler and more advantageous for state governments. Ajayi remarked that this would lead to more equitable distribution of tax income and create opportunities for states to generate revenue from previously untapped sources like Limited Liability Partnerships.
Addressing Concerns of Governors
The Presidency acknowledged the concerns raised by governors and assured that steps were being taken to address them. President Tinubu has directed the Ministry of Justice to work closely with the National Assembly to refine the bills and resolve any issues.
Minister of Information and National Orientation, Mohammed Idris, affirmed this commitment in a statement, saying, “The Federal Government welcomes meaningful input to address grey areas. The Ministry of Justice and the National Assembly will collaborate to ensure all concerns are addressed before the bills are passed.”
A Call for State Innovation
Ajayi called on state governments to seize the opportunities presented by the tax reforms. He urged governors to invest in infrastructure, human capital, and business-friendly policies to maximize the benefits of the new tax regime.
“The challenge for governors will be to put on their thinking caps and create environments where businesses and socio-economic activities can thrive,” Ajayi said. He emphasized that the reforms would provide states with tools to become economic powerhouses but that success would depend on their willingness to innovate and adapt.
Presidency Reiterates Commitment to Fiscal Federalism
In its defense of Tinubu’s tax reforms, the Presidency reiterated that the bills align with principles of fiscal federalism. Ajayi concluded that the reforms are not just about generating revenue but about creating a balanced and equitable fiscal system for all tiers of government.
“From streamlining the tax system to enabling states to collect more revenue, these reforms will catalyse economic growth across Nigeria,” he asserted.
The tax reform bills remain under review by the National Assembly, with assurances from the Presidency that all valid concerns will be addressed.
Ajayi listed the 10 ways the Tax Bills will serve the states better and enhance their capacity to earn more revenue as follows:
- The Federal Government will cede 5% out of its current 15% share of VAT revenue to states.
- The Bills will transfer income from the Electronic Money Transfer levy exclusively to states as part of stamp duties.
- The Bills seek to repeal obsolete stamp duty laws and re-enactment of a simplified law to enhance the revenue for states.
- Under the new dispensation, the Tax Bills will usher in, and states will be entitled to the tax of Limited Liability Partnerships.
- When passed by the National Assembly, the Tax Bills will enable the state government to enjoy tax exemption on their bonds to be at par with federal government bonds.
- Under the proposed tax reform, states will enjoy a more equitable model for VAT attribution and distribution that will lead to higher VAT income.
- Integrated tax administration will provide tax intelligence to states, strengthen capacity development and collaboration, and scope of Tax Appeal Tribunal to cover taxpayer disputes on state taxes.
- The proposed tax laws grant powers for the Accountant General of the Federation to deduct taxes unremitted by a government or MDA and pay to the beneficiary sub-national government on personal income tax of workers of federal institutions in states.
- Framework to grant autonomy for states internal revenue service and enhanced Joint Revenue Board to promote collaborative fiscal federalism.
- Legal framework for taxation of lottery and gaming and introduction of withholding tax for the benefit of states.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
