The 36 state governors of the federation have unilaterally demanded the immediate withdrawal of the National Tax Reforms Bill, delivering a significant strategic blow to the comprehensive efforts undertaken by the Taiwo Oyedele-led Presidential Fiscal Policy and Tax Reforms committee.

The governors, speaking during the National Economic Council – Nigeria’s highest economic advisory body – meeting on Thursday, asked President Bola Tinubu to withdraw the Reforms Bill from the National Assembly for more comprehensive consultations.

Oyo State Governor, Seyi Makinde, announced this as part of resolutions reached at the council’s 144th meeting chaired by Vice President Kashim Shettima at the State House, Abuja.

Makinde told journalists that council members agreed that it was necessary to allow for consensus building and understanding of the bills among Nigerians.

The meeting, which included a presentation by Oyedele, ultimately failed to persuade the governors regarding Tinubu’s plan to overhaul the taxation system aimed at achieving effective economic growth and increasing the tax-to-Gross Domestic Product ratio.

“Today (Thursday), NEC took a presentation from the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms. The primary focus is fair taxation, responsible borrowing and sustainable spending,” Makinde stated.

“After extensive deliberation, NEC noted the need for sufficient alignment between and amongst the stakeholders for the proposed reforms.

“So, Council, therefore, recommend the need to withdraw the bill currently before the National Assembly on tax reforms so that we can have wider consultations and also build consensus around these reforms for the benefit of the entire country, and also to give people…for them to know the vision and where we are moving the country in terms of tax reforms because there is a lot of miscommunication, misinformation.

“Council advised that the bill be withdrawn from the National Assembly, and then there will be consultations afterwards.”

President Bola Tinubu and the Federal Executive Council recently sponsored a bill to restructure and streamline tax processes, establish a unified revenue service and simplify financial obligations for businesses and citizens.

The reforms stemmed from a month-long review of existing tax laws by the Oyedele-led committee inaugurated in August 2023.

The committee’s recommendations were harmonised into four executive bills. They include the Nigeria Tax Bill, which aims to eliminate unintended multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide.

Secondly, the Nigeria Tax Administration Bill proposes new rules governing the administration of all taxes in the country.

Its objective is to harmonise tax administrative processes across federal, state and local jurisdictions to ease taxpayers’ compliance in all parts of the country.

Thirdly, the Nigeria Revenue Service (Establishment) Bill seeks to rename the Federal Inland Revenue Service as the Nigeria Revenue Service to better reflect the mandate of the Service as the revenue agency for the entire federation, not just the Federal Government.

Fourthly, the Joint Revenue Board Establishment Bill proposes the creation of a Joint Revenue Board to replace the Joint Tax Board, covering federal and all states’ tax authorities.

The fourth bill also suggests establishing the Office of Tax Ombudsman under the Joint Revenue Board, serving as a complaint resolution body for taxpayers.

However, the Council called for a second look. Its decision came three days after the Northern Governors kicked against the reforms bill.

At its last meeting on October 28, the Northern Governors’ Forum, consisting of 19 governors from the region, rejected the new derivation-based model for Value-Added Tax distribution in the new tax reform bills before the National Assembly.

A communiqué read by the Chairman of the forum, Governor Muhammed Yahaya of Gombe State, said the proposition negates the interest of the North and other sub-nationals. The forum said the bill portends massive job losses and more economic turmoil for the region.

However, the Presidency said contrary to job loss fears and perceived marginalisation of the North, Tinubu’s tax reforms would benefit all states and harmonise the country’s tax laws for greater efficiency.

The Special Adviser to the President on Information and Strategy, Bayo Onanuga, argued this in a statement titled, ‘Explainer: Proposed tax reform bills not against the north; they will benefit all states’ on Thursday.

Onanuga said the proposed laws would not increase the number of taxes currently in operation. Instead, they were designed to “optimise and simplify existing tax frameworks,” he said.

“It’s instructive to note that these proposed laws will not increase the number of taxes currently in operation. Instead, they are designed to optimise and simplify existing tax frameworks.

“The tax rates or percentages will remain the same under these reforms, as they focus on ensuring a more equitable distribution of tax obligations without adding to the burden on Nigerians.

“The reforms will not lead to job losses. On the contrary, they are structured to stimulate new avenues for job creation by supporting a dynamic, growth-oriented economy. Importantly, these laws will not absorb or eliminate the duties of any existing department, agency, or ministry. Instead, they aim to harmonise revenue collection and administration across the federation to ensure efficiency and cooperation.”

The Presidency reasoned that Nigeria’s current tax administration lacked coordination among federal, state, and local tax authorities, often leading to overlapping responsibilities, confusion and inefficiency.

“Without reform, this inefficiency will persist,” Onanuga said.

He argued that the proposed laws aimed to “coordinate efforts between different tiers of government, resulting in better tax resource management and greater clarity for taxpayers.”

Under existing laws, taxes like Company Income Tax, Personal Income Tax, Capital Gains Tax, Petroleum Profits Tax, Tertiary Education Tax, Value-Added Tax, and other taxing provisions in numerous laws are administered separately, with individual legislative frameworks.

However, “The proposed reforms seek to consolidate these multiple taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure to reduce administrative fragmentation,” the statement read.

On the proposed derivation-based VAT distribution model, which the northern governors oppose, the Presidency argued that “the new proposal, as enunciated in the Bill, is designed to create a fairer system.”

It explained that the current model for distributing VAT is based on where the tax is remitted rather than where goods and services are supplied or consumed.

“The ongoing tax reform seeks to correct the inherent inequity in the current derivation model as a basis for distributing VAT revenue.

“The new proposal before the National Assembly outlines a different form of derivation which considers the place of supply or consumption for relevant goods and services.

“This means that states in the Northern region that produce the food we eat should not lose out just because their products are VAT-exempt or consumed in other states,” Onanuga wrote.

According to the Presidency, these reforms are critical to improving the lives of Nigerians and were not put forward by President Tinubu to undermine any part of the country.

“There is no better time than now for the National Assembly to give due consideration to these bills that will overhaul our tax systems and create the revenue all the tiers of government require to fund the development our country and people urgently need,” the statement concluded.