Tax Reform Bills Spark Controversy as States and Stakeholders Gear Up for Public Hearing

The proposed Tax Reform Bills 2024 are stirring heated debates across Nigeria, despite assurances from the Federal Executive Council (FEC) that the reforms aim to benefit lower-income earners. Opposition continues to mount, with state governments and stakeholders preparing their positions ahead of a Senate public hearing.

Key Highlights of the Tax Reform Bills

The proposed legislation includes the following key provisions:

1. Income Tax Exemptions: Workers earning less than ₦1 million annually will be exempt from income tax.
2. VAT Redistribution: State governments’ share of Value Added Tax (VAT) will increase to 55%, while the Federal Government’s share will drop to 10%.
3. Small Business Relief: Businesses with an annual turnover of ₦50 million or less will be exempt from taxation.
4. Corporate Tax Reduction: Company Income Tax (CIT) will be reduced from 30% to 25% for two years.

While these changes aim to provide relief to lower-income earners and stimulate small businesses, they have sparked regional and political tensions.

Rising Opposition from the North and Beyond

Northern leaders, including Governor Babagana Zulum of Borno State, have voiced strong objections. Zulum warned that the reforms could worsen insecurity, hinder salary payments, and exacerbate economic inequalities in northern states. He criticized the rapid legislative process, comparing it unfavorably to the 20-year delay for the Petroleum Industry Bill.

Former Vice President Atiku Abubakar echoed concerns about the uneven impact of the reforms. He called for a fiscal system that promotes equity, urging lawmakers to ensure the bills benefit all Nigerians without favoring a few states at the expense of others.

Regional Perspectives

• Southern Leaders’ Concerns: In the South-East and South-West, leaders highlighted the potential for disproportionate economic impacts. Anambra’s Commissioner for Information, Dr. Law Mefor, criticized the VAT allocation model, arguing it unfairly favors industrial hubs like Lagos over the states where revenues are generated.
• Sokoto and Other Northern States: Officials in Sokoto and other northern states have expressed reservations, with stakeholders calling the reforms skewed toward Lagos State’s development.

Stakeholder Actions

• Senate Committee Review: The Senate Committee on Finance, led by Senator Sani Musa, will host a public hearing to gather input from stakeholders, including civil society organizations and traditional leaders. A report is expected within six weeks.
• Grassroots Mobilization: Groups like the Southern Borno Concerned Citizens (SBCC) are organizing community prayers and fasting sessions, urging divine guidance for leaders opposing the reforms.

A Call for Transparency

Stakeholders, including Atiku Abubakar, have called for objectivity and inclusiveness in the public hearing process. Transparency and public trust are essential to ensure the reforms align with the nation’s broader interests.

What’s Next?

The contentious nature of these bills underscores the need for careful deliberation. While the Senate reviews feedback from stakeholders, all eyes are on President Bola Tinubu and the National Assembly to chart a path that balances economic growth, equity, and regional stability.