Governors propose new VAT sharing formula, endorse tax reform bills

By Kunle Sanni
The Nigerian Governors’ Forum (NGF) has thrown its weight behind President Bola Tinubu’s Tax Reform Bills currently undergoing legislative review at the National Assembly, emphasizing the need for modernized fiscal policies.
In a communique issued after their meeting on Thursday, the governors expressed support for reforms to the nation’s tax laws but firmly opposed any increase in the Value Added Tax (VAT) rate or reduction in Corporate Income Tax (CIT), citing economic stability as a priority.
The NGF also approved a revised VAT sharing formula aimed at equitable resource distribution: 50% based on equality, 30% on derivation, and 20% on population.

“We, members of the Nigeria Governors’ Forum and the presidential tax reform committee, convened to deliberate on critical national issues, including Nigeria’s fiscal policies and tax system, and arrived at key resolutions,” the communique stated.
The governors highlighted their commitment to comprehensive tax reform, aligning the system with global standards while advocating for the exemption of essential goods and agricultural produce from VAT to protect citizens and promote food security.
The governors also recommended that no terminal clauses be introduced for agencies such as TETFUND, NASENI, and NITDA in the allocation of development levies under the proposed laws.
The communique, signed by NGF Chairman and Kwara State Governor AbdulRahman AbdulRazaq, reaffirmed the governors’ support for the legislative process to finalize the Tax Reform Bills.