Proposed tax reform bills not against North, says Presidency

By Kunle Sanni

Presidential Adviser Bayo Onanuga has announced that the new Value Added Tax (VAT) proposal currently before the National Assembly aims to create a fairer revenue-sharing system, especially benefiting Northern states that produce food and resources.

According to Onanuga, the proposed model differs from the current system, which distributes VAT based on the location of tax remittance. Instead, the new approach would allocate revenue based on where goods and services are supplied or consumed.

“The new proposal before the National Assembly introduces a derivation model that considers the place of supply or consumption for relevant goods and services,” he explained. “This change means that states in the Northern region that produce essential food should not be disadvantaged simply because their products are VAT-exempt or consumed in other states.”

This initiative, detailed in an explainer issued on Thursday, is designed to address revenue distribution disparities, ensuring that states significantly contributing to the nation’s food supply and resource production receive fair compensation.

The announcement follows concerns raised by the Northern Governors’ Forum, led by Governor Inuwa Yahaya of Gombe State, who voiced reservations about the proposal during an October 28, 2024, meeting. Traditional leaders from the region, including the Sultan of Sokoto, His Eminence Muhammadu Sa’ad Abubakar III, were also in attendance.

In response to these concerns, Onanuga, Special Adviser to the President on Information and Strategy, clarified that the reforms, backed by President Bola Tinubu, aim to benefit all regions fairly and foster a more efficient tax system.

Beyond the VAT model, the proposed bills also seek to streamline tax administration, reduce redundancies, and improve taxpayer compliance nationwide. “The proposed laws are designed to coordinate efforts across different levels of government, leading to better resource management and greater clarity for taxpayers,” he said.

Under current laws, taxes such as Company Income Tax (CIT), Personal Income Tax (PIT), Capital Gains Tax (CGT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), and VAT are each administered separately with their own legislative frameworks.

The proposed reforms would consolidate these taxes, integrating CIT, PIT, CGT, VAT, PPT, and excise duties into a unified structure to reduce administrative fragmentation and improve efficiency.