Not a few notable figures from the northern part of the country have expressed vehement opposition to the four tax reform bills proposed by President Bola Tinubu. Apart from the resistance to the piece of legislation by senators Abdul Nigi and Ali Ndume from Bauchi and Borno States, respectively, the greatest salvo yet, was delivered by Governor Babagana Zulum of Borno state who has raised alarms about the potential consequences of the proposed tax reform bills.
Governor Zulum warned that the legislation, advancing rapidly through the National Assembly, could severely harm the economic prospects of the North and other regions of Nigeria.
He compared the swift legislative action on the tax bills to the prolonged process of the Petroleum Industry Bill, which took nearly two decades to pass. He cautioned that the bills, if enacted, could hinder development efforts, including the ability to pay salaries in Northern states.
The governor argued that the tax reforms would disproportionately affect certain regions, particularly in the North, as well as parts of the South West and South East. He expressed concern that the bills were being pushed through with little regard for their long-term effects on the country’s future.
Zulum’s opposition may have been informed by the general intent of the bills which represents a significant shift in the manner of the distribution of VAT revenue.
The new laws tend to mark the beginning of the much clamoured call for fiscal federalism as it provides for the allocation of VAT revenues based on the states where goods and services are consumed rather than pooling them centrally for redistribution as done for proceeds from the sale of oil and other national assets.
Mr. Zacch Adedeji, the Federal Inland Revenue Service (FIRS) Chairman argued at a forum that the proposed sharing arrangement aligns VAT with its nature as a consumption tax.
On the contrary, the north being largely agrarian, produces most cereals and other produce for the food and industrial raw materials needs of the country. Yet they do not benefit from VAT, even though the finished products are taxed.
It is this mismatch or anomaly that may have been inflaming passions.
Governor Zulum, however, emphasized that his opposition to the bills did not equate to opposition to the current administration but rather a plea for reconsideration.
He also stated that some individuals may be misleading President Bola Tinubu into thinking the North does not support his government.
