President Bola Tinubu has reaffirmed his administration’s commitment to comprehensive tax reforms aimed at modernizing Nigeria’s fiscal system and enhancing revenue generation. In a recent media chat, he emphasized that the reforms are essential to move away from outdated tax practices and to support the nation’s developmental goals. He stated, “Tax reform is here to stay. In today’s economy, we cannot continue to do what we were doing in the past.”
The proposed reforms include increasing the Value Added Tax (VAT) from 7.5% to 12.5% by 2026, with exemptions for essential items such as food and medicine. This move aims to reduce inflation and broaden the tax base. Additionally, the reforms propose a new VAT revenue-sharing formula, allocating 60% based on consumption, 20% by population, and 20% equally among states. However, this has faced criticism from northern state governors who argue it may disadvantage their regions.
Despite opposition, including calls from the National Economic Council to withdraw the bills for further consultation, President Tinubu remains steadfast. He has directed the Ministry of Justice to collaborate with the National Assembly to address concerns and amend the bills accordingly. The President has also expressed openness to making concessions to ensure broader support for the reforms.
The Senate recently passed four key tax reform bills, which now await reconciliation with the House of Representatives before being forwarded to President Tinubu for final approval.
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