Governor Babagana Zulum of Borno State has warned that the proposed tax reform bill before the Senate would destroy the economy of the entire northern region and some states in other geopolitical zones of the country.
Speaking with BBC Hausa on Friday, Zulum condemned the accelerated attention being given to the bill by the Senate in comparisons to the Petroleum Industry Bill, which, he said, took almost two decades to pass.
The governor expressed the strong opinion that the bill is designed to plunge certain regions of the country into dire strait.
Zulum suspects that some individuals might be leading President Bola Ahmed Tinubu into believing that the North does not support his administration.
“Why the rush? The Petroleum Industry Bill took almost 20 years before it was finally passed. But this tax reform bill is being transmitted and receiving legislative attention within a week. It should be treated carefully and with caution so that even after our exit, our children will reap its benefits.
“We condemn these bills sent to the National Assembly. They will drag the North backward and also affect the South East, South West, and some South-Western states like Oyo, Osun, Ekiti, and Ondo.
“This is not opposition. Based on our understanding, this bill will destroy the North entirely. We call on President Tinubu to review this decision. He secured 60% of his votes from the North. He should not listen to those telling him the North is not supporting him. What we need is the withdrawal of these tax bills,” he said.
According to him, if the bill sailed through, Northern states would face the risk of struggling to implement developmental projects, including paying workers’ salaries.
“If these bills pass, we won’t even be able to pay salaries. And if we do, it won’t be sustainable the following year.
“We are against it, and even Lagos State is against it. If this bill is dragging regions backward, why won’t they rescind it? Our National Assembly members, including some from the South, are not in support of it,” he lamented.
He said North East opposition to the bill does not translate to opposition to Tinubu’s administration.
“This is our position, and it doesn’t mean we are against the government. We supported and voted for President Tinubu. But these bills will not be beneficial to us,” he noted.
The Daily Crucible reports that the Senate on Thursday passed the President Bola Ahmed Tinubu tax reform bills for a second reading following a debate among lawmakers.
The bill was subsequently referred to the Committee on Finance, which was instructed to revert in no more than six weeks.
President Tinubu transmitted four tax bills to the National Assembly for consideration two months ago.
The four tax reform bills proposed by President Tinubu have passed a second reading in the Senate.
They are the Joint Revenue Board of Nigeria (Establishment) Bill, 2024 -SB.583; The Nigeria Revenue Service (Establishment) BILL, 2024- SB.584; The Nigeria Tax Administration Bill, 2024-SB.585; and the Nigeria Tax Bill, 2024.
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The bills scaled the second reading a day after the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, appeared before the Senate to explain their purpose.
Mr Oyedele told the lawmakers that the bills aimed to lift the tax burden on 90 per cent of Nigerian workers.
Also, Senator Opeyemi Bamidele, while leading a debate on the general principles of the bills, harped on the need to reform Nigeria’s tax system to take tax burden away from low income earners.
He said the bills essentially seek to ensure uniformity in the country’s tax revenue collection system.
“Nigeria’s tax reforms bill is a significant move to overhaul the country’s tax system. These bills aim to simplify the tax landscape, reduce the burden on small businesses and streamline how taxes are collected.
“In broad terms, the four bills seek to ensure uniformity in tax revenue administration in Nigeria in accordance with the provisions of the Constitution, eliminate the incidence of double taxation across the country, deploy taxation as a tool to encourage private sector investments in critical industries and boost individual disposal incomes through targeted tax exemptions as captured in the various bills,” he said.
Mr Bamidele, the senator representing Ekiti Central Senatorial District, further explained that the bills seek to exempt Nigerians who earn below the minimum wage from the Pay As You Earn (P. A.Y.E) deduction.
The senate leader noted that the bills, when passed and assented to by the president, will also exempt small businesses from paying tax.
“In the area of tax exemptions, there is a proposal to exempt those whose salaries are not more than the minimum wage from P.A.Υ.Ε deductions while small businesses with annual turnover of N50,000,000 or less are equally exempted from payment of taxes,” he stated.
Mr Bamidele said the bills seek to reduce company income tax from 30 per cent to 25 per cent.
Aside from the reduction of company income tax, the senate leader explained that the provisions of the bills also seek to use certain percentages of various taxes to fund the student loan scheme of the federal government.
“Similarly, there is a proposed huge reduction in company income tax from the current 30 per cent to 25 per cent by 2026.
“As part of deliberate attempt to curtail the incidence of double taxation and multiplicity of taxes and levies, multiple taxes hitherto paid by companies under various tax heads namely 2.5 per cent education tax, 0.25 per cent NASENI tax have been harmonised into a development levy of 2 per cent which by 2030 will be applied to fund the newly established student loan scheme which will benefit many Nigerian youth,” Mr Bamidele said.
On the sharing formula of the Value Added Tax (VAT), the senate leader explained that the bills propose to allow state governments to take 55 per cent of VAT revenue while the remaining will be shared between the federal and local governments with the former taking 10 per cent.
“However, local government’s share of VAT revenue remains unaffected. Relatedly, basic items consumed by Nigerian households such as food items, medical services and pharmaceuticals, educational fees, electricity etc., are exempted from VAT,” he said.
Afterwards, Mr Bamidele urged his colleagues to support the tax reform bills and see them as part of the legislative intervention needed to support ongoing fiscal and tax reform measures needed to reposition the Nigerian economy for growth and productivity.
The Senate Minority Leader, Abba Moro, seconded the motion.
Mr Moro, a PDP member representing Benue South Senatorial District, said the reforms would assist many Nigerian workers who are low-income earners and also help small business enterprises operating within the country.
Niger East Senator Sani Musa also said the tax reform bills are in the interest of the country.
Mr Musa, the chairman of the Senate Committee on Finance, assured that his committee will involve all concerned stakeholders during the public hearing.
He also urged his colleagues to support the bills because it is a development for the nation.
Seriake Dickson (PDP, Bayelsa West) said he supports the bills because they will encourage state governors to create an enabling environment for economic activities in their respective states.
“There is emphasis on derivation according to taxation, and the attempt now is to encourage states to be productive. This is a situation where states will abandon their core responsibility to create an enabling environment, attract investments, promote economic activities so that that state can boost its revenues. That’s a good thing. That’s not a bad thing,” he said.
Mr Dickson said there was nothing wrong with the sharing formula of the Value Added Tax since each state will get a percentage of what is consumed within their territory.
“The other area, in fact, according to derivation, when we get to the committee stage, we’ll look at the specific details. But there’s nothing wrong in saying that the telephone calls that are made in Bayelsa or Akwa Ibom, or Sokoto or Kano, the VATs on those things that are consumed, be calculated and paid to those states.
“And we are told that that is the essence of these bills, and there’s nothing wrong about it, because VAT is a consumption tax. It’s not a production tax.”
Ali Ndume (APC, Borno South) demanded that the bills be withdrawn and that the Presidential Committee on Fiscal Policy and Tax Reforms negotiate with the National Economic Council, governors and traditional rulers before they are considered at the National Assembly.
Mr Ndume noted that his major reasons for opposing the tax reform bills were because of the sharing formula of the Value-Added Tax and the derivation of the tax system.
Tahir Monguno, the Senate chief whip, urged the Senate to disregard Mr Ndume’s demands because they are baseless.
Mr Monguno said that there was no need to withdraw the bills because necessary concerns of the NEC, governors and traditional rulers will be addressed during the public hearing on them.
After the debate, Senate President Godswill Akpabio directed the committee members to report back to the Senate within six weeks for consideration.
Mr Akpabio urged the committee to involve the National Economic Council (NEC), Nigerian Governors’ Forum (NGF) and Civil Society Organisations in the public hearing.
How It Started in NASS
Two months ago, President Tinubu transmitted the bills to the National Assembly for approval.
The bill, however, faced stiff opposition even before the lawmakers started the debate on it.
The Northern Governors Forum, during its meeting last month, stated that some aspects of the bills, particularly the VAT components, are against the interests of the north.
Consequently, the forum directed the lawmakers from the region in the National Assembly to reject the bills.
Also, the National Economic Council, which comprises the governors and is constitutionally chaired by the vice president, urged President Tinubu to withdraw the bills from the National Assembly for further consultations.
However, the president insisted that any disagreement with the proposed laws should be resolved in parliament.
•Additional report: PremiumTimes.
