The Nigerian Tax Reform Bill, currently under review in the National Assembly, has stirred significant debate.
The tax reform bill has been introduced by the federal government as a plan to spur economic growth by altering how taxes, especially Value Added Tax (VAT) and excise duties, are collected and allocated among Nigeria’s states.
The National Economic Council (NEC), led by state governors, recently urged President Bola Tinubu to reconsider the bill, warning that it risks centralizing fiscal control and limiting states’ capacity to effectively serve their citizens.
What Does This Tax Reform Aim to Achieve?
The federal government promotes the bill as a means to streamline revenue collection, improve economic growth, and ensure that tax revenues are efficiently managed.
Key reforms include allowing states to retain VAT collected within their borders and imposing new excise duties on services, such as telecommunications and gaming.
The Critiques With This Tax Reform Bill
Critics, including the National Economic Council (NEC), argue that the bill undermines the principles of federalism by centralizing fiscal control, reducing states’ fiscal autonomy, and potentially creating inequalities among regions.
Allowing wealthier states to retain all VAT could widen the economic gap between states, while excise duties on services may increase living costs.
The bill’s new foreign exchange provisions may also deter foreign investment by limiting businesses’ financial flexibility.
