State governors under the Nigerian Governors Forum (NGF) have collectively voiced their opposition to any increase in the Value Added Tax (VAT) rate.
This stance was outlined in a communiqué issued following a high-level meeting with the Presidential Tax Reform Committee on Thursday in Abuja.
The governors underscored the importance of ensuring economic stability and protecting citizens’ welfare during ongoing fiscal reforms.
In an effort to address disparities in resource allocation, the forum approved a revised VAT sharing formula, proposing a distribution of 50% based on equality, 30% on derivation, and 20% on population.
This adjustment, the governor said, aims to promote fairness while supporting smaller states and encouraging revenue generation at the subnational level.
The NGF expressed strong opposition to raising VAT rates, warning of the potential negative impact on businesses and consumers.
Additionally, the governors advocated for the continued exemption of essential goods and agricultural produce from VAT to protect vulnerable citizens and support food security.
The forum also endorsed the legislative process underway in the National Assembly to implement comprehensive tax reforms.
Furthermore, the governors recommended retaining development levies allocated to critical national agencies, such as the Tertiary Education Trust Fund (TETFund), the National Agency for Science and Engineering Infrastructure (NASENI), and the National Information Technology Development Agency (NITDA), without introducing terminal clauses.
NGF Chairman and Kwara State Governor AbdulRahman AbdulRazaq stated: “The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices.
“Members agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time, to maintain economic stability.
“The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.
“The meeting recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the bills.
“The meeting supports the continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reform Bills,” the communiqué read.
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