From Victor Osula, Abuja
The Nigerian Governors’ Forum has opposed the proposed increase in Value Added Tax rates and reaffirmed its support for ongoing legislative efforts to enact comprehensive tax reform bills.
This stance was disclosed following a high-level meeting with the Presidential Fiscal Policy and Tax Reforms Committee in Abuja on Thursday.
Chairman of the committee, Taiwo Oyedele, had earlier revealed that a proposed executive bill submitted to the National Assembly seeks to increase VAT from the current 7.5% to 10% in 2025, with a further increment to 12.5% between 2026 and 2029.
However, the governors unanimously rejected the proposed VAT hike, citing concerns about its potential adverse effects on businesses and consumers.
Rising from the meeting, the governors instead approved a revised VAT sharing formula designed to address inequities in resource distribution. The new formula allocates 50% based on equality, 30% on derivation, and 20% based on population.
According to the governors, this framework promotes fairness and incentivizes revenue generation at the subnational level while addressing the needs of smaller states.
The forum also noted the need to protect vulnerable populations and ensure food security. To this end, the governors advocated maintaining the exemption of essential goods and agricultural produce from VAT.
A communiqué issued after the meeting, signed by NGF Chairman and Kwara State Governor, AbdulRahman AbdulRazaq, stated, “The Forum reiterated its strong support for the comprehensive reform of Nigeria’s outdated tax laws. Members acknowledged the importance of modernizing the tax system to enhance fiscal stability and align with global best practices.
“The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources.
“Members agreed that there should be no increase in VAT rates or reduction in Corporate Income Tax (CIT) at this time, to maintain economic stability.
“The Forum further advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard citizens’ welfare and promote agricultural productivity.”
The communiqué also highlighted the governors’ recommendation against introducing a terminal clause for key development levies shared by agencies like TETFund, NASENI, and NITDA.
Additionally, the governors pledged their support for the legislative process at the National Assembly, expressing confidence that it would lead to the passage of the proposed Tax Reform Bills.