The Nigerian Senate has paused its deliberation on the controversial Tax Reform Bills, following widespread public opposition. The suspension, announced by Deputy Senate President Jibrin Barau on Wednesday, December 4, includes halting the planned public hearings until the concerns surrounding the bills are addressed.
The bills in question are the Joint Revenue Board of Nigeria (Establishment) Bill, 2024, Nigeria Revenue Service (Establishment) Bill, 2024, and the Nigeria Tax Bill, 2024.
These reforms have faced significant pushback since their introduction, particularly from northern governors, who argue that the bills are anti-democratic and unfairly target the northern states.
The National Economic Council (NEC), which is Nigeria’s highest economic advisory body, also recommended that the bills be withdrawn for further consultations to allow for broader consensus-building.
The controversy intensified after Borno State Governor, Prof Babagana Zulum, criticized the speed at which the bills were being pushed, particularly the provisions related to Value-Added Tax (VAT) distribution, which he argued would disadvantage northern states.
Zulum’s concerns were echoed by northern lawmakers, who have voiced opposition to the bills’ impact on their regions. Senator Shehu Buba (APC, Bauchi South) also called for a thorough review of the bills, stressing that they require deeper consultation from tax experts.
In response to these concerns, the Senate established a special committee to engage with the executive arm of the government, including members of the President’s Economic team, to resolve the issues. The committee will work towards finding common ground on contentious aspects of the tax reforms to ensure national unity.
The Senate also invited members of the President’s economic team, including Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, and Zacchaeus Adedeji, Chairman of the Federal Inland Revenue Service, to provide further clarity on the bills. Despite this, there were conflicting reports regarding the timing of key meetings, particularly with the Attorney-General of the Federation, who was out of the country at the time.
The reforms, according to Oyedele, are urgently needed to address Nigeria’s economic challenges, especially the high poverty rate and the burden of multiple taxes on small businesses. He argued that the proposed changes, such as the 60% derivation formula for VAT distribution, are crucial for promoting economic equity across the country.
As the Senate delays further action, it is clear that the tax reforms will continue to be a subject of intense debate, with stakeholders from various regions calling for more consultations before the bills are passed into law. The outcome of these discussions will likely shape Nigeria’s tax policy and its economic future in the coming years.
