Senior Special Assistant to President Bola Tinubu on Media and Publicity, Temitope Ajayi, has outlined how the controversial Tax Reform Bills could significantly benefit Nigerian states. In a recent statement, Ajayi detailed 10 key provisions in the bills that he believes will help enrich state economies and improve fiscal autonomy. These reforms have been a topic of fierce debate, with some state governors, particularly from northern Nigeria, raising concerns about their potential impact on regional economies.
Among the provisions in the Nigeria Tax Bill 2024 and related legislation, the Federal Government has committed to ceding 5% of its current 15% share of Value-Added Tax (VAT) to states. This move is aimed at boosting state revenues and improving their fiscal capacity. Additionally, the bills propose that income from Electronic Money Transfer levies be directed exclusively to states, enhancing their financial independence. Other measures include the repeal of outdated stamp duty laws and the creation of a more efficient legal framework for tax administration at the state level.
One of the most significant changes the tax reform promises is the redistribution of VAT. The new model would allow for a more equitable sharing of VAT income, potentially increasing the revenue for states. States will also benefit from a broader tax base, including the taxation of Limited Liability Partnerships and the introduction of tax exemptions for state-issued bonds, aligning them with federal government bonds. This would increase states’ ability to attract investment and raise capital.
The proposed reforms also include provisions for better tax administration, such as providing states with improved tax intelligence and expanding the scope of the Tax Appeal Tribunal to cover state tax disputes. Furthermore, the new tax framework will grant the Accountant-General the authority to deduct unremitted taxes from federal government departments and remit them to the states, ensuring better compliance and revenue generation. These measures aim to strengthen the collaborative nature of fiscal federalism and enhance the autonomy of state revenue services.
Ajayi emphasized that the tax reforms are designed to support sustainable economic growth, rather than simply increasing government revenue. The aim is to create an environment where states can thrive by improving their fiscal systems and enhancing their capacity to fund infrastructure, education, and other key sectors. Despite opposition from some state governors, the reforms are seen as a long-term strategy to position states as economic powerhouses in Nigeria.
