Lagos, Nigeria
Taiwo Oyedele, the chairperson of the presidential committee on tax policy and fiscal reforms, has expressed that his committee has no objections to the newly proposed Value-Added Tax (VAT) sharing formula put forward by the Nigeria Governors’ Forum (NGF).
He made this statement on Saturday during an event called The Platform, organised by The Covenant Nation to promote national development.
The NGF, on January 16, endorsed the tax reform bills currently under consideration in the National Assembly. As part of the proposed reforms, the NGF also suggested a revised and more “equitable” formula for the distribution of VAT revenues.
This development signals a potential shift in how VAT funds are shared among different levels of government in Nigeria.
The recent development regarding the Value-Added Tax (VAT) sharing formula emerged after a meeting between the Nigeria Governors’ Forum (NGF) and the presidential tax reform committee on January 16.
The meeting focused on addressing key national issues, particularly the bills focusing on reforms in Nigeria’s fiscal policies and tax system.
Initially, the Oyedele-led presidential committee proposed a VAT-sharing formula that allocated 20 percent based on equality, 60 percent on derivation, and 20 percent on population.
This proposal, however, was met with opposition from northern governors, who argued that it was not favourable to their region and called for the National Assembly to reject it.
In response to this opposition and after further discussions with the presidential committee, the NGF proposed a revised formula. This new formula suggested 50 percent based on equality, 30 percent on derivation, and 20 percent on population.
Commenting on the revision, Taiwo Oyedele acknowledged that tax reforms, like those happening globally, are not solely determined by technical accuracy but also by political considerations. This statement reflects the balancing act between policy effectiveness and regional interests in the ongoing discussions around Nigeria’s fiscal reforms.
“You also need to consider other things, including political considerations, and so once the governors proposed their formula for sharing the VAT revenue,” he said.
“We have no objections to that, because, at the end of the day, if you need to move one kilometre, you don’t have to move all of that at once; you can’t even jump one kilometre at once.
“Maybe sometimes you need to just move gradually. You know, you take a breather. You reflect, have more data, and then you move again.”
