The Tax Reform Bill has drawn harsh criticism from the Northern Elders’ Forum (NEF), which has called it a policy “conceived in bad faith” and a danger to national unity. The National Economic Council and other important parties were left out of the bill’s preparation, which the group criticised. NEF’s convener, Professor Ango Abdullahi, denounced the bill as badly draughted and detrimental to the North’s resource potential during its Board of Trustees’ biannual meeting in Abuja. The Northern States Governors’ Forum and the Northern Nigeria Council of Traditional Rulers were commended by the forum for their patriotic opposition to the bill.
Criticising their lack of action on the issue, they also called on Northern lawmakers in the National Assembly to vigorously oppose the bill. In order to prevent manipulation by unreliable leaders, NEF cautioned Northerners to remain watchful, especially during elections, and accused the bill’s supporters of having questionable motives. A larger effort to modernise Nigeria’s fiscal structure includes the Tax Reform Bill. President Bola Tinubu proposed it with the intention of streamlining taxes, increasing Revenue collection, and improving resource distribution equity.
Corporate tax reforms will also cut rates for small enterprises.
Important components include the implementation of progressive taxation, modifications to the VAT system, and the unification of Taxation laws. The plan adds exemptions for vital industries including energy supplies and oil exports, and it suggests raising VAT rates from 7.5% to 15% by 2030. While enacting measures to prevent multinational organisations from evading taxes, corporate tax reforms will also cut rates for small enterprises. To pay for Infrastructure and student Education initiatives, a development levy is also included.
Nigeria’s business environment has been hampered by problems including complicated compliance procedures and numerous levies, which proponents claim the measure will alleviate. Reducing corporate Income Tax rates, increasing tax justice among states, and reorienting taxes from Investment to consumption are the main goals. They say this will raise GDP, attract investment, and increase the tax-to-GDP ratio, which is already one of the lowest in the world. Proponents emphasise that the burden on individuals and corporations will be lessened by harmonising taxes and using Technology for administration.
Opposition could affect the reform’s planned gains in equitable dev.
Governance and interregional relations may be significantly impacted by the fierce opposition, especially from the Northern Elders’ Forum and certain state governors. Concerns regarding perceived marginalisation and resource allocation are the main reasons for the North’s rejection of the bill, which could strain federal-state relations and cause implementation to be delayed. Economically, opposition could jeopardise the reform’s planned gains in equitable development and higher investments. Politically, the rift might exacerbate already-existing rifts and jeopardise national unity. Opponents contend that the bill’s VAT redistribution scheme, which gives place of consumption precedence over derivation, may cause some states—especially those with lower economic activity—to see a decline in revenue.
Nonetheless, equalisation transfer provisions are meant to lessen these differences. The reform is necessary for long-term Economic Stability and equitable growth, according to supporters. When properly executed, progressive tax reforms frequently promote prosperity without sacrificing unity, according to international comparisons. Therefore, how well the bill is implemented and how well the government engages stakeholders will determine if it actually undermines cohesion. Additionally, although the bill’s measures regarding the corporate tax and development levy are advantageous for the country’s revenue, they may have an impact on Northern industries like small businesses and Agriculture by requiring higher compliance expenses.
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Small enterprises are partially relieved of their tax duties, but the Northern informal sector’s dominant players may still be strained by the emphasis on progressive taxation. Many Northern states, according to data from the Nigerian Bureau of Statistics, mainly rely on federal allocations rather than internally generated revenue (IGR). For example, Kano, which has the greatest IGR in the North, only produced ₦40 billion in 2021, whereas Lagos State’s IGR exceeded ₦1 trillion. A reform that puts more emphasis on consumption or tax derivation runs the risk of making this gap worse.