19 northern govs told to embrace Tinubu's 'Tax Reform Bill'

President Bola Tinubu holds his first meeting with the FIRS chairman after his two weeks vacation. [X, formerly Twitter]

For Northern Nigeria, this means that revenue collected within the region would support development projects like roads, schools, and hospitals, stimulating local businesses and encouraging investment.

An appeal has been made to the 19 northern governors to accept the proposed Tax Reform Bill, highlighting potential benefits for local communities.

This appeal was made by Arabinrin Aderonke Atoyebi, the Technical Assistant for Broadcast Media at the Federal Inland Revenue Service (FIRS) in an open letter issued on Tuesday, October 29 via LinkedIn.

Pulse Nigeria reported earlier that the19 northern governors rejected the proposed bill which could likely cause a crack between them and President Tinubu.

Aderonke cites Dr. Zacch Adedeji, the Executive Chairman of the FIRS, who has repeatedly clarified that the reform is intended to “tax prosperity, not poverty.”

According to Dr. Adedeji, the proposed changes aim to streamline tax systems, reduce burdens on small businesses, and improve compliance, thereby enabling “businesses, farmers, and traders alike” to thrive without excessive taxation.

Boosting Local Economies and Infrastructure

A view from Wuse Bazaar (Fruit Market) in Abuja, Nigeria on February 18, 2024. [Getty Images]

The new VAT model would, in essence, redirect funds from locally generated goods and services back to their origin communities.

“This model is an opportunity for sustained growth that benefits both communities and the local economy in a meaningful way,” Aderonke states.

The derivation-based system stands in contrast to the centralised model currently in place, offering Northern Nigeria an opportunity to capitalise on its unique resources. This approach not only bolsters local infrastructure but encourages self-sufficiency, reducing reliance on other regions. “This bill will help develop the region into a prosperous North,” Aderonke emphasises, highlighting how it could leverage the North’s natural advantages and build upon its strengths.

Transparency and Renewed Hope for Taxpayers

This initiative will provide Nigerians with official channels to voice concerns and hold tax authorities accountable. [Getty Images]

Beyond financial benefits, Aderonke underscores the bill’s promise of transparency in tax administration, a point supported by Dr. Adedeji.

He advocates for a tax framework where taxpayers can witness improvements funded by their contributions, fostering trust within the system.

“This is about a fairer, simpler tax system that not only empowers businesses but also respects and values taxpayers' contributions,” She asserts.

With this reform aligned closely with President Bola Tinubu’s Renewed Hope Agenda, which envisions equitable development across Nigeria, Aderonke calls upon Northern governors to consider the bill’s long-term advantages for the North.

Read full text below......

Tax Reform: Open Letter to Northern Governors

Your Excellencies, Governors of Northern Nigeria states

I write to you with a vision we all share: building a prosperous, fair, and united Nigeria. It’s understandable to have concerns about the recent Tax Reform Bill, especially regarding the proposed shift to a derivation-based model for VAT distribution and how it might impact Northern states.

However, looking more closely at this reform reveals opportunities to benefit not only Northern states but also the entire nation. I believe that with your leadership and support, this reform could unlock opportunities that advance the North’s growth and empower its communities. I wish to share some perspectives on the vision and benefits of this reform.

The purpose of this reform, according to Dr. Zacch Adedeji, Executive Chairman, Federal Inland Revenue Service, backed by the Federal Government, is not to create new taxes or burden the everyday citizen. He states, and I quote, "This reform is about taxing prosperity, not poverty." In clearer terms, the reform is designed to ensure that those with greater means and profits contribute fairly while also reducing redundant taxes that impact small businesses and local communities. This streamlined approach offers simplicity, making tax compliance easier and more efficient for businesses, farmers, and traders alike, thereby allowing our local enterprises to grow without unnecessary hindrances.

What does this mean for Northern Nigeria? In practical terms, a derivation-based VAT model would redirect funds from goods and services generated locally back into the communities that produce them. It also means resources collected in the North would be reinvested directly into Northern infrastructure like roads, schools, hospitals, and other development projects. Such reinvestment has the power to create a real impact: stimulating local businesses, attracting new industries, and generating more wealth within the region over time. This model is an opportunity for sustained growth that benefits both communities and the local economy in a meaningful way.

In the past, VAT revenue has been centralized, but this reform offers a new direction, allowing each state to gain more from its own economic activities. A localized VAT model values the strengths and contributions each region brings to the country and ensures that these efforts benefit local communities directly. It’s a way to support each state’s growth and allow funds collected within a state to have a greater impact on its residents. I understand your concern but the new bill will help in developing the region into a prosperous North if you look inward in line with the following: One, it will strengthen North the more to focus on some of the things they have comparative advantage of and make them stronger. Two, it will make the North to be more creative in developing what they have, instead of relying on other section of the country for progress and development. Third, it will also make the North look inwards into their ability and capability to develop themselves.

Additionally, the reform seeks to establish transparency and accountability in tax administration, addressing past inefficiencies that have created distrust in the system. A more transparent framework assures that taxpayers can see tangible improvements from their contributions. Dr. Zacch, again, has said, and I quote, “This is about a fairer, simpler tax system that not only empowers businesses but also respects and values taxpayers' contributions."

Let’s not forget, the Renewed Hope Agenda of President Bola Tinubu seeks to bring transformation that empowers every region. The proposed tax reforms align with this vision by creating a tax system that is efficient, transparent, and geared toward prosperity.

So, as trusted leaders, I encourage you to consider these reforms not only for the present but for the potential they unlock for a prosperous Northern Nigeria. Together, with your guidance and influence, we can pave the way for a Nigeria where all regions feel seen, valued, and fairly treated. This bill offers a foundation on which to build a stronger North and a unified Nigeria.

Thank you.