President Bola Tinubu’s recent submission of four tax reform bills to the National Assembly has generated an intense national debate, raising questions about economic equity, regional interests, and governmental power dynamics. Zaccheus Adedeji, the Executive Chairman of the Federal Inland Revenue Service (FIRS), has found himself at the center of this unfolding narrative, with his clarifications sparking as much controversy as clarity.
At the core of these legislative reforms is the Nigeria Revenue Service (NRS) Bill, which proposes a sweeping transformation of tax governance in Nigeria. If passed, the NRS would replace the FIRS as the principal tax authority, consolidating tax collection from both domestic and international sources under one powerful agency. This move would make the NRS a pivotal force in Nigeria’s economic framework, potentially outstripping even the Central Bank of Nigeria (CBN) and the Nigeria National Petroleum Company Limited (NNPCL) in influence.
Beyond structural reform, the proposed shift to a derivation-based Value Added Tax (VAT) model has ignited sharp regional divides. Under this model, states would retain a more significant portion of VAT collected from businesses within their jurisdictions. Critics, particularly in northern region, argue that this system unfairly favours states where corporations are headquartered, potentially sidelining the resource-dependent states whose economies rely on consumption rather than corporate income.
The Northern Governors Forum, led by Governor Muhammad Inuwa Yahaya of Gombe state, has been vocal in its opposition. Labeling the reform as inequitable, the forum fears that derivation-based VAT distribution would widen the economic gap between northern and southern states. “The proposed shift to a derivation-based VAT model disadvantages the North,” their communiqué stated, urging legislators to safeguard national unity and prevent regional disenfranchisement.
In response to mounting concerns, the National Economic Council (NEC), chaired by Vice President Kashim Shettima, recommended a retraction of the reform bills, advocating further stakeholder engagement to achieve a consensus. The NEC, joined by state governors and high-ranking officials such as Finance Minister Wale Edun, argued for a collaborative review to refine the bills in a manner that would not disproportionately benefit one region over another.
Yet, despite NEC’s recommendations, President Tinubu has held firm. Through his spokesperson, he affirmed that the legislative process should unfold, inviting public participation through hearings rather than immediate withdrawal. This decision marks a potentially transformative period for Nigeria’s tax system, one that could reshape the country’s economic fabric.
The driving force behind these proposals is widely recognised as Zaccheus Adedeji, whose background combines corporate finance expertise and public sector experience. With a first-class degree from Obafemi Awolowo University and a career that spans global firms like Procter & Gamble to public roles such as finance commissioner in Oyo state, Adedeji has emerged as a central player in the Tinubu administration’s economic strategy.
Adedeji’s motivations have become a point of speculation. As he presented the reforms to the National Assembly, he highlighted the bills’ potential to harmonise Nigeria’s tax code, increase transparency, and streamline revenue collection without imposing additional tax burdens. His goal, he asserted, is to enhance Nigeria’s investment appeal and align the country’s tax infrastructure with global standards—a vision that some perceive as visionary, and others, particularly within NEC, view as overly ambitious and regionally insensitive.
While the legislative fate of the tax reform bills remains uncertain, their potential impact on Nigeria’s economic and political landscape cannot be understated. If passed, these reforms would centralise revenue collection and grant unprecedented power to a national tax authority, challenging established revenue dynamics and potentially restructuring state-federal relations.
Moreover, the divergence between the Federal Executive Council (FEC) and NEC—a rare occurrence under a single-party government—adds an additional layer of intrigue. This political split may signal a broader rift within the administration over the direction of economic policy, hinting at underlying tensions over regional equity and fiscal autonomy.
As Nigeria grapples with this tax reform conundrum, the debate goes beyond financial efficiency to touch on themes of national cohesion, regional autonomy, and economic justice. Whether Adedeji’s vision will ultimately lead Nigeria into an era of streamlined governance and enhanced economic competitiveness, or exacerbate existing regional divides, remains to be seen. For now, this pivotal moment in Nigerian fiscal policy has set the stage for a broader conversation about the country’s economic future and the delicate balance between unity and diversity in policy implementation.