During a recent interview with Arise News, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, clarified misconceptions surrounding the proposed tax reforms. He emphasised that the reforms are aimed at enhancing economic efficiency and fairness rather than targeting or disadvantaging any specific region.
Oyedele explained that current VAT allocation under the Value Added Tax Act distributes revenues based on derivation, equality of states, and population. However, the existing system often benefits states like Lagos, where corporate headquarters are concentrated, disproportionately compared to other regions. The reforms propose to adjust this system, ensuring states retain more of their contributions based on consumption patterns rather than company registration locations. This shift aims to promote equity and incentivise local economic growth across all regions.
The proposed measures also include streamlining Nigeria’s over 200 official and unofficial taxes into a manageable eight, enhancing compliance and reducing administrative burdens. Key components involve exempting low-income earners from taxation, abolishing nuisance taxes, and fostering fiscal federalism by consolidating revenue collection under a single agency.
Despite concerns raised by stakeholders, including northern governors, Oyedele stressed that the reforms prioritise national development and sustainability. He attributed misunderstandings to a lack of trust and communication, emphasising the necessity of transparent dialogue among all levels of government.
The reforms, part of President Bola Tinubu’s broader economic strategy, reflect efforts to expand Nigeria’s tax base, improve compliance, and support long-term economic growth. As the legislative review progresses, adjustments are expected to ensure these reforms align with the constitution and address stakeholders’ concerns.
Doris John Tah,
300level student,
Department of Mass Communication,
University of Maiduguri, Borno state
