A fierce debate has erupted between Northern political elites and the Federal Government over a proposed tax reform that could drastically alter Nigeria’s revenue-sharing framework.
At the center of the dispute is an amendment to the Value Added Tax (VAT) Act, aiming to distribute VAT revenue based on the derivation principle — where states receive funds based on the goods and services consumed within their borders.
The Northern Perspective
Northern leaders argue that this reform would unfairly favor Southern states, where major businesses are headquartered, and most consumption occurs.
Senator Kawu Samaila from Kano South District described the reform as part of broader economic challenges facing the region that require comprehensive dialogue.
Public affairs analyst Dr. Majeed Dahiru explained the Northern governors’ concerns, emphasizing that the derivation model would significantly reduce the region’s share of VAT revenue.
“It’s not outright opposition to tax reforms but rather apprehension about the proposed revenue distribution,” he noted.
Arguments for Reform
Supporters of the reform, however, view it as a push for fairness.
They argue that states should benefit from taxes generated within their borders, especially as some Northern states ban certain products like alcohol but still collect VAT from them.
Policy analyst Baba Yusuf criticized the Northern elite for what he called a “short-term transactional approach,” urging them to focus on long-term value creation.
He stated, “This reform could stimulate productivity by aligning revenue with actual consumption patterns.”
A Political Undertone
The debate also carries political implications.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, called the issue more political than economic, suggesting that resistance stems from fears of losing revenue rather than genuine economic concerns.
Wider Distrust in Government
The controversy has further highlighted public distrust in the government.
Activist Dr. Ibrahim Zikirullahi criticized the lack of transparency in previous reforms, urging leaders to prioritize the welfare of ordinary Nigerians.
Despite the growing divide, voices like Senator Kawu Samaila call for dialogue to bridge differences and ensure a fair outcome for all Nigerians.
As discussions continue, the outcome of this battle will have far-reaching consequences for Nigeria’s fiscal future.
The key question remains: Can the North and the Federal Government find common ground, or will this tax reform deepen regional divides?
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