Business
Presidency, govs on warpath over Finance Bill
…as Tinubu stakes fate against North’s fresh challenge
Unfolding events are incrementally deepening the war raging among critical stakeholders over President Bola Tinubu’s Tax Reforms Bill, presently before the National Assembly for consideration, with no side likely to sheathe the sword anytime soon.
Indication of even a more fierce battle that may end up in court emerged Friday when President Tinubu insisted that the proposed bill would go through legislative processes, asking those with misgivings to come forward with their inputs during public hearings.
Tinubu’s reaction was a rejection of advice by the National Economic Council (NEC) – Nigeria’s highest economic advisory body – for the executive to withdraw the bill from the National Assembly.
The 36 state governors of the federation, speaking during the 144th NEC meeting on Thursday chaired by Vice President Kashim Shettima, asked the President to withdraw the bill for more comprehensive consultations.
Tinubu and the Federal Executive Council (FEC) had recently sponsored a bill to restructure and streamline tax processes, establish a unified revenue service and simplify financial obligations for businesses and citizens, but allegedly without inputs from the states.
The reforms stemmed from a month-long review of existing tax laws out of comprehensive efforts undertaken by the Taiwo Oyedele-led Presidential Fiscal Policy and Tax Reforms committee inaugurated in August 2023.
The committee’s recommendations were harmonized into four executive bills. They include the Nigeria Tax Bill, which aims to eliminate unintended multiple taxation and make Nigeria’s economy more competitive by simplifying tax obligations for businesses and individuals nationwide.
Secondly, the Nigeria Tax Administration Bill proposes new rules governing the administration of all taxes in the country. Its objective is to harmonize tax administrative processes across federal, state and local jurisdictions to ease taxpayers’ compliance in all parts of the country.
Thirdly, the Nigeria Revenue Service (Establishment) Bill seeks to rename the Federal Inland Revenue Service, FIRS, as the Nigeria Revenue Service to better reflect the mandate of the Service as the revenue agency for the entire federation, not just the Federal Government.
Fourthly, the Joint Revenue Board Establishment Bill proposes the creation of a Joint Revenue Board to replace the Joint Tax Board, covering federal and all states’ tax authorities. The fourth bill also suggests establishing the Office of Tax Ombudsman under the Joint Revenue Board, serving as a complaint resolution body for taxpayers.
NEC’s decision came three days after the Northern leaders, comprising the governors and traditional rulers kicked against the proposal. At its last meeting on October 28, the Northern leaders, rejected the new derivation-based model for Value-Added Tax (VAT) distribution in the new tax reform bill before the National Assembly.
A communique read by the Chairman of the forum, Governor Muhammed Yahaya of Gombe State, said the proposition negates the interest of the North and other sub-nationals. The forum said the bill portends massive job losses and more economic turmoil for the region.
The communique read in part, “The forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly. The contents of the reforms are against the interest of the North and other sub-nationals, especially the proposed amendment to the distribution of Value Added Tax to a Derivation-based Model.
“This is because companies remit VAT using the location of their headquarters and tax office, where the services and goods are consumed. In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and calls on members of the National Assembly to oppose any bill that can jeopardize the well-being of our people.”
More consultation
In what some commentators saw as bowing to pressure from the North, the NEC meeting, which included a presentation by Oyedele, ultimately, failed to persuade the governors regarding Tinubu’s plan to overhaul the taxation system aimed at achieving effective economic growth and increasing the tax-to-Gross Domestic Product ratio.
Oyo State governor, Seyi Makinde told journalists after the meeting that council members agreed that it was necessary to allow for consensus building and understanding of the bills among Nigerians.
“Today (Thursday), NEC took a presentation from the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms. The primary focus is fair taxation, responsible borrowing and sustainable spending,” Makinde stated.
“After extensive deliberation, NEC noted the need for sufficient alignment between and amongst the stakeholders for the proposed reforms.
“So, Council, therefore, recommend the need to withdraw the bill currently before the National Assembly on tax reforms so that we can have wider consultations and also build consensus around these reforms for the benefit of the entire country, and also to give people…for them to know the vision and where we are moving the country in terms of tax reforms because there is a lot of miscommunication, and misinformation.”
But the President is not under obligation to head the advice of the NEC. Little wonder, he has, insisted that the controversial bill will go through legislative processes.
The President, who stated this on Friday in a statement issued by his media aide, Bayo Onanuga, said those with any form of misgivings in regards to the bill should come forward with their inputs during public hearings.
“President Tinubu commends the National Economic Council members, especially Vice President Kashim Shettima and the 36 State Governors, for their advice”, the statement said.
“He believes that the legislative process, which has already begun, provides an opportunity for inputs and necessary changes without withdrawing the bills from the National Assembly.
“While urging the NEC to allow the process to take its full course, President Tinubu welcomes further consultations and engagement with key stakeholders to address any reservations about the bills while the National Assembly considers them for passage”.
Tough time for NASS
Although both the Senate and the House of Representatives unexpectedly adjourned plenary to November 19 on Thursday, political analysts believe lawmakers are faced with one of the most difficult moments of their tenures.
Business Hallmark is mindful of the fact that the 19 northern states and the FCT have the majority in the National Assembly. This means that the region can have its way on any bill if it secures the bloc vote of its lawmakers in both chambers of the National Assembly. Their bloc vote will definitely surpass the threshold of the simple majority they need to shoot down or successfully back a bill in both chambers.
Early last month, when the Chairman of the Federal Inland Revenue Service, Zacch Adedeji, had an interactive session with the Senate Committee on Finance on objectives of the tax reforms bill, a member of the committee, Dandutse Muntari, vowed that the proposed legislation would not see the light of the day.
Just a few days ago, Senator representing Borno South, Ali Ndume, in an interview monitored by our correspondent, joined forces with Northern elders to reject the tax reform bill, describing it as a ploy to increase tax for Nigerians most of whom are currently “not living but surviving.”
The lawmaker accused the Minister of Finance, Wale Edun, and Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, of instigating what he described as anti-people economic reforms.
“I am one of those opposing that tax bill in the National Assembly. I am not going to support it. In fact, I am going to start campaigning against the increase in tax for now because it does not only affect the North, but the average Nigerian”, he said.
Meanwhile, the deputy spokesman of the House of Representatives, Philip Agbese, has pledged the readiness of the House to consider the bill on merit, saying, “The bill will be considered on its merit and debated squarely on the floor of the House of Reps dispassionately by members from North and South as well as people representing the eight political parties. We will support the bill if it will stop the hardship in the country and help to build our roads, schools and other infrastructures.”
Who blinks last?
It now looks like a fierce contest between the Presidency and the National Executive Council, with each side strategizing to win the fancy of the National Assembly which stands as the umpire.
On one hand, the governors may be riding on their influence over the national legislators from their various states to get the National Assembly reject the tax reform bill. On the other hand, the President may resort to lobbying with money, contracts and promises of juicy committees, relying on the unalloyed loyalty he enjoys from the leadership of the National Assembly, especially the Senate President, Godswill Akpabio.
“I think the President will allow some changes in the bill, that’s why he’s referring aggrieved parties to the public hearing”, a senior analyst, who does not want his name in print due to the sensitive nature of the situation, told our correspondent.
“Governors are not likely to lose the fight because they control the lawmakers. They decide who goes for another term and who does not go.
“The legislators are now left with two options of either they support their state governors and secure their place at the hallowed chambers or support the Presidency and enjoy the fullest of their tenure today, without being sure of tomorrow.”
The editorial board of ThisDay on Sunday wondered why President Tinubu would jettison the recommendation by the NEC to withdraw the current tax reform bills to pave the way for more comprehensive consultation with key stakeholders in the country. The Board noted that ‘’by asking the council, headed by Vice President Kashim Shettima and comprising all the 36 governors, to direct their reservations to the National Assembly, the president might be taking a needless gamble.’’
It further stated, “We do not believe there is any sectional undertone to the bills. But the Federal Government should take the blame for the misgivings being expressed. Like it did with the removal of petrol subsidy and floating of the Naira, it seems the administration is, once again, jumping out without thinking things through.
‘’Otherwise, they would not have sent the tax bills to the National Assembly without inputs from the states, the key beneficiaries of VAT. It is strange and impolitic that a presentation would be made to NEC only after the bills that will impact the revenues of states have been submitted to the National Assembly.
‘’Most states rely on money from the Federal Account Allocation Committee (FAAC) to fund their budget, and VAT is a major component of the revenues shared at FAAC.’