Business
RMAFC rejects Tinubu’s tax bills, cites VAT sharing formula, constitutional breaches
The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) has opposed the tax reform bills introduced by President Bola Tinubu currently under consideration by the National Assembly.
Mohammed Bello Shehu, RMAFC chairman in a nine-page memorandum, listed various legal, constitutional, and technical objections to the proposed legislation.
RMAFC emphasised that Section 162(2) of the 1999 Constitution (as amended) exclusively empowers it to determine an equitable revenue-sharing formula among the three tiers of government, guided by principles of fairness and justice.
He said, “The proposed bills will significantly bolster the Commission’s efforts and the nation’s capacity for domestic revenue mobilization.
“They will help integrate untapped revenue sources, including contributions from the informal sector, into the tax net. Additionally, these reforms will enhance Nigeria’s revenue-to-GDP ratio, positioning the country more favourably among nations with high fiscal performance.
“The Commission, therefore, expresses its full support for the proposed legislation and is confident it will serve as a pivotal step toward elevating Nigeria’s revenue generation and financing sustainable development.
“However, the lingering debate over derivation in Value Added Tax (VAT) allocation has raised significant concerns, sparking heated arguments among stakeholders.
“This memorandum outlines the commission’s position, emphasizing its constitutional mandate to ensure that VAT allocation adheres to the principles of fairness, justice, and equity, and highlighting why any arbitrary apportionment may be inappropriate and unconstitutional.”
Shehu emphasized RMAFC’s critical role in Nigeria’s fiscal framework, ensuring equitable revenue sharing among the three tiers of government, and outlined several key recommendations.
To resolve the VAT sharing controversy, the RMAFC proposed adopting a formula it develops to reflect VAT’s nature as a consumption tax, ensuring equitable distribution based on consumption patterns while supporting economically weaker states.
Additionally, it recommended implementing electronic invoicing and transaction monitoring to trace VAT collections to end-user locations, amending laws to clarify derivation rules for interstate transactions, and fostering collaboration among federal, state, and local governments to achieve consensus on its proposed formula.
The commission cautioned that the proposed tax reform bills could undermine national unity and constitutional harmony.