By Milcah Tanimu
Nasarawa State Governor Abdullahi Sule expressed his support for President Bola Ahmed Tinubu’s tax reforms. However, he raised concerns about the proposed removal of Value Added Tax (VAT) from the federation allocation. He made these remarks during the launch of a new digital tax code by the Nasarawa State Board of Internal Revenue Services on Thursday.
Governor Sule explained that removing VAT from the Federation Account Allocation Committee (FAAC) would hurt the Northern region. Specifically, it would shift 60% of the revenue to derivation. Consequently, he emphasized that while he supports most aspects of the tax reforms, Northern governors are particularly concerned about this change.
“We are not against the tax reforms themselves,” Sule said. “The President’s reforms have many benefits. However, we are specifically concerned about removing VAT from FAAC. This would redirect 60% of the revenue to derivation, which would disadvantage the Northern states.”
Moreover, the Governor discussed the challenges of implementing VAT based on consumption rather than the point of distribution. He shared his experience as managing director of African Petroleum, noting how goods ordered in bulk could be distributed across several states. This, in turn, complicates the task of tracking consumption.
In addition, Sule praised the introduction of the USSD tax code by Ahmed Yakubu Mohammed, Executive Chairman of the Nasarawa State Internal Revenue Board. He stated that it would improve revenue collection from the informal sector. While acknowledging the difficulties of tapping into this sector, he also emphasized its potential for increasing revenue.
“Economies grow through productivity and manufacturing, not just taxes,” Sule noted. “We must work to close the gaps in revenue collection. The informal sector needs better management to ensure resources are used properly.”
Furthermore, Sule urged the state to fully implement the new tax code, ensuring its benefits reach everyone.
The National Economic Council (NEC), Nigeria’s top economic advisory body, recommended withdrawing the tax reforms bill from the National Assembly for more consultations. However, President Tinubu stated that the bill would proceed through the legislative process. He confirmed that necessary adjustments would be made without withdrawing it.
