Against the backdrop of the prevailing hardship across the country, any mention of a new tax regime evokes sharp reactions from anybody and everybody. The cause of this is deeply etched in the country’s history of questionable governance whereby citizens hardly benefit from their contributions towards tax revenues of successive governments. As far as most citizens are concerned, their contributions towards taxation, fuel more, the greedy throats of corrupt government officials than the delivery of dividends of good governance.
It is against this backdrop that the recent transmission of four new bills on reforming the country’s tax regime, to the National Assembly by President Bola Ahmed Tinubu, has attracted reactions from Nigerians with perhaps the most significant coming from the Northern Governors Forum (NGF). A primary grouse of the NGF and even other stakeholders is the lack of adequate consultations by the president before rolling out the proposed tax reforms. Of particular concern to the Northern Governors Forum is the proposed review of the Value Added Tax (VAT) regime, which by the new bill will feature a new ‘derivation based’ model. The existing model allocates VAT based on where it is collected rather than where the goods and services are consumed. In contrast, the new model intends to factor in consumption, in order to ensure that states who contribute to national food production are adequately recognised. According to the Tinubu administration, this is intended to avail the country a more equitable tax regime that will benefit all, with good promise for the strong agricultural orientation of the Nigerian economy. According to the Presidential spokesman, Bayo Onanuga, the reforms are intended to provide the desired revenue gains for all tiers of governance and in particular benefit the agro-based entrepreneurs of the country, located mostly in the rural economy where the bulk of them live and work. Seen ordinarily, therefore, the reforms offer the promise of a new dispensation of prosperity for rural, agro-based enterprises.
However, the NGF rose from a crucial meeting last Monday to oppose the reform and in particular the intendment of the VAT reforms on the ground that such was detrimental to the interests of northern Nigeria. In a communique read by its Chairman, Mohammed Inuwa Yahaya, governor of Gombe State, the forum decried the proposed amendment to VAT administration in the country.
In consideration of the stand of the NGF, they have a point over the manner of the reform process which suggests lack of wide consultation by the Tinubu administration before launching such a major tax reform in the country. If that had been done, perhaps the stand of the Northern governors would have been less affirmative. Unfortunately, the situation fits into the now vexatious ambush culture, which is routinely deployed by the president to push his policies down the throat of Nigerians, without minding whose ass is gored.
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However in another context, the situation also places the Northern governors on the spot for mis-reading the reform exercise, without consideration for whatever positive dividend may be derivable from it. For if seen in context, while the lapses in the approach of the Tinubu administration may have occurred, a review of the VAT administration in the country has also become overdue. At least, there is a long standing ground swell of protests by several states mostly in the South over the disproportionate sharing of VAT revenue from them who generate the funds, to other states that generate less yet benefit disproportionately. A point for consideration is the case of alcoholic drinks, from which huge VAT is collected from producing as well as consuming states, and shared even to states that discourage its consumption.
While it is easy to appreciate the stand of the northern governors as safeguarding the interests of the region, deeper reflection points to the need for them to dig deeper into the recesses of the economy of the region – especially the promise of industrialisation of agricultural enterprise, as the ultimate panacea to the region’s economic challenges. In this respect cannot be forgotten the stellar vision and enterprise of late Premier of the North – Sir Ahamdu Bello, who from his days as premier conceived of the greater glory of the region as a self-sustaining economic and political power house. While it is globally acknowledged that his most remarkable legacy was the unification of the North into a single political entity, of even equal significance was his pioneering role in fast-tracking rapid industrialisation of the region.
In this respect, easily coming to mind is his complement of agro-based industries such as the iconic Kaduna Textile Mills (1954), Bauchi Meat Factory (1965), and several other projects that were intended to make the North the agro-industrial hub of not only Nigeria but the entire West Africa. It is noteworthy that today, most of the industrial projects conceived and established by the great leader in the relatively darker days of the country’s history, are either moribund or have ceased to exist in what is a travesty of followership. In the circumstances, it is nothing short of a matter of national concern that the industrial legacies that would have changed the narrative of the North have been frittered away by successive administrations of the region.
In the final analysis, against the backdrop of the foregoing lies a major challenge for the Northern Governors Forum. While they may be bellyaching over Tinubu’s tax reforms, based on whatever grouses they may nurse, they should also look out for whatever spinoffs that can be gleaned from the new dispensation.
Even as endemic poverty may be ravaging the entire country, statistics show that over 60% of the country’s poor dwell in the North. This is a problem which only rapid agricultural reforms will resolve, and the earlier the better.
Hence if indeed, the Tinubu tax reforms will succeed in addressing this state of poverty in the North and the rest of the country, then the Northern Governors Forum have little to fear.
