Faith Maji, James Abraham, Chima Azubuike, Ahmed Amshi, Umar Sani, Tukur Muntari, Sami Tunji, and Damilola Aina

In an effort to reach an 18% tax to GDP ratio by 2026, the federal government is moving forward with important tax measures.

The Presidential Fiscal Policy and Tax Reforms committee, led by Taiwo Oyedele, was established by President Bola Tinubu in August 2023 with the goal of achieving an 18% tax-to-GDP ratio within the following 12 months.

Tinubu promised that his government would “tax the fruits and not the seed” when he established the committee, while complaining that Nigeria had the lowest tax to GDP ratio in Africa.

He enumerated the Committee’s extensive responsibilities, which included tax harmonisation, revenue profile improvement, tax system transformation, and reaching a minimum of 18% tax to GDP.

According to 2023, Nigeria’s tax-to-GDP ratio of 10% is among the lowest in Sub-Saharan Africa.

Earlier this year, Taiwo Oyedele, the chairman of the Presidential Fiscal Policy and Tax Reforms Committee, stated that his committee intends to raise the tax-to-GDP ratio from 10% to 18% over the next two to three years without enacting new taxes.

Dr. Zacch Adedeji, the Executive Chairman of FIRS, stated in October 2024 that the organisation is certain it would achieve its ambitious goal of an 18% tax-to-GDP ratio by 2026.

According to the FIRS, this may be accomplished by integrating technology, improving procedures, and implementing extensive capacity-building initiatives as crucial success factors.

Nigeria’s nominal GDP is now N246.35 trillion, according to statistics from the National Bureau of Statistics, spanning the second quarter of 2023 through the second quarter of 2024. This means that the government would need to generate around N44.34 trillion in tax revenue to meet this aim.

With over N3.94 trillion generated in the first quarter of 2024, the 2026 aim more than doubles the FIRS target for 2024, which is N19.41 trillion.

Even if the Q1 performance was 56.7% better than the same quarter in 2023, the income was still below the N4.8 trillion quarterly target established by the FIRS.

Nonetheless, FIRS outperformed its 2023 revenue objective by N816 billion, or 107%, over the predetermined amount.

The N12.37 trillion overall revenue collection for 2023 exceeded the N11.56 trillion projection.

Additionally, the agency’s 2022 revenue of N10.18 trillion was surpassed by 21.7%.

With revenue numbers for 2019 to 2023 of N5.262tn, N4.952tn, N6.403tn, N10.179tn, and N12.374tn, respectively, this collection is a part of a steady growing trend that has been seen over the last several years.

In 2024, the Federal Government anticipates earning N19.41 trillion from the FIRS. This goal is a notable improvement of 56.91 percent over the actual and 67.91 percent over the objective from the prior year.

This year, the federal government anticipates that the oil industry will pay an additional N9.96 trillion in taxes. This represents around 214.2% of the revenue from this type of taxation in the previous year.

The Senate recently asked the FIRS to aim for an ambitious tax revenue goal of N30 trillion in 2024 through its Finance Committee.

A critical evaluation of the present tax waiver policies, which the Senate claims have resulted in a significant loss of revenue—estimated at N17 trillion over the previous five years—accompanies this demand to action.

Northern state governors, meantime, have reiterated their resistance to the tax reform proposal that President Bola Tinubu recently sent to the National Assembly for approval.

Kano State, Yobe State, Plateau State, Gombe, Katrina State, and Bauchi State Governor Bala Mohammed are among the governors.

They contend that much consultation is still required before the law can be approved.

Speaking to the national legislature, the Bauchi State administration reiterated the northern leaders’ position on the value-added tax reform legislation.

Mukhtar Gidado, the Senior Special Adviser to the Governor of Bauchi State on Media and Publicity, responded to a question about the government’s position by saying, “The northern governors have unanimously made their stance clear on the bill.”

“I don’t have to say anything by myself. There was only one voice coming from the north.

According to the Kano State Government, it would wait for the Northern Governors’ Forum to respond about the Federal Government’s stance on the VAT Reform Bill.

In a phone conversation on Sunday, Baba Halilu Dantiye, the Kano State Commissioner of Information and Internal Affairs, made this claim.

According to him, the Northern Governors’ Forum, of which Kano is a part, recommended that the VAT Reform Bill be withdrawn, hence the Kano State Government would not comment on the matter.

Kano is one of the members of the Northern Governors’ Forum, which recommended that the Bill be withdrawn.

“Therefore, we should wait for the Forum’s response, which will undoubtedly meet and discuss the Federal Government’s stance,” Dantiye stated.

Additionally, Yobe State expressed support for the Northern Governors’ Forum’s stance on the proposed Value Added Tax reform law.

In a conversation with one of our correspondents on Sunday, Abdullahi Bego, the Commissioner for Home Affairs, Information, and Culture, affirmed this.

Bego said, “Yobe State’s stance is consistent with the Northern Governors’ Forum’s announcement.”

“We support the decisions made at their meeting.”

According to the Commissioner’s statement, Yobe State will take the position expressed in the communiqué, which probably contains the forum’s objections and suggested changes to the VAT reform law.

Yiljap Abraham, the governor of Plateau state’s aide, stated that following new talks, the governor’s perspective will be heard by the president.

During the phone call, Yiljap, the Plateau state governor’s special adviser on policy and governance, informed our correspondent that the 19 state governors, including Plateau, will announce their stances following the conclusion of consultations.

He said that member state talks were still going on.

The governor’s assistant responded, “I can’t say anything regarding that for now, but I think there is something the northern governors are doing that will place their position in very active form that will go beyond what they have said,” when asked if Plateau state would organise its members of the national Assembly to oppose the bill. We only need to wait a little while before we find out, in my opinion.

The Gombe State Government, meantime, has called for calm about the refo bill, stating that there is no reason to be alarmed about a proposed VAT reform law that is presently before the National Assembly.

Ismaila Misilli, the Director-General of Press Affairs at Gombe Government House, disclosed this information to our correspondent over the phone.

“The Governors’ Forum has not yet made a statement. But based on my knowledge of the National Assembly’s operations, this is a common occurrence,” Misilli stated.

He asserts that the bill’s first reading is only a presentation to the National Assembly and does not guarantee passage.

The act of presenting a bill before any of the National Assembly’s chambers is known as first reading. Therefore, not passing the law is a typical occurrence,” Misilli clarified.

He went on to say that discussion will start at the second reading stage, where zone parliamentarians will contribute to the cause of their governors.

“It hasn’t arrived at that point yet. Northern senators and members of the House of Representatives will each have their own role during the discussion and third reading, depending on the governors’ recommendations.He assured them that there was nothing to be concerned about.

Concerns about the planned bill’s possible effects on the area have prompted Misilli to reassure.

Mallam Maiwada Danmallam, the Director General of Media to Governor Dikko Umar Radda of Katsina State, stated that the 36 governors of the state collectively decided to take up the VAT Reform bill that the federal government forwarded to the National Assembly.

After the Federal Government stated that it would not withdraw the VAT Reform bill from NASS for consultation in accordance with the 36 governments’ request, Maiwada made this statement in response to a question posed to him by our correspondent in Katsina on Sunday about what his principal, Governor Radda, would do to guarantee Katsina state is not left out of the bill.

“Well, this is not a decision for an individual governor,” he said. The region’s governors have decided to reject the proposed tax revisions for reasons they believe are unjust to the area.

Therefore, we should anticipate that the governors would act together rather than individually in whatever course of action they decide to adopt. The governors may also attempt to persuade regional members of the National Assembly to agree with them and support them if the federal government refuses to change. Given that they primarily share a party and are working towards the same goal of providing Nigeria with the best deal regardless of regional, religious, or political affiliations, I’m confident that the federal government and the governors will ultimately find a cooperative solution to the issue.

“To put it briefly, I am confident that neither the federal government nor the states will be undercut.”