Northern States Governors’ Forum (NSGF) have rejected the proposed shift to a derivation-based Model for Value Added Tax (VAT) distribution, proposed by the President Bola Tinubu’s government due to its negative effects on the north.
They claimed that the proposed model of the recent Tax Reform Bill the Nigerian government submitted to the National Assembly for approval is disadvantageous to the northern states and other less industrial regions who are also against it.
This was disclosed in a communique issued by the Governors after a strategic meeting in Kaduna State on Monday, read by the Chairman of the NSGF and Governor of Gombe State, Muhammad Yahaya.
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 jeopardise the well-being of our people.
“For the avoidance of doubt, the Northern Governors’ Forum is not averse to any policies or programmes that will ensure the growth and development of the Country.
“However, the forum calls for fairness in the implementation of all national policies and programmes to ensure that no geopolitical zone is short-changed or marginalised.
“On the present economic hardship affecting the Country, the Forum is appealing to all citizens to remain calm, as the states and Federal Government are working hard to implement measures that will cushion effects of the hardship,” the communique stated.”
The governors explained that VAT is currently remitted based on the location of company headquarters rather than where goods and services are consumed stating that the measure would negatively affect the distributed revenue from the Federal Accounts Allocation Committee (FAAC).