National economic Council recommends tax reform withdrawal

On October 31, 2024, Nigeria's National Economic Council (NEC) recommended the withdrawal of President Bola Tinubu's proposed tax reform bills, advising a more consultative approach to address concerns across the nation. Led by Vice President Kashim Shettima, the NEC meeting discussed issues within the tax reform proposals, notably a planned central revenue collection system and a derivation-based VAT model that could potentially reallocate VAT revenue to states more heavily based on consumption and supply location. This particular model has raised concerns, especially among northern governors, who fear it may disadvantage states in their region where production is lower than consumption levels in other areas.

Oyo State Governor Seyi Makinde highlighted that NEC members called for greater alignment and clarity among stakeholders before any further action on the reform bills. While Tinubu’s administration asserts the reforms are intended to streamline and harmonize Nigeria's tax administration to eliminate redundancies, northern leaders feel the current proposal could exacerbate economic disparities. The proposed reforms, which cover a series of four bills under review, are part of Tinubu’s broader strategy to overhaul Nigeria's tax system, aimed at increasing efficiency and promoting economic growth without adding new tax burdens. Nonetheless, this recommendation to withdraw the bills suggests a significant pause to ensure nationwide consensus, as highlighted by NEC members following Thursday’s meeting