The Centre for Democratic Development Research and Training (CEDDERT) has published an in-depth report on the proposed Tax Reform Bills, cautioning that they may undermine Nigeria’s federal structure and worsen public trust in governance.
The report, authored by Abubakar Siddique Mohammed and Aliyu Rafindadi Sanusi, warns that rushing the bills through the National Assembly without broad national consultations could exacerbate tensions. Titled “Economic and Political Implications of the Nigerian Tax Reform Bill, 2024,” it critiques the bills for prioritizing revenue sharing and derivation over issues crucial to citizens.
The reforms include four executive bills: the Nigeria Tax Bill (NTB) 2024, Nigeria Tax Administration Bill (NTAB) 2024, Nigeria Revenue Service Establishment Bill (NRSEB) 2024, and Joint Revenue Board Establishment Bill (JRBEB). Among the contentious provisions is the shift to a derivation-based Value Added Tax (VAT) formula, sparking debates about fairness and feasibility.
CEDDERT’s report also opposes the proposed VAT increase from 7.5% to 15%, highlighting its potential to drive inflation and worsen economic hardship. The authors argue that this rate hike is poorly timed, given Nigeria’s struggles with rising poverty and inflation.
The publication also critiques the Nigeria Tax Bill 2024, which seeks to unify tax legislation across all levels of government, for its possible adverse effects on federalism and public welfare. It raises concerns about the gradual phase-out of TETFund by 2030 and the defunding of key agencies like NASENI and NITDA, warning these measures could cripple critical sectors.
Another key issue is the proposal to engage private consultants in tax administration. The report likens this to the Treasury Single Account (TSA) arrangement, cautioning against inefficiencies and exorbitant fees from private-sector involvement.
The authors also critique the push for VAT derivation, arguing that it lacks credible data on final consumption patterns. They caution that this could lead to broader calls for resource control, thereby straining Nigeria’s federal cohesion.
The report underscores the need for a more cautious, inclusive approach to tax reform, emphasizing that rushed decisions could jeopardize Nigeria’s economy and federal system.
