The League of Northern Democrats (NLD) has urged the National Assembly to revise key aspects of the four tax reform bills currently under consideration, citing constitutional conflicts, governance issues, and potential economic repercussions.
This followed the presentation on Thursday in Abuja of the report of the nine-man review committee set up by the group to look at the proposed new laws.
The League emphasised the need for reforms to be inclusive, transparent, and effective in addressing Nigeria’s revenue mobilization challenges while avoiding unnecessary hardships for citizens.
The bills under review include the Joint Revenue Board Establishment Bill, Nigeria Revenue Service Bill, Tax Administration Bill, and Nigeria Tax Bill.
The League commended the intent of the Joint Revenue Board Establishment Bill to harmonize tax administration and promote taxpayers’ rights.
It endorsed the establishment of the Joint Revenue Board, Tax Appeal Tribunal, and the Office of the Tax Ombud but recommended its passage with a focus on efficient implementation.
On the Nigeria Revenue Service Bill, it noted that the proposed replacement of the Federal Inland Revenue Service (FIRS) with the Nigeria Revenue Service raised concerns about governance structure.
The League criticised the provision allowing one individual to serve as both Executive Chairman and CEO, arguing that it undermines accountability and corporate governance principles.
The group, therefore, recommended the separation of the roles of Chairman of the Governing Board and CEO.
It maintained that the Chairman should provide oversight, while the CEO focuses on day-to-day operations.
On the Tax Administration Bill, while the League recognized the bill’s effort to standardize tax procedures, it flagged issues with revenue allocation and governance of state tax agencies.
The League endorsed revising the VAT revenue-sharing formula to reflect equity, citing imbalances that disproportionately favor Lagos and Rivers States due to VAT centralization.
LND proposed that “derivation” in Section 143 as VAT allocation based on the point of consumption be clearly defined.
The League called for separating the roles of Executive Chairman and CEO at the state level to enhance transparency.
The League raised concerns about reintroducing elements of the repealed Capital Transfer Tax Decree in Section 4(3-4), which it argued infringes on religious and cultural practices.
It also criticized the planned sunset clauses for key development agencies like TETFund and NITDA, warning of their premature termination.
It said inheritance-related provisions in Section 4 should be expunged while TETFund should be sustained as the sole recipient of the consolidated development levy just as it also called for the integration of NITDA and NELFund activities under its purview.
The League highlighted Nigeria’s low revenue-to-GDP ratio of 7.3%, among the worst globally, as a core challenge.
It stressed that tax reforms must prioritize formalizing the country’s vast informal sector, which constitutes 58% of the economy.
The League opposed scheduled VAT hikes to 15% by 2035, calling for a halt until inflation is contained and economic conditions improve.
The League underscored the need for stakeholder consultations and public education to ensure buy-in and mitigate opposition.
The NLD emphasised that while tax reforms are essential to improving revenue collection, they must align with constitutional provisions and economic realities.
It called for a balanced approach that complements fiscal policies with private sector investment promotion and targeted poverty reduction initiatives.
