•Taiwo Oyedele
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has said Lagos State remains the biggest loser in the ongoing tax reform efforts.
He explained that the committee’s proposals on Value Added Tax (VAT) were designed to benefit all regions of the country.
The tax advisor disclosed this while appearing on Arise TV to explain the complaints that had trailed the tax reform policy by President Bola Tinubu.
According to him, “Lagos is the biggest loser in the reform bill because most companies headquartered in the state currently remit their VAT there due to their centralised finance departments”.
He said the framers of the constitution replicated 1979 without the VAT. In 1999 when they introduced the constitution, VAT was missing, but the government continued to collect it.
“Some states like Rivers State and Lagos State are in court saying that VAT should be collected by the state because they feel that they are not getting enough for the contribution they are making into the pot, and therefore if they collect it as a state tax, they will be better off”, he added.
Oyedele noted that though Lagos and Rivers States have argued that direct VAT collection would better reflect their contributions, allowing them to collect it independently would create chaos for businesses.
”That is the equivalent of 100 per cent derivation. For us, as we’re working on these tax reforms. We said if we get states to start collecting VAT in Nigeria, it will be chaotic for business because we know for a fact that states in Nigeria will not respect input-output.
“However, under the reforms, VAT collection would be adjusted to address inequities, redistributing revenue away from Lagos despite its significant contributions”, he noted.
Oyedele said, “As of today, when companies remit their VAT, they do so from their head office because that’s where they have the finance department. So MTN, BUA, Dangote, Airtel, all the banks, most of them are headquartered in Lagos. Some of the oil companies are headquartered in Rivers State.”
President Bola Tinubu in October 2024 introduced four Tax Reform Bills to the National Assembly, aimed at overhauling Nigeria’s tax system.
The proposed laws – the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill – seek to consolidate existing tax laws, simplify tax administration, and enhance revenue generation.
However, the reforms have faced significant opposition, particularly from stakeholders in the Northern part of the country with top figures calling for its outright withdrawal for better consultation.
