JUST IN: NEC Chaired by VP Shettima Recommends Withdrawal of Tax Reform Bills

The National Economic Council (NEC), chaired by Vice President Kashim Shettima, has recommended the withdrawal of contentious tax reform bills currently before the National Assembly. This decision was reached during NEC’s 142nd meeting at the Presidential Villa in Abuja, following mounting opposition from various state governors and regional forums.

Oyo State Governor Seyi Makinde, speaking with State House correspondents, explained that the NEC’s decision reflects a commitment to broader stakeholder involvement. He noted that recent debates surrounding the reform bills prompted the council to reassess its approach, aiming to avoid divisive impacts on the federation.

Tensions around the tax reforms intensified earlier this week when the Northern Governors’ Forum (NGF), led by Gombe State Governor Inuwa Yahaya, formally rejected the proposed derivation-based model for Value Added Tax (VAT) distribution. This model, included in the new tax bills, suggests shifting VAT allocations based on local consumption, rather than central remittances.

Governor Abdullahi Sule of Nasarawa clarified the northern governors’ position, arguing that the proposed model could disadvantage northern states with lower VAT contributions. “States with minimal VAT contributions would suffer under the derivation model,” Sule stated, underscoring the regional imbalance inherent in the current proposal.

Emphasizing unity, Sule added, “This isn’t about opposing President Tinubu, whom we supported. Our decisions stem from a collective concern for regional fairness, as the proposed model could place northern states at a disadvantage given their lower VAT collections.”

Presidential Special Adviser on Information and Strategy, Bayo Onanuga, also addressed the mounting concerns on Thursday, urging stakeholders to view the reform as an attempt to promote equity. Onanuga highlighted that the current VAT model disproportionately benefits wealthier states with higher tax remittances, rather than reflecting where goods are consumed.

“The new VAT proposal is designed to address inherent inequities,” he said. “It considers the place of supply or consumption of goods and services, which means regions like the North, supplying key food items exempt from VAT, would see fairer distribution.”