Nigeria’s President Bola Tinubu is pressing forward with four tax reform bills, despite opposition from state governors who wield significant influence over the country’s taxation system. Tinubu rejected calls to withdraw the bills, insisting that the legislative process should proceed, allowing for necessary input and revisions rather than starting from scratch.
The presidency posted on X (formerly Twitter) that Tinubu believes the bills, already in front of lawmakers, offer ample opportunity for changes through debate and input from stakeholders, including the governors. This stance sets the stage for a potential clash with the powerful National Economic Council (NEC), which includes the vice president, state governors, and the central bank governor. On Thursday, the NEC recommended halting the reforms to allow for more extensive consultation.
Tinubu’s administration is proposing sweeping tax reforms to reduce the number of taxes businesses currently pay—over 60—down to six, which would be collected centrally by a federal agency. These taxes would then be redistributed to the states, requiring the governors to relinquish some control over local tax collection. The NEC’s concerns are focused on ensuring that these reforms serve the interests of the entire nation and do not undermine the fiscal autonomy of the states.
The president, however, argues that the tax reforms were developed after more than a year of consultations with various stakeholders, including the state governors themselves. A presidential tax reform committee, tasked with streamlining the country’s complex tax system, was the driving force behind the proposed bills.
One of the most significant components of Tinubu’s reform agenda is a planned increase in Value Added Tax (VAT) and a new tax rate of 25% targeting the country’s wealthiest citizens. The administration sees these measures as essential to boost government revenue, particularly as Nigeria grapples with significant economic challenges.
Analysts say Tinubu’s determination to move forward without fully satisfying the governors’ concerns highlights the delicate balance of power in Nigeria’s federal system, where both the central government and states hold substantial authority over taxation. The outcome of this standoff could shape the country’s fiscal landscape for years to come, other market watchers have noted.
