Tinubu’s tax reform bills ignite nationwide debate as analysts, stakeholders voice divergent opinions

President Bola Tinubu’s proposed Tax Reform Bills continue to dominate national discourse, sparking sharp divisions among socio-cultural organizations, political factions, and economic experts.

Introduced as part of an ambitious fiscal overhaul, the bills aim to modernize Nigeria’s tax regime by replacing the existing National Tax Policy with a “National Fiscal Policy on Fair Taxation, Responsible Borrowing, and Sustainable Spending.”

The reform package includes four key bills: the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.

Despite passing the second reading in the Senate last week, the proposals have faced significant opposition, particularly from northern elites, over revenue-sharing principles that favor derivation-based VAT distribution.

The principle of allocating 60 per cent of VAT revenue based on derivation has emerged as a flashpoint, with northern stakeholders arguing that it disproportionately benefits Lagos and other southern states where most corporate headquarters are based.

Yerima Shettima, President General of the Arewa Youth Forum (AYF), expressed skepticism about the reforms, citing historical inequities in federal resource distribution.

“Despite contributing significantly to GDP through agriculture and other sectors, the North has consistently received less in terms of infrastructure and services. Increasing taxes without addressing this imbalance exacerbates existing economic hardships,” Shettima argued.

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He also warned that extending tax obligations to the largely informal northern economy—dominated by small-scale farmers, traders, and artisans—could lead to widespread business closures and unemployment.

In contrast, southern socio-cultural groups such as Ohanaeze Ndigbo and Afenifere have endorsed the bills, emphasizing their potential to drive economic growth and reduce fiscal inequalities.

Okechukwu Isiguzoro, the factional Secretary-General of Ohanaeze, highlighted the benefits of eliminating double taxation and creating a fairer business environment.

“These reforms will empower SMEs, particularly in the Southeast, by fostering a transparent and equitable tax system that stimulates investment,” Isiguzoro said. He urged southern lawmakers to support the bills, warning against efforts by northern elites to derail them.

Similarly, Afenifere’s National Publicity Secretary, Jare Ajayi, downplayed northern concerns, arguing that VAT derivation benefits all states. “Every state has an opportunity to maximize revenue under this arrangement. It encourages competition and motivates economic activities at the grassroots,” Ajayi said.

Economic analysts have urged caution and called for greater public engagement on the proposed reforms.

Dr. Yusuf Alabi, a tax policy expert, noted that while the bills represent a step toward fiscal sustainability, their success hinges on transparent governance. “Mistrust in government institutions remains a major barrier. To win public confidence, the administration must ensure tax revenues are utilized equitably and visibly,” he said.

Similarly, financial analyst Bisi Akintola emphasized the importance of educating informal sector players about the new tax regime. “Without targeted awareness campaigns, compliance will remain low, undermining the reforms’ objectives,” she warned.

As the bills progress through the National Assembly, their fate will likely test the political will of Tinubu’s administration. The president has stood firm against calls to withdraw the proposals, insisting on allowing legislative due process.