By Abiola Olawale
Governor Babajide Sanwo-Olu of Lagos state has joined the ongoing heated debates on the proposed tax reform bills before the National Assembly.
This is as the Governor discarded arguments that the proposed bills would only benefit Lagos State if signed into law.
Speaking with the press on the sidelines of the Africa Investment Forum Market Days 2024 in Morocco, Sanwo-Olu urged Nigerians to take time to understand the provisions of the reforms, countering claims that Lagos would be the primary beneficiary.
According to him, details in the tax reforms bills would ensure that each state work harder to achieve more revenue.
He stated: “What those uncomfortable with the tax reform are not willing to accept is that there is no way of making an omelette without breaking the egg.
“You cannot make changes if the reforms are not set in. I have advised that people should take time to read the provisions of the reform very well and to fully understand what they’re trying to do.
“I have seen comments around. Comments like Lagos is going to be the major beneficiary. It is not true. Lagos is going to be a shaped-off in some places, but on a larger scale basis, we see it as a global thing for a better governance structure.
“All of us will play better and we’ll be able to discipline ourselves more. One of the things that you will see is that you need to work harder to get the full benefit of the reform. So it’s not just an easy kill.
“I have a positive attitude to it. I see it as a very wonderful reform. Tax-to-GDP ratio in Nigeria is one of the lowest in the world,” the governor said.
“So, there are a few things that need to happen, and like I keep saying, not only when you make those changes, you will not be able to see the opportunities that are found in your account.
“We need to be bullish. We need to be encouraging ourselves and know that the intention is not to hurt anybody. This, I am very sure of.
“The intention is to better a lot, but not just better a lot of one person or one set of people. It’s for all of us, and so we should look at it this way.”
It would be recalled that President Bola Ahmed Tinubu, had on October 3, requested the national assembly to consider and pass four tax reform bills. The four bills are the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill and the Joint Revenue Board Establishment Bill.
However, the tax reform bills proposed by Tinubu have ignited widespread controversy across various sectors of the economy. The new tax bills under consideration in the National Assembly propose adopting a derivation principle in the allocation of VAT revenues between the federal government and sub-national entities.
These proposals have sparked controversy, with northern elites openly rejecting them, arguing that the changes may not favour their region.
Under the current Section 40 of the VAT Act, VAT revenue is allocated as follows: 15% to the Federal Government, 50% to the States and Federal Capital Territory (FCT), and 35% to Local Governments. The allocation to states and local governments incorporates a derivation principle of at least 20%.
Although not explicitly detailed in the VAT Act, other factors influencing the distribution include 50% based on equality and 30% based on population.
