The League of Northern Democrats (LND) acknowledges and supports the recent communique issued by the Nigeria Governors’ Forum (NGF) at the conclusion of their meeting with the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, on January 16, 2025.
The NGF’s endorsement of a revised Value Added Tax (VAT) sharing formula of 50% based on equality, 30% based on derivation and 20% based on population aligns substantially with the recommendations of LND’s Technical Committee on Tax and Fiscal Reforms, publicly presented on December 19, 2024.
In a statement signed by LND Spokesperson, Dr Ladan Salihu, LND welcomes the forum’s recognition of the need for comprehensive tax reforms to modernize Nigeria’s fiscal system, enhance stability and align with global best practices.
“However, there is one critical issue overlooked in the Governors Forum’s communique that requires urgent resolution before LND can fully endorse the reforms: the definition of
“derivation.”
“For any tax reform to achieve equity, fairness and sustainability, “derivation” must be clearly and unambiguously defined to mean the place of consumption. This was a cornerstone of LND’s recommendations and remains non-negotiable. Without this definition, the proposed increase of derivation to 30% risks perpetuating regional inequalities, where certain areas benefit disproportionately at the expense of others, particularly the North.
” The absence of clarity on this matter undermines the principles of equity that the reform is said to seek to achieve in the first place.
” LND is convinced that tying derivation to the area of consumption will ensure that resources are distributed based on actual economic activity and contribution. This approach
not only aligns with the realities of modern taxation but also promotes accountability and incentivizes regions to develop their economic capacities.
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“Until this critical issue is resolved, LND will withhold its full support for the tax reform agenda. We urge the NGF and the Presidential Tax Reform Committee to incorporate this
fundamental clarification, and all other amendments made by the LND, including the inheritance tax clause, into their framework to guarantee that the reforms deliver equitable
and beneficial outcomes for all Nigerians.
“As stakeholders in the Nigerian project committed to our regional and national development, LND reiterates its readiness to work collaboratively with all parties to ensure these reforms succeed in fostering fairness, growth and prosperity for our people.”
