By Citizenship Daily
The League of Northern Democrats (LND) has backed the Nigeria Governor’s Forum (NGF) recent endorsement of a revised Value Added Tax (VAT) sharing formula in the country.
Spokesman of the league, Dr. Ladan Salihu made public the position of the organisation in a press release issued at the weekend, saying that the league acknowledges and supports the stance of 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.
It was highlighted in the release that 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 recommend- ations of LND’s Technical Committee on Tax and Fiscal Reforms, presented to the public on December 19, 2024.
“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”.
According to the league,for any tax reform to achieve equity, fairness and sustainability, “derivation”must be clearly and unambiguously defined to mean
the place of consumption which 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 as this approach not only aligns with the realities of modern taxation but also promotes accountability and incentivizes regions to develop their economic capacities.
“Until this critical issue is resolved, LND will withhold its full support for the tax reform agenda urging 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 results for all Nigerians”.The release declared.
The league further revealed its readiness to work in unison with all parties in ensuring these reforms come to fruition in fostering fairness, prosperity and growth of the country and its people.
