Former Senate Leader, Senator Ali Ndume, has lauded the Nigeria Governors Forum (NGF) for endorsing tax reform bills but raised concerns over aspects of the proposed Value Added Tax (VAT) sharing formula.
The governors had during a meeting with the Presidential Tax Reform Committee last week, pledged their full support for the reforms.
In a communiqué signed by Kwara State Governor and NGF Chairman, Abdulrahman Abdulrasaq, the 36 governors endorsed a revised VAT sharing formula allocating 50% based on equality, 30% on derivation, and 20% on population.
Speaking with journalists, Ndume, who represents Borno South Senatorial District, commended the governors’ move but argued that the 30% derivation allocation is excessive.
He suggested 10% as a more appropriate figure.
He said, “First of all, the move by the governors is commendable. The tax reform is long overdue, and it’s now left for the National Assembly to do the needful
“However, I have issues with the 30% derivation allocation. That is on the high side. Even oil-producing states that bear the environmental brunt of crude oil exploration only receive 13% derivation.”
The former Senate Chief Whip also criticized the 4% administrative charge allocated to the Federal Inland Revenue Service (FIRS), arguing that it should be reduced to 1% to curb excessive spending.
“Four per cent for FIRS is too much. It shouldn’t be more than 1%. That’s why they spend extravagantly,” he said.
Ndume also advocated for a reduction in VAT rates, suggesting they be lowered from the current 7.5% to 5% or even less to ease the burden on Nigerians.
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