Chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, Mr. Taiwo Oyedele, has expressed disappointment over the rejection of the Federal Government’s tax reform bills by states that were expected to benefit the most.
He revealed this during an interview on The Morning Show on Arise TV on Wednesday, where he discussed the resistance to the reform efforts.
Oyedele stated that the Federal Government initially anticipated resistance from states like Lagos and Rivers but was surprised by the opposition from other states. He said, “We had not envisaged that there was going to be push-back from the other states. We thought the push-back would come from Lagos mostly, maybe a little from Rivers. It’s almost like we ended up with the people we are fighting for are now fighting us.”
The chairman explained that the resistance largely stemmed from the proposal on Value Added Tax derivation, which he described as a sensitive issue for many states. He clarified the difference between VAT derivation and oil and gas derivation, noting that while oil derivation is based on production, VAT is tied to consumption across all states.
“VAT derivation, I think that word is sensitive because people think about where it’s based on production. If they’re not producing crude oil, you don’t get any part of that derivation. Whereas for VAT, every state consumes. If you share anything based on VAT derivation, everyone gets something from it,” Oyedele explained.
He further assured that the Federal Government’s proposals were in line with the provisions of the Nigerian Constitution. “The Constitution, with respect to stamp duty, under Section 163, should be shared based on derivation. So what we are proposing is not strange to our constitution,” he said.
Oyedele emphasised the importance of recognising tax generation locations to avoid legal disputes. “When it comes to matters of tax generation, we must recognise where they’re being generated. Otherwise, we end up in a situation where one state will get a Supreme Court judgment,” he concluded.
The ongoing push-back against the reforms has underscored the challenges in implementing tax policies designed to ensure fairness and economic development across the federation.
