Members of the House of Representatives have called for the removal of contentious clauses from the tax reform bills, which recently passed their second reading in the Green Chamber. Concerns were raised about conflicts with the 1999 Constitution and the lack of interpretation for certain terms within the proposed legislation.
During the debate on the general principles of the tax reform bills submitted by President Bola Ahmed Tinubu, lawmakers expressed their apprehensions. The House subsequently consolidated four reform bills and adopted the revised position of the Nigerian Governors’ Forum (NGF) regarding the VAT sharing formula and other contentious issues.
Lawmakers, particularly those from the North, highlighted inconsistencies in the bills. Rep. Sada Soli Jibia (APC, Katsina) noted potential conflicts between some clauses and the Constitution, specifically mentioning Section 141, which he argued contradicts constitutional provisions. He also pointed out overlaps with existing laws, including the Personal Income Tax Act and the Company Income Tax Act.
Rep. Abubakar Hassan Fulata (APC, Jigawa) emphasized the absence of interpretation clauses in most proposals, warning that this could lead to abuse. He proposed the removal of clauses that systematically phase out key agencies like TetFund, NITDA, and NASENI.
Additionally, Rep. Ahmed Jaha (APC, Borno) expressed strong opposition to the proposed inheritance tax, arguing that it contradicts religious and cultural beliefs regarding the handling of a deceased’s estate.
The House also aligned with the NGF’s revised VAT sharing formula, which allocates 50% based on equality, 30% on derivation, and 20% on population. This contrasts with an earlier proposal that favored a higher percentage based on derivation.
The reforms aim to modernize Nigeria’s tax system, improve compliance, and enhance revenue generation for subnational governments. Lawmakers noted the importance of addressing infrastructural deficits and supporting economic growth.
After extensive debate, the consolidated bills were passed for second reading and referred to the House Committee on Finance for further action.
