LND COMMENDS GOVERNOR’S FORUM ON TAX REFORM, FLAGS CONCERNS OVER “DERIVATION” 19-01-25
By Sadiq Aminu The League of Northern Democrats (LND) has expressed cautious optimism regarding the Nigeria Governors’ Forum’s (NGF) recent communique on tax reform, while highlighting a critical area of concern.
The NGF, in a meeting held on 16 January 2025 with Mr Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, endorsed a revised formula for Value Added Tax (VAT) sharing: 50% based on equality, 30% on derivation, and 20% on population.
The LND noted that this aligns significantly with its own Technical Committee’s recommendations on tax and fiscal reforms, published in December 2024.
While welcoming the NGF’s recognition of the urgent need for comprehensive tax reforms to modernise Nigeria’s fiscal system and enhance stability, the LND emphasised a vital omission in the forum’s communique: the precise definition of “derivation.”
In a statement issued by its spokesperson, Dr Ladan Salihu, in Abuja, their LND insisted that “derivation” must be clearly defined as the place of consumption, arguing that this is essential to achieving equity, fairness, and sustainability.
“The absence of clarity on the definition of derivation risks perpetuating regional inequalities,” Dr Salihu said. “Certain areas could disproportionately benefit at the expense of others, particularly the North.
A consumption-based approach ensures resources are distributed according to actual economic activity and contribution, promoting accountability and incentivising regional development.
The LND further warned that unless this critical issue is addressed, it would withhold full support for the proposed tax reform agenda.
It also urged the NGF and the Presidential Tax Reform Committee to incorporate its recommendations, including the inclusion of an inheritance tax clause, to ensure reforms achieve equitable outcomes for all Nigerians.
The LND reiterated commitment to working collaboratively with all stakeholders to foster fairness, growth, and prosperity through meaningful reforms.
While expressing optimism that the ongoing dialogue could deliver lasting progress for Nigeria, the statement adds that “the LND remains resolute in its mission to champion regional and national development”.