Ndume Rejects 30% Derivation Allocation in Proposed Tax Reforms Bills

Senator Ali Ndume from Borno South has criticized the governors for supporting a 30% derivation formula in the proposed tax reform bills. He believes this percentage is too high and treats other regions unfairly.

The proposed tax reform legislation, consisting of three key bills (Joint Revenue Board, Nigeria Revenue Service, and Nigeria Tax Bill), has ignited intense controversy nationwide since it was presented to the parliament.

The Senate has approved a significant step towards reforming Nigeria’s tax system.

Following initial strong resistance, the Nigeria Governors’ Forum has endorsed tax reform bills after meeting with the Presidential Tax Reform Committee. The Forum proposed a revised VAT sharing formula that allocates 50% based on equality, 30% based on derivation, and 20% based on population.

A communiqué signed by Governor Abdulrahman Abdulrasaq of Kwara State, chairman of the Nigeria Governors’ Forum, outlined this development.

Senator Ndume, a vocal opponent of the tax reform bills, disagreed with the governors’ recent support for the legislation. In an interview on Sunday, he questioned the proposed 30% derivation allocation for oil-producing regions, arguing that it is excessive, even for areas significantly impacted by oil extraction.

“Why would they take that amount when others are also in need of development funds?”, questioned, the senator.

He maintained further that, “At a time when people are struggling to make ends meet, tax rates should be decreased to 5% or even 3%, just as Ghana and the United States have done to support their citizens. Expanding the tax base and ensuring corporations like banks and telecom companies pay their fair share is the way forward.”

Ndume, while acknowledging the necessity of tax reform, insisted that the well-being of ordinary Nigerians must be paramount.

“We need to reform the tax system, but it should not disadvantage the masses, especially now when they are barely surviving,” senator Ndume opined.

The senator urged the National Assembly to conduct a thorough review of the proposed legislation, addressing these concerns and ensuring the reforms are equitable, fair, and ultimately beneficial for all Nigerians.

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