In a significant development for Nigeria’s fiscal landscape, the National Economic Council (NEC) has recommended the withdrawal of the recently submitted Tax Reform Bill from the National Assembly.
The bill, aimed at overhauling the country's tax system, faced opposition at Thursday's NEC meeting, primarily due to concerns from northern governors and traditional rulers over a proposed Value Added Tax (VAT) distribution model they view as skewed against the North.
The 145th NEC meeting, presided over by Vice President Kashim Shettima, included a briefing from Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, who presented the bill’s objectives and benefits. Oyo State Governor Seyi Makinde, speaking to journalists, explained that council members had requested more time for consultations and engagement to address misunderstandings around the bill's objectives.
“Council noted that we are underperforming across major revenue sources, including the tax-to-GDP ratio,” Makinde explained. “Following extensive discussions, NEC acknowledged the need for alignment and consensus-building to ensure the reforms benefit the entire country.” NEC members reportedly agreed that pausing the legislative process would provide time to better communicate the tax reform vision and alleviate any miscommunication.
The proposal seeks a derivation-based VAT distribution model, sparking controversy as northern stakeholders argue it could disadvantage their regions. Despite the federal government’s assurances that the reform is fair, the resistance has prompted NEC to advise withdrawal for broader consultations that include more inclusive input from various regions.
In addition to tax reforms, NEC also approved the launch of the “Solutions for Internally Displaced and Host Communities” initiative, designed to support displaced persons and the communities that shelter them. Hajara Ahmed, Project Coordinator for the World Bank-supported program, presented the plan, which will focus on long-term needs like improved access to services, resilient infrastructure, and economic support for host communities.
Minister of Budget and Economic Planning, Atiku Bagudu, highlighted that the initiative will empower both internally displaced persons (IDPs) and host communities by providing essential resources, developing infrastructure, and promoting sustainable livelihoods. The program, coordinated with the National North East Development Commission, will designate focal persons in each state to work closely with the Federal Ministry of Budget and Economic Planning on project implementation.
Bagudu emphasized that the infrastructure improvements, which include enhanced water supply, sanitation, and transportation, aim to support IDPs and host communities alike. “This initiative will help create an inclusive environment where both displaced populations and local residents can thrive together,” he stated, stressing the importance of empowering local governments to effectively manage these resources.
As Nigeria grapples with both fiscal reform and the welfare of displaced citizens, NEC’s recommendations highlight a collaborative approach, encouraging constructive dialogue and community-centered development.