Former Senate Leader, Senator Ali Ndume, has commended the decision of state governors to fully support the proposed tax reform bills.
The Nigeria Governors Forum (NGF), during a recent meeting with the Presidential Tax Reform Committee, expressed unanimous support for the proposed legislation.
In a communiqué issued by Kwara State Governor and NGF Chairman, Abdulrahman Abdulrasaq, the governors approved a revised Value Added Tax (VAT) sharing formula. The new formula allocates 50% based on equality, 30% based on derivation, and 20% based on population.
However, Senator Ndume, who represents Borno South, raised concerns over the proposed derivation percentage during a phone interview with Tribune Online.
According to him, allocating 30% based on derivation is excessive, suggesting that 10% would be sufficient.
He also criticized the Federal Inland Revenue Service (FIRS) for charging 4% in administrative fees, describing it as excessive and advocating for a reduction to 1%.
Ndume stated: “First of all, the move by the Governors is commendable. The tax reform is long overdue. It is a good move. It’s now left for the National Assembly to do the needful.
“For me, I still have issues with the 30 per cent derivation. That is on the high side. Even oil-producing states that bear the brunt of crude oil exploration in their communities take 13%.
“I also think 4 per cent as administrative charges for FIRS is too much. It shouldn’t be more than 1 per cent. That’s why they spend extravagantly.
“Secondly, the VAT itself should be reduced from 7.5% to 5% or even less.”
