RMAFC Opposes Tinubu’s Controversial Tax Reform Bills

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has opposed President Bola Tinubu’s controversial tax reform bills.

RMAFC insisted that it is saddled with the responsibility to produce formulae for sharing revenues, including the Value Added Tax (VAT).

In a memorandum on the ongoing debates on the Tax Reform Bills, RMAFC rejected the principle of derivation over the existing system of VAT pooling, among other legal, constitutional, and technical objections to the proposed legislation.

RMAFC cautioned against amending the VAT sharing formula without its constitutional input.

Osun Defender reports that the National Assembly is deliberating on four proposed bills under the Tax Reform and Fiscal Policy Bill.

But RMAFC while insisting on its exclusive right to revenue-sharing, said: “Only the RMAFC has the mandate to produce formulae for sharing revenues, including VAT. Any deviation from this constitutionally backed process is both inappropriate and potentially unconstitutional.”

RMAFC warned against arbitrary changes to the VAT formula, noting that such actions could violate constitutional provisions and undermine its role as the impartial arbiter of revenue allocation.

“Arbitrary apportioning of percentages for VAT allocation, whether vertically among the tiers of government or horizontally among states and local governments, is both impractical and unconstitutional,” the Commission stated.

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It added, “The Constitution designates RMAFC as the final authority on matters of revenue allocation.

“As such, no Act of Parliament, including the VAT Act, can infringe upon this constitutional responsibility. Any such attempt would constitute a violation of the Constitution.”

It further maintained that its role as the exclusive arbiter in developing fair revenue allocation formulas must be respected, arguing that any deviation from its constitutional duties could undermine the integrity of the Commission and compromise the principles of justice in revenue sharing.

The Commission, however, called for an approach to Value Added Tax (VAT) allocation that accounts for the unique nature of VAT as a consumption tax.

“Derivation in fiscal federalism refers to the principle where revenue generated from a specific resource or activity is allocated to the jurisdiction (state or region) where it originated. In Nigeria, this principle is constitutionally recognized, notably in the allocation of oil revenues where 13% of revenue derived from oil is returned to oil-producing states, though different from the VAT derivation. It aims to ensure fairness and economic equity by compensating resource-originating regions for their contributions to the national purse,” the memorandum added.