Indications emerged on Sunday as to why the 36 state governors reversed their earlier rejection of the tax reform bills currently before the National Assembly.
After initially calling for broader consultations, the governors have now unanimously endorsed a revised version of the bills, particularly focusing on the derivation principle for the distribution of value-added tax (VAT).
Sources revealed that the governors’ initial opposition had strained the relationship between President Bola Tinubu and Vice President Kashim Shettima.
The tension reportedly escalated due to Borno State Governor Babagana Zulum’s vocal criticism of the bills, which he argued would primarily benefit Lagos State at the expense of other regions.
Zulum criticized the swift progress of the tax reform bills, noting the stark contrast to the lengthy deliberation of the Petroleum Industry Bill.
He cautioned, “The Petroleum Industry Bill took almost 20 years before it was finally passed. But this tax reform bill is being transmitted and receiving legislative attention within a week. It should be treated carefully and with caution so that even after our exit, our children will reap its benefits.”
He also warned that, if passed in its original form, the bill would disproportionately favor Lagos, the largest contributor to the nation’s VAT revenue.
Zulum argued, “If passed into law by the legislature as proposed by the President, only Lagos State would be the beneficiary.”
Tinubu’s allies reportedly viewed Zulum’s outspoken objections as a reflection of Vice President Shettima’s stance on the matter, considering the close political ties between the two.
According to The Whistler, a source at the presidency explained, “Nigerians know the relationship between the Borno State governor and the vice president just as they know the relationship between the Lagos State governor and the president.
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“The voice of the governor of Lagos State might be taken for that of the president, who is his political godfather. It’s in the same way Zulum’s action could be seen as signifying Shettima’s position on any issue, rightly or wrongly. So people may not be too wrong if they say it’s a case of Esau’s hand, Jacob’s voice.”
To resolve the rift, the NEC, chaired by Vice President Shettima, intervened and facilitated discussions to ease tensions between the president and vice president.
A source added, “That was why the governors, on the platform of the Nigeria Governors Forum, had to review their initial position on the bills and endorse an amended version of the documents.”
In a communiqué signed by NGF Chairman Governor AbdulRahman Abdulrasak of Kwara State, the governors urged the National Assembly to continue its work on the bills, signaling a unified stance and alignment with the president.
Tax experts suggested that the primary reason for the governors’ initial rejection was the proposed 60% derivation for VAT, which they believed would unfairly favor Lagos.
The revised formula, which reduces the VAT derivation to 30%, is seen as a compromise aimed at achieving a more equitable distribution of VAT revenue across all states.
Titilope Adako is a talented and intrepid journalist, dedicated to shedding light on the untold stories of Osun State and Nigeria. Through incisive reporting, she tackles a broad spectrum of topics, from politics and social justice to culture and entertainment, with a commitment to accuracy, empathy, and inspiring positive change.
