The Senate has suspended action on the controversial tax reform bill following public backlash and widespread opposition. The suspension includes public hearings until all contentious issues are resolved.
Deputy Senate President Barau Jibrin announced the decision during Wednesday’s plenary. He also said a committee, chaired by Minority Leader Abba Moro, has been set up to meet with the Attorney General of the Federation and other stakeholders on Thursday, December 5, to deliberate on the reforms.
The proposed tax reforms, introduced by President Bola Tinubu in October 2024, have faced serious criticism, particularly from northern governors and lawmakers. They believe that the reforms unfairly burden northern states while favouring industrialised southern states.
Prominent figures, including former Vice President Atiku Abubakar and Governor Babagana Zulum of Borno State, have rejected the bills. In response, the National Economic Council requested their withdrawal for further consultations. However, despite the opposition, the Senate recently passed the bills for a second reading.
The proposed tax reforms include creating a centralised Nigeria Revenue Service to replace existing agencies like the Federal Inland Revenue Service. It also introduced a gradual increase in VAT from seven and a half per cent in 2024 to 15 per cent by 2030. Many people are concerned this could raise living costs, even with essential goods being exempted.
Another controversial part is the new method of sharing VAT revenue. 60 percent would go to states based on where goods are used, rather than where companies are located. Although it aims for fairness, this aspect of the bill have been described by northern governors as anti-democratic.
The Senate stated that no further action will be taken on the bills until all concerns are thoroughly addressed. Its members delegated to engage the Federal Government include representatives from various regions and committees, such as Oji Uzor Kalu, Deriake Dickson, and Adamu Aleiro.
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