TEXT OF A PRESS CONFERENCE ON THE TAX REFORM BILLS ISSUED BY THE CNG AND DELIVERED BY THE CNG’S NATIONAL CO-ORDINATOR 

Date: Tuesday, December 3rd, 2024

PREAMBLE

The (CNG) has carefully observed and monitored the ongoing conversation on the Tax Reform Bills proposed by President Bola Ahmed Tinubu’s administration.  

While the Government and its puppets argue that these reforms are ostensibly designed to boost revenue generation and enhance economic equity, however, most Nigerians see the policy as simply a framework to entrench hardship among the already poverty-stricken Nigerians through the deployment of some harsh neoliberal measures targeted at turning Nigerians into modern slaves in their fatherland.

The CNG, like all Nigerians, is fully aware that Nigerians are facing socio-economic challenges, including poverty, unemployment, and underfunded education, poor health and dilapidated infrastructure. Others are Inflation, multiple taxation, corruption and impunity in Government which stifle our development. We believe successive governments have not done, and this current administration too is not doing enough to address these problems.

The CNG, after carefully reviewing the proposed tax reforms, in their current form, believes that it would aggravate our existing challenges perhaps with only three states and the FCT to benefit out of our collective difficulties. 

OBSERVATIONS

The CNG observed that these so-called reforms will certainly disproportionately and negatively impact most parts of the country generally and the North specifically, in the light of proposed defunding of important pivotal institutions like TETFUND, NITDA, and NASENI, and shift the economic burden onto already struggling populations.

Impact on National Institutions:

The Nigeria Tax Bill introduces sweeping reforms that consolidate multiple levies on companies’ profits into a single “development levy,” which will progressively decline from 4% in 2025 and 2026 to 2% by 2030. This reform poses significant threats to critical sectors, particularly education, technology, and industrialization.

Tertiary Education Trust Fund (TETFUND):

 • Currently funded through a 3% tertiary education tax on companies’ annual assessable profits, TETFUND plays a pivotal role in financing research, infrastructure, and academic training across tertiary institutions.

 • Under the new structure, TETFUND will receive 50% of the development levy in 2025 and 2026, rising to 66% from 2027 to 2029 as the levy rate declines to 3%. However, TETFUND will receive no funding from 2030 onwards, effectively phasing it out. 

 • The phasing out of TETFUND jeopardizes the sustainability of public tertiary institutions, particularly in areas such as infrastructure, training and research. With such strides that had impacted millions of students, academics and tertiary institutions in Nigeria, scrapping TETFUND is tantamount to destabilizing Nigeria’s educational system. 

National Information Technology Development Agency (NITDA):

 • NITDA currently collects 1% of the profit before company income tax from companies in tech-related industries through the Information Technology Tax.

 • Under the new levy structure, NITDA will receive 20% of the levy in 2025 and 2026 but nothing beyond 2026.

 • This funding cut threatens to derail the digital inclusion agenda and innovation initiatives, particularly in states already grappling with limited access to technology. The rural communities which are lagging behind urban areas with a widening digital divide, stands to be adversely affected.

National Agency for Science and Engineering Infrastructure (NASENI):

 • NASENI is funded through a 3% deduction from the Federation Account and a 0.25% levy on the turnover of companies with N4 million and above. This has been instrumental in driving industrial and technological innovation.

 • Under the reform, NASENI will receive 5% of the development levy in 2025 and 2026 but no funding from 2027 onwards.

 

• This abrupt funding cessation undermines Nigeria’s industrialization aspirations and the push for technological self-reliance which requires strategic investments in industrial infrastructure.

Unjust VAT Derivation Formula:

The proposed reforms in the Nigeria Tax Bill, particularly the introduction of a 60% derivation formula for revenue collection, are deeply contentious. The lack of publicly available data to justify these changes raises serious concerns, especially for consumption-heavy states in the North.

Taxation is inherently a number-driven issue, yet the government has failed to provide the necessary data to justify this shift.

 

• For instance, how was it determined that Lagos and other headquarters-hosting states are disproportionately contributing to national VAT revenue and receiving a more disproportionate share? Was it not determined using data? Then if the claims that other states apart from Lagos and its likes will be better off under the proposed formula are based on transparent data, why isn’t it publicly available?

 

• Proponents of the reform claim it will improve fairness, but without clear projections showing how much each state will collect and receive under the proposed system compared to the current arrangement, this remains an unsubstantiated assertion.

Increased VAT Rates:

The planned incremental VAT hikes, culminating at 15% by 2030, pose significant risks to Nigeria’s economy, especially for vulnerable households whom poverty levels are alarmingly high. While the government has attempted to cushion the impact by exempting essential goods and services from VAT, the unregulated nature of Nigeria’s market system undermines these exemptions, making the overall economic strain inevitable.

Defunding of the North East Development Commission (NEDC):

As part of efforts to rebuild the North east region that has been destroyed by Boko Haram insurgency, 3% of VAT has been specifically devoted to NEDC for that purpose. Hence, the removal of VAT as a funding source for the NEDC endangers critical rehabilitation efforts in a region still recovering from decades of insurgency and instability.

RECOMMENDATIONS

1. Reform VAT Derivation:

The government should publish comprehensive data to justify the proposed VAT derivation formula, enabling citizens to evaluate its fairness based on concrete numbers compared to the existing system. Transparency in this matter is non-negotiable. If the data clearly demonstrates increased equity, it will bolster public trust in the reform. 

However, if such projections cannot be provided, it is prudent to maintain the current VAT revenue-sharing formula while implementing the proposed location-based collection system. This approach allows the government to evaluate the real impact of the new collection method, particularly on the current 20% derivation share.

2. Retain Funding for Developmental Agencies:

Agencies like TETFUND, NITDA, and NASENI must be exempted from defunding or restructuring. These institutions are pillars of Nigeria’s educational, technological, and industrial progress, and undermining their financial base will derail critical national development objectives. 

3. Suspend VAT Rate Increases:

The government should halt the planned VAT increases and explore alternative revenue sources that do not add to the current hardships of ordinary Nigerians.

4. Engage Stakeholders Nationwide:

The reforms must undergo thorough consultations with all sub-nationals and key stakeholders, including civil society and educational institutions to ensure a consensus-driven approach.

CNG’S POSITION

Based on the above analysis, the CNG categorically rejects these tax reforms in their current forms. They represent a shortsighted approach to revenue generation that sacrifices equity, inclusion, and sustainability. 

This administration, with its pseudo-reforms and devilish policies, remains the most wicked, heartless and demonic in the political evolution  of Nigeria. 

Since its inception, the Government has created poverty and misery, expanded frontiers of deprivation, and excruciating economic policies, entrenched inhumane and gangster-like approach to civil dissidence and complete trial-and-error in economic management. 

The CNG reminds the Government that through their fake and devil-like reforms in the   economy, fuel-subsidy removal, energy sector,  the administration has bequeathed disastrous condition for Nigerians that rich and middle class have been turned to paupers while poor Nigerians have been turned to surviving in hell-like situation.

The government and its economic team have vindicated the CNG’s earlier statement on 19th July as the worst economic team that have completely destroyed our ailing economy that have relegated Nigeria’s ranking from the first to fourth economy in Africa. The economic team and the monetary policies are worst in the annals of Nigerian history.

Where are the reform benefits from the fuel subsidy removal, floating of the naira and increase in electricity tariff that had been implemented in the last one year apart from destitution and impoverishment?

Thus, the CNG insists that the centralization of import through Lagos alone must be discarded to allow for imports through our Land borders such as Kwara, Borno, Kebbi and Katsina among others.

Similarly, the Government must complete/rehabilitate and operationalize Baro, Lokoja, Makurdi, Warri, Calabar and Onitsha Ports to enable the states to also take in some revenue as against current system that centralizes everything in Lagos.

The CNG also affirms that all the Inland Dry Ports in Kano, Aba, Ibadan, Jos, Katsina, Maiduguri and Kaduna must be quickly operationalized in the interests of equity, fairness and inclusion.

While we commend the courageous position of Northern Governors Forum (NGF), National Economic Council (NEC), the Northern council of traditional rulers and some members of the National Assembly who stood firm against this ill-fated policy to strangulate Nigerians, we equally urge other lawmakers to summon the courage and take bold decision against this unpopular policy.  

On the whole, the CNG urgently demand for the immediate suspension of these Tax Bills, so as to allow wider engagement and collect the input of critical stakeholders and the Nigerian citizens in general, towards implementing a more equitable, transparent and sustainable Tax administration reform in our country.   

We thank you for your attention.

God bless Northern Nigeria.

God bless Federal Republic of Nigeria.

Signed:

Comrade Jamilu Aliyu Charanchi,

National Coordinator, CNG.