National Ulama Council Oppose Tax Reform Bill

National Ulama Council Oppose Tax Reform Bill

ULAMA FORUM IN NIGERIA

Flat No 7 Floor Hadiza House, Zaria Road, Kano

Contact Numbers: 0803 943 4089; 0806 084 4088; 0803 619 2943

Email: ulamaforumnigeria@gmail.com 

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𝐏𝐑𝐄𝐒𝐒 𝐑𝐄𝐋𝐄𝐀𝐒𝐄

𝐓𝐇𝐄 𝐒𝐓𝐀𝐍𝐃 𝐎𝐅 𝐓𝐇𝐄 𝐔𝐋𝐀𝐌𝐀 𝐅𝐎𝐑𝐔𝐌 𝐈𝐍 𝐍𝐈𝐆𝐄𝐑𝐈𝐀 𝐎𝐍 𝐓𝐇𝐄 𝐏𝐑𝐎𝐏𝐎𝐒𝐄𝐃 𝐓𝐀𝐗 𝐑𝐄𝐅𝐎𝐑𝐌 𝐁𝐈𝐋𝐋𝐒 𝐁𝐄𝐅𝐎𝐑𝐄 𝐓𝐇𝐄 𝐍𝐀𝐓𝐈𝐎𝐍𝐀𝐋 𝐀𝐒𝐒𝐄𝐌𝐁𝐋𝐘

𝐏𝐫𝐞𝐚𝐦𝐛𝐥𝐞

The country has of recent been drawn into a justified debate on the refusal of Mr. President to accept and act on the recommendation of the National Economic Council to withdraw the Tax Reform Bills before the National Assembly for their unacceptable and lopsided provisions that do not bode well for fair dealing in the spirit of federalism.

The new Tax Reform Bills, especially the Nigeria Tax Bill (NTB), 2024, and the Nigeria Tax Administration Bill (NTAB), 2024, are understood to partly accentuate income inequality in Nigeria. The NTAB particularly transfers the largest share of Value Added Tax (VAT) revenue from the areas of consumption or generation to the locations of head offices of production entities. This is seen to violate the principles of equity and fairness, as production is worthless without consumption.

VAT is a consumption tax; therefore, transferring the largest share of its revenue from areas of consumption or generation to the location of head offices of production entities violates the main objective of Fiscal Equalization, and promotes wide income disparity with its inherent risk of social disharmony. It is unjust because the overburdened local taxpayer will not equitably benefit from the tax he has paid, thereby nullifying a basic principle of state policy of balanced development as enshrined in the Constitution of the Federal Republic of Nigeria, 1999 (as amended).

Moreover, the Development Levy distribution formula proposed in the NTB seems to be designed to phase out some agencies, such as TETFUND and NITDA, which provide critical developmental infrastructure and services.

In the light of the foregoing, the Ulama Forum in Nigeria has found it imperative to observe and note as follows:

Observations

1. It is noted that the proposed Nigeria Tax Bill (NTB), 2024, and the Nigeria Tax Administration Bill (NTAB), 2024 seek to eliminate the existing multiple avenues of taxation by way of harmonising taxes that are similar in nature and intent. 

2. The implication of the two bills, however, is that states that provide residence to headquarters of firms that produce the VATable goods and services would be allocated a great percentage of the derivation share to the detriment of the states where the actual consumers of the goods and services reside. The provisions of the proposed bills will favour not more than three states to the detriment of the other states of the federation and the FCT, thereby considerably diminishing their VAT allocation and consequently strangulating them economically.

3. It is most untimely and insensitive to confront the Nigerian citizens with a regime of excessive VAT rate at a time when they are struggling for survival in the midst of harsh and unfavourable government economic policies. 

4. A more disturbing and abhorrent dimension is the threat to agencies such as TETFUND, NITDA and NASENI. The future of these agencies will patently be jeopardised through the proposed Development Levy distribution formula. The NTB proposes a gradual decrease in the funding of the agencies from 4% of assessable profit of the companies in 2025 and 2026 down to 2% in 2030, when they will be phased out, leaving only the Student Education Loan Fund to enjoy the 2%. 

If the three agencies are deprived of their existing source of funds and are made to stop benefiting from the proposed Development Levy, it is not likely that they would survive even if they were to be funded through the mainstream Federal Government’s budgetary allocation.

5. Another obnoxious feature of the proposed Development Levy is that as TETFUND is being gradually stifled, public tertiary educational institutions will need alternative sources of funding infrastructure, research and staff capacity building. This will force them to charge exorbitant tuition fees, making students to be increasingly indebted under the Student Loan Scheme, thereby stealthily justifying the wide suspicion of a plan to fully privatise tertiary education.

6. These important bills have not been subjected to sufficient public scrutiny and debate, and there seems to be a clandestine rush to impose them on the country, thus depriving the emergence of a national consensus.

7. By the structure and contents of the bills, there is room to suspect that they are designed to conform to the 10 to 15-year Reform Agenda of the World Bank, to the detriment of our sovereign independence as a nation.

Recommendations 

1. The concerns of the National Economic Council and the State Governors over the matter should be addressed. This will give the Bills a sovereign consensus, credibility, and semblance of home-grown policy, thereby disabusing minds that it is a subterranean imposition of the World Bank and IMF.

2. State governors should go a step ahead by employing the services of experts in ex-raying the bills to identify how the states will be affected. Therefore, the governors should demand for respite from any action to pass the bills into law in their present form and content.

3. The bills should be subjected to greater and wider debate and scrutiny so as to have input from a wide spectrum of stakeholders. 

4. Members of the National Assembly should live up to expectations of their oath of office and should not allow themselves to be stampeded into passing bills that are against the interests of their constituencies.

5. All public-spirited individuals, groups, and organisations should rise to this open challenge and threat to the principle of fairness and even development, considering that the issue of the VAT sharing formula affects fundamental tenets of federal constitutionalism. 

Conclusion:

While acknowledging that there may be a need to harmonise the many tax laws, the Ulama Forum in Nigeria believes that the proposed bills leave much to be desired because of their clear lopsidedness and the uncertainties that shroud them. We therefore urge that, in the spirit of justice and fair play, the Bills should be withdrawn to allow for wider discourse and national consensus

Signed This Day of Monday 18th November 2024 (16 Jumada 1, 1446 AH)                                             

Aminu Inuwa Muhammad MSW, MFCE

Convener:     0803 943 4089               

Engr Basheer Adamu Aliyu

Secretary    0806 084 408

Endorsed This Day of Monday 18th November 2024 (16 Jumada 1, 1446 AH) by the following members:

S/N                  NAME                        STATE

01 Malam Aminu Inuwa Muhammad – Convener Kano

02 Prof. Mansur Ibrahim mni, Danmasanin Sokoto Sokoto

03 Dr. Bashir Aliyu Umar OON Kano

04 Prof. Abubakar Muhamad Sani B/Kudu Jigawa

05 Prof.  Khalid Abubakar Aliyu Kaduna

06 Prof. Muhammad Babangida Muhammad Bauchi

07 Dr. Sa’idu Ahmad Dukawa Kano

08 Prof. Salisu Shehu Bauchi

09 Prof. Ahmad Bello Dogarawa  Kaduna

10 Mal Ahmad Bello Abu Maimoona Katsina

11 Prof. Muhammad Alhaji Abubakar Borno

12 Malam Muhammad Lawal Maidoki, Sadaukin Sokoto Sokoto

13 Malam Aminu Aliyu Gusau, Modibbon Gusau Zamfara

14 Mal Shehu Muhammad Maishanu Zamfara

15 Prof. Muhammad Amin Al-Amin Katsina

16 Barr. Ibrahim Muhammad Attahir Gombe

17 Dr. Salisu Ismail Jigawa

18 Malam Ibrahim Ado-Kurawa Kano

19 Dr. Abubakar Saidu Gombe

20 Engr. Dr. Ahmad Y. M. Jumba  Bauchi

21 Amir Abdullahi Abubakar Lamido Gombe

22 Dr. Ibrahim Adam Omar Disina Bauchi

23 Prof. Ahmad Murtala Kano

24 Prof. Usman M. Shuaibu Zunnurain Katsina

25 Engr. Basheer Adamu Aliyu – Secretary Kano