Tax reform bills: Nigerians share mixed reactions amid concerns over VAT increase 

The survey, conducted across eight states representing Nigeria’s geopolitical zones, aimed to gauge public sentiment on the tax reform proposals, their urgency, and the implications for businesses and governance.

Respondents spanned both formal and informal sectors, providing diverse perspectives on the reforms.

While the bills aim to simplify Nigeria’s tax system and enhance state-level revenue generation, some respondents believe the bills could push Northern governors to improve internally generated revenue (IGR).

According to the SBM Intelligence report, Munir Hamza, a Kano-based business owner, supported the bills, stating that they could incentivize Northern states to focus on revenue generation rather than relying on federal allocations.

“If the bills are passed, it will enable governors to adjust their expenditure and find more means to generate revenue. The government should ignore the opposition and do the needful,” Hamza said. 

“This will simplify the tax system, making it easier to manage and understand. Northern states should focus on improving IGR instead of relying on federal allocations and the quota system,” she said. 

While respondents generally viewed the reforms as having the potential to boost economic growth and industrial competitiveness, many expressed unease about the planned increase in VAT from 7.5% to 15% by 2027.

The report also included insights from financial experts, who shared different concerns on the tax reform bills.

Abiodun, a Lagos-based tax consultant noted that the real problem the North has with the bill was that, in his view, they do not want to be shortchanged and that pursuant to the Constitution, the VAT ought to be administered by the states.

“Currently, VAT is filed by the company headquarters, which are usually located in Lagos. The largest payers of VAT e.g. MTN, Dangote and Airtel, are all located in Lagos, whilst the consumption is happening in other states. 

“The proposed bill is strictly based on place of consumption rather than Headquarters location.”  

Speaking to SBM, Muda Yusuf, the former director general of the Lagos Chamber of Commerce and Industry, said many sections of the tax reform bill are quite technical, making them unintelligible for many average Nigerians.

“The Nigerian economy is highly informal. The man in Alaba who makes over N100 million does not know what is called Company Income Tax and may not even have an audited account. The reduction of CITA from 30% to 25% is a welcomed idea.  

“However, the increase in VAT from 7.5% to 10% is a bad idea,” he said.  

The tax reform bills have become controversial since it was introduced with different interests kicking against its provisions.

The tax reform bills have become controversial since it was introduced with different interests kicking against its provisions.

For instance, the Northern Governors Forum expressed their opposition to the bill, urging legislators from the region to resist any legislation that undermines the interests of Northerners nationwide.