Why Tinubu's Tax Bills Are Dividing Nigeria's North and South

A brewing storm is gripping the National Assembly as lawmakers return from recess to debate President Bola Ahmed Tinubu's proposed tax reform bills. The contentious legislation has amplified regional differences between the North and South, particularly over the sharing of Value Added Tax (VAT) revenue.

The four bills - Nigeria Tax Bill 2024, Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and Joint Revenue Board Establishment Bill - seek to overhaul the nation's tax system. However, the principle of allocating 60% of VAT revenue through the derivation formula has fueled tensions, with some northern leaders alleging that it disproportionately favors Lagos State.

North-South Divide: What's at Stake?

The North, which boasts 57 senators and 190 House members, holds a numerical advantage in the legislature. However, it is far from unified, as North-Central states often align with southern interests. Meanwhile, the South's 51 senators and 170 House members are pushing for reforms they argue will ensure equitable development.

Northern politicians, including Rabiu Kwankwaso, the NNPP presidential candidate, have voiced strong opposition to the bills. Kwankwaso described the bills as a "plot by Lagos to take over the taxes of KanoÔÇØ and urged lawmakers to resist their passage. The Northern Governors' Forum has similarly instructed representatives to reject the bills.

Despite these objections, Taiwo Oyedele, chairman of the Presidential Tax Committee, insists the reforms will benefit northern states more than Lagos. He has engaged lawmakers to clarify the proposals, but skepticism remains high, particularly among vocal northern leaders like Senator Ali Ndume, who declared the bills "dead on arrival.ÔÇØ

Regional Disparities Highlighted

The crux of the dispute lies in the derivation principle, which directs a larger share of VAT revenue to states where it is generated. Southern states, especially Lagos, generate significant VAT due to their economic activities, while many northern states rely on redistribution.

However, the South is also divided. Oil-producing states in the South-South are likely to back the bills due to potential gains from increased revenue allocation. This emerging alliance between the South-South and North-Central could tip the scales in favor of the reforms.

The Numbers Game in the Senate and House

To pass, the bills require the backing of at least 55 senators and 181 House members. With 109 senators and 360 House members, the regional balance will play a decisive role.

The North's majority in both chambers does not guarantee a united vote. North-Central lawmakers, known for their independent stance, could align with the South, potentially securing the needed votes.

In the House, northern lawmakers like Abdulmumin Jibrin initially supported the bills, but the recent backlash from Kwankwaso and northern governors may alter their positions. On the other hand, southern lawmakers like Philip Agbese, Deputy House Spokesperson, remain vocal in support of the reforms, emphasizing the need to strengthen Nigeria's economic base.

What Lies Ahead?

The debate over Tinubu's tax bills is not just about fiscal policy; it reflects deeper issues of regional equity, resource control, and national unity. As lawmakers deliberate, the loudest voices and strategic alliances will shape the outcome.