Tax reform bill: What the North needs to do

Guest Columnist By Bilyamin Abdulmumin

Passing bills in Nigeria (apparently everywhere else) has the tradition of generating controversies. The Petroleum Industry Act (PIA) for instance had to endure decades of rejections before finally passing into law; when the Electoral Act 2022 was signed into law, the opposition went agog crying to high heaven; similarly, when, the Social Media Bill was passed, it was seen as prove of a government obsession to suppress dissent.
The reform that is now raising the dust is the Tax Reform Bills. Days after sending the bills to the national assembly, the nineteen northern states governors convened in Kaduna to oppose it; they described the bills as anti-North. The Federal Executive Council (FAC) also threw some weight behind the northern governors. However, like the vigor with which subsidy removal was pursued, the president insisted on proceeding with the reform.
A major fear of the northern governors is the amendment of Value Added Tax (VAT) as a Derivation-based Model. By implication, the consumption of goods and services by northern states become less relevant in terms of their states’ contribution to federal government revenue, because according to Governor Yahya, the NGF chairperson, “companies remit VAT using the location of their headquarters and tax office and not where the services and goods are consumed’’. So, in this way, for all the consumption of MTN services in states like Kano, the VAT goes to Lagos, where the MTN headquarters is, hence improving Lagos allocation, while Kano, where the services were consumed, gets allocation reduced.
For the state where the plants and industries are sited, this reform is a dream come true, unfortunately for the state bottom rock in terms of industries it is a crying face for them.
While seeking redress to the proposed bill, it is also better to take charge; no more time is needed for the North to dust off all the moribund infrastructure, pass and implement industrial policies, continue with the uncompleted, and maintain the few industries in the region than now.
In Kano there are plathero of them, notwithstanding Karota revenue, Abba Kabir Yusuf needs to rise to industrious revenues. The Tomato processing industry by Dangote is said not to be meeting the expectations and optimism.
In Zamfara, a once peaceful and serene area, Dauda Lawal needs to recall all the companies aground and those existing only in paper, e.g., fertilizer plants by his predecessor Mutawalle. Apart from raising revenue, industrialization benefits in Zamfara are multitude, combating even the insecurities that bedevil the state (through job opportunities in the long run).
In Kaduna, Uba Sani needs to continue with the Malam El-rufai’s exploit, maintaining and upgrading Olam Nigeria, and a host of economic initiatives.
In Kebbi state, the comrade Dr. Nasir Idris Kauran Gwandu needs to extend his widely recommended administration to continue the ongoing legacies of Senator Abubakar Atiku Bagudu, like the bioethanol mega plant, maintaining and promoting already established ones ( e.g., GB Food tomato processing plant and WACOT).
Ironically, the southern states (especially the west), where the proposed bill is set to favor, are the ones upping the ante. Lagos, for instance, is making unprecedented investments in energy generation.
The interest in remodeling the proposed Tax Reform Bills is not enough, but in addition, it’s a wake-up call for the North to raise the bar in terms of regional industrialization.

Bilyamin Abdulmumin, PhD is a Public Policy Analyst.