The Northern Governors’ Forum has expressed its strong disapproval of the Federal Government’s proposed Tax Reform Bill, particularly the suggested Derivation-based Model for Value Added Tax (VAT) distribution. The group of 19 governors argues the new model would disproportionately disadvantage northern and less industrialised states, undermining equitable revenue sharing across Nigeria.
Led by Gombe State Governor Muhammad Yahaya, the forum issued a communique detailing its concerns after a strategic meeting in Kaduna. The gathering, which included northern traditional rulers, Chief of Defence Staff General Christopher Musa, and other key stakeholders, spotlighted deepening tensions around resource control and tax distribution. In northern states where Sharia law prohibits the sale of alcohol, VAT revenue from such sales has historically been shared among all regions. However, under the proposed reform, states would retain VAT based on where consumption occurs rather than the location of company headquarters.
“The Forum notes with dismay the content of the recent Tax Reform Bill,” the communique read. “The proposed VAT distribution changes pose a disadvantage to the North and other regions, given that VAT is remitted based on the company’s headquarters rather than where goods and services are consumed.”
The governors warned that adopting the Derivation-based Model would shrink revenue allocation from the Federal Accounts Allocation Committee, ultimately affecting northern states’ economies. They called on lawmakers to oppose any amendments that could “jeopardise the well-being” of their constituents.
While the forum emphasised it is not opposed to reforms that promote national development, it insisted on policies that maintain fairness across all regions. It also urged citizens to remain patient as state and federal authorities work on measures to ease current economic hardships.
