Nigeria's Tinubu insists on tax reform despite push back from states

Nigeria’s President Bola Tinubu won’t withdraw four tax bills sent to lawmakers, a move likely to enrage powerful state governors whose buy-in is critical for the implementation of the proposed reforms.

President Tinubu “believes that the legislative process, which has already begun, provides an opportunity for inputs and necessary changes without withdrawing the bills from the National Assembly,” the presidency said in a post on X Friday.

The National Economic Council, which is headed by the nation’s vice-president and includes governors of the 36 states as well as the central bank, had on Thursday recommended the withdrawal of the bills to allow for more consultation.

The NEC has constitutional backing to make economic recommendations to the president and many analysts had thought their rebuke of the tax bills would force Tinubu to review the proposals. His decision to forge ahead now places him in direct confrontation with the state governors, who have to give up some of their powers for the proposed tax reforms to be effective.

The governors have constitutional backing for taxes within their domains, and the president’s bid to crunch more than 60 taxes currently paid by businesses to six that will be collected by a federal agency and re-distributed won’t happen unless they approve. The president is banking on the changes to help raise taxes to about 18% of GDP from a low of 11% and cut widening deficits.

The economic council had said the recommendation to withdraw the bills was to enable “wider consultations and also build consensus around these reforms for the benefit of the entire country.”

But the president said a tax reforms committee had spent over a year consulting widely with different organizations, including the state governors, and that “the tax reform bills that emerged were distilled from the extensive work of the presidential committee.”