Former Anambra State Governor Peter Obi has called on the federal government to gain public approval before implementing any changes proposed in the tax reform bills currently under review in the National Assembly.
In a statement released on Monday, Obi emphasized the importance of fostering public trust and ensuring that Nigerians are involved in the decision-making process regarding these reforms, which have drawn criticism, particularly from stakeholders in Northern Nigeria.
The Need for Public Involvement
Obi, a former presidential candidate for the Labour Party in the 2023 general elections, acknowledged the significance of tax reforms but stressed that such measures must be accompanied by open, transparent, and informed public discussions.
“Reforms of this scale demand careful deliberation and thorough consideration. Public hearings should be organized to gather diverse perspectives, ensuring that policies reflect the interests of all citizens,” Obi stated.
He added that inclusive public engagement is critical for establishing trust and legitimacy, which are essential for the success of any government policy.
“Public sensitization and consensus-building are non-negotiable. Without these, even the most well-intentioned reforms are likely to fail,” he said.
Broader Implications
Obi pointed out that discussions on tax reforms should not solely focus on revenue generation for the government but also consider the broader implications for the nation and its regions.
“The sustainability of all regions and the overall impact on citizens must be central to these conversations,” he said, urging the government to prioritize transparency and inclusivity.
Obi’s remarks align with calls from other prominent figures, including former President Atiku Abubakar, who also advocated for comprehensive public hearings on the bills.
Key Details on the Tax Bills
The proposed reforms aim to introduce a derivation principle for allocating Value Added Tax (VAT) revenue between the federal government and sub-national entities. This has sparked concerns, particularly among Northern elites, who argue that the proposed changes could disadvantage their region.
Under the existing VAT Act, revenue is allocated as follows:
- 15% to the Federal Government
- 50% to States and the Federal Capital Territory (FCT)
- 35% to Local Governments
The allocation formula includes a derivation principle of at least 20%, alongside other factors such as equality (50%) and population size (30%). Additionally, 4% of collections go to the Federal Inland Revenue Service (FIRS) as a collection fee, while 2% is allocated to the Nigeria Customs Service (NCS) for import VAT.
A Call for Participatory Democracy
Obi concluded by urging the federal government to adopt a participatory approach in addressing the tax reform bills, emphasizing that transparency, deliberation, and inclusivity are hallmarks of a thriving democracy.
