Proposed tax reform bills go beyond VAT issues- Gov Sule

Nassarawa State Governor, Abdullahi Sule, says the revenue-sharing formula in President Bola Tinubu’s proposed tax reform bills has fully captured the 36 states and the Federal Capital Territory. In this interview on Channels TV ‘Politics Today’ monitored by David Lawani, the governor said the bills’ contentious issues were addressed in the recent Nigeria Governor’s Forum meeting
How was the NGF over the reform bill?
We have achieved something through consultation. First, congratulations go to the President for guiding us through the process. When we met with Mr President recently, he said that you can go ahead and implement most of these observations without withdrawing the bill. You remember the contentious issue of the Value Added Tax. The VAT is a combination of so many things. The other problem that we have continued to mention is the aspect of saying that as far as TETFUND and others, we are going to face out. We express deep concern as far as those areas are concerned. We came back to the sharing formula of the VAT itself, where about 50 percent will be taken and kept aside and paid on derivation. That is where the heated debates are. I thank God Almighty. The tax reform committee chaired by Taiwo Oyedele and Zack Adedeji understood our position based on what Mr President has said. I have been here earlier, where I said the President said to go and make changes, and I am perfectly okay and satisfied. We waited for the day they were going to meet, and we would present them, and they accepted, and everybody was happy. The people who were calling us names and who understand what we are saying.
Would this affect the North negatively?
The way it is presented today should affect the North positively. I am telling you that one of the biggest things they are fighting for, which we initiated, is a situation where you will increase VAT. The 7.5 percent is 13 percent this month, then 12.5 percent, and then 15 percent, which means you will double it. We were concerned about the vast inflation that we have at the moment. I explained earlier that this 34 percent is in the state where I lived and work, like Lagos. But, if you move to the far North, it is far more than 34 percent. It is more than 50 percent, on average, that they talk about. In the North, we are not so lucky with the planning in the past to have industry, to have people who can work, and to our people who have purchasing power. It will affect them when you reduce VAT because the prices of items will increase, and people will not be able to afford it. Many people will go without rice, sugar, and other things that attract VAT. I was the happiest person when we presented that, and if you feel it is the right thing, go ahead.
There should be calm in the North. Is this in Nigeria’s interest, not against the North’s? Do you agree?
It is not only for the North. It will affect other states with similar challenges. So many other states in the South have challenges identical to those in the North. I got married from the East. I have travelled extensively in the East. I was an MD in two companies all over Nigeria. Some southern states are doing fantastic, but some are not doing so well, just like the North. That is why I said it is for Nigeria, not only for the North.
Inheritance is a significant issue in the North; what do you say about inheritance, which is common in the North with taxation?
It is already in the existing law. There has been some misinformation about some items in the tax reform bill. We have four bills, but most of the time, people keep looking at the tax bill. There is a bill that addresses multiple taxation. There are so many good things about this particular reform. Some things affect people negatively. I don’t want to say only the North generally negatively. Inflation is everywhere, and high prices and other things will affect everybody. So, when we brought it up, it is just that the northern governors brought the matter up, but the governors of the North brought a matter that affects the whole of Nigeria. I heard someone saying it is second-term governors- it is all scrap. At that meeting, we had the 19 northern governors, and everybody agreed with the northern governors’ position. The first or second-term governor is not about it. It is about the interest of Nigeria. And I am happy that we have been able to arrive at something. So I congratulate Mr. President on that. I congratulate Zack Adedeji for that. I congratulate Oyedele on that. The reason why I am congratulating them is for you to put up a position. A debate is to be presented. It is not an easy thing. Not everybody can do that.
Is this why the President was attacked due to the reform bill?
The debate that was put forward was for the protection of the President. For people like us, if ordinary people start feeling the heavy weight, the President will look bad. So, for some of us who have identified with these people, we are discussing them. It is people who genuinely love the President, and the moment some of these things hit an ordinary man, the common man will turn around and hate the President for that. So, where is the debate for the fight against the President? It is an intellectual debate between intellectuals and people. They debated it, and they have moved on. In one of the meetings, many people who didn’t even understand what was happening were those who hijacked the debate, and it looked like an attack. As an APC governor, I cannot attack an APC administration, not even the President, a Senator, or a member of the House of Representatives. It is not an attack but about things we know will be detrimental to the country. It would have jumped our inflation. When inflation comes, whether you are a Northern or Southerner, as long as you buy and pay tax, it will affect you.
Do you agree that the northern elites and the President are in equilibrium now?
Yes.
Is there a meeting point?
Yes, we all agreed that change is constant. We must look at our laws and reform them where they are overdue. Multiple taxation is one example. You have to change that to attract investment.
Why did you accept that there should be a VAT-sharing formula?
The most significant movement on the ground came from the committee. They were fighting because about 60 percent would go on derivation, and some governors said, “Why is all the money going to Lagos?” It was based on the 60 percent that was initially suggested. We now said no. That 50 percent of the amount was now shared equally among the 36 federation states, including the FCT. Twenty percent of it was shared according to the population because it was meant for the people.
Do states like Lagos, Kano, and Rivers likely get more?
Yes, because they have more people. Kano will have more people. Therefore, I don’t expect Nasarawa to receive the same amount as Kano. That will give in. The 50 percent that will be shared right now is the catch. It is going to be shared equally. Whether you are 30 or 10 times the size of another state, you will get the same amount, and a chunk of 50% will do that. The good thing we have achieved on that, as far as the President is concerned, is that the current sharing formula is not the one that is being revised. Ten percent goes to the federal government, while 90 percent now goes to the state and local governments. We are sharing this 90 percent. It is the federal government that has moved grounds. We should commend the federal government.
Lagos and Rivers might bear the brunt now because they will get lower shares.
Correct! I am telling you from my understanding of how VAT is generated and derived. The majority of these companies are registered. I give you a good example: FCT has no industry, but FCT is number three in derivation. Do you know where the derivation is coming from? No companies have significant capital in the FCT, but the federal government pays for those roads at FCT because of the roads you are constructing. The roads that you are doing in Akwa Ibom, FCT is getting that derivation. The roads you are doing in Lagos are now being paid for here. Nobody is complaining about that. You cannot say 50 percent of that goes to the FCT. You will see that you are not fair. I worked in Port Harcourt, Rivers State. If you go to Onne, all the service companies are there and pay a lot of VAT. That VAT is going there. For most of our offshore operations, the moment we load at Onne, it goes directly to Bonga, Agbami, and other areas, not Rivers State land, but Rivers benefits from it. We cannot debate that because that is the structure.
States like Rivers and Lagos are losing value. Under the old arrangement, Lagos should have received N54bn, but under the current arrangement, they will receive about N21bn less. Rivers would have lost about N10bn. What’s your take?
Let me tell you something. The idea locally is that Nasarawa is next to Lagos, and we discussed this. You said you are talking about something for national interest, so you cannot restrict it to just one or two to three states. That is why Mr President, in his wisdom, said to go and check the areas, and all of us were there. And we sat down and discussed that. What you are saying is hypothetical. It is theoretical. It is not the actual thing. Even in the past, we only shared N300bn. It is now based on recommendations that are being made. You are no longer sharing N300bn; you are sharing N600bn. The Lagos you mentioned is losing N20bn and will still get back its N20bn through improved revenue in this bill without necessarily including the VAT because we have taken care of it. There is no increase in VAT. There are so many other areas in the free trade zone where Nigeria is being cheated; it is a situation where you tell a company, we are giving you free trade, and you are not going to pay taxes and everything. Go ahead and produce from here, then export and bring back the dollars for the company’s interest. Some of these companies are making and selling back to Nigeria. So, you lose that tax, and this reform has addressed that. So, you are going to get some money back. You don’t need to be losing. That is why I said it is theoretical.
What is the issue around TETFUND that ASUU is demanding that it should stay?
I have explained to many people that I see the usefulness of TETFUND and SUBEB. If you go to public universities in Nigeria, nearly 50 percent of projects are done by TETFUND. So, if you say you will wipe out TETFUND, we must show concern. By the debate, okay, we will not face them, and SUBEB will not be far out. We have supported the position of the ASUU and the rest of that. ASUU is not a north or south thing. The other aspect is that it is something that requires continuous engagement. Just because we have done this, it has to be presented to Mr President. Those who will continue to lobby with Mr President will tell him Mr President, like you have instructed, we have sat and done that. This is what we have done and have agreed. It is also our responsibility to continue the engagement. There will be a public hearing, whether we like it or not, and we will explain it to our people during the public hearing. We will also have an executive session with our legislatures.
In the interest of the Nigerian people, what will the bigger picture be of these agreements today?
The bigger picture at the end of the day is to get it passed for the interest of Nigerians and to attract more investment into Nigeria. Part of the reform is attracting investment to Nigeria, so we want to put taxation first. We are going to look at stamp duties. We will look at all the other royalties and the rest of that and address them. We are trying to encourage these companies trying to escape from Nigeria to stay. The tax bill is more than the VAT matters. There are so many other issues in it. If you have not taken time to go through them, you may not understand. This is the best that is going to be there for Nigerians. In Nasarawa State, we are attracting investment in mining and agriculture. We say what, come in, and this will benefit you. You are not going to go through this. There is coordination between the federal and our state’s internal revenue services.