The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) has cautioned that President Bola Tinubu’s tax reform bills could undermine national unity and constitutional harmony.
RMAFC stated that the bill’s framework potentially violates the constitution due to issues related to revenue distribution.
In a nine-page memorandum signed by its chairman, Mohammed Bello Shehu, RMAFC outlined various constitutional violations.
According to the memorandum, Section 162(2) of the 1999 Constitution (as amended) exclusively empowers the Commission to determine an equitable revenue-sharing formula among the three tiers of government, guided by principles of fairness and justice. However, the controversial bill is said to favor certain geopolitical zones.
It was further noted that the bill’s framework does not align with RMAFC’s established principles of fair tax-sharing formulas. Specifically, controversies have arisen around claims that the proposed reforms are unfavorable to northern states.
Shehu emphasized that RMAFC is committed to ensuring fair and just revenue-sharing formulas, which are critical for economic reforms.
“They will help integrate untapped revenue sources, including contributions from the informal sector, into the tax net. Additionally, these reforms will enhance Nigeria’s revenue-to-GDP ratio, positioning the country more favorably among nations with high fiscal performance,” he said.
“The Commission, therefore, expresses its full support for the proposed legislation and is confident it will serve as a pivotal step toward elevating Nigeria’s revenue generation and financing sustainable development,” he added.
Shehu also stated, “This memorandum outlines the Commission’s position, emphasizing its constitutional mandate to ensure that VAT allocation adheres to the principles of fairness, justice, and equity, and highlighting why any arbitrary apportionment may be inappropriate and unconstitutional.”
Investors King gathered that RMAFC recommended adopting a formula that reflects VAT’s nature as a consumption tax. This would ensure equitable distribution based on consumption patterns while supporting economically weaker states and promoting national unity.
Additionally, the Commission proposed implementing electronic invoicing and transaction monitoring to trace VAT collections to end-user locations.
