…Advocates equity in distribution
The Renewed Kaduna Restoration Group, (RKRG), a nonpartisan organization advocating for good governance, has raised concerns regarding the proposed amendment to the Value-Added Tax (VAT) sharing formula under the Tax Reform Bill currently under consideration by the 10th National Assembly.
In a statement issued yestetday, signed by its chairman, Alhaji (Dr.) Ahmed Tijjani Ramalan, the RKRG emphasized that any changes to the VAT distribution framework must strictly adhere to Nigeria’s constitutional provisions. The group cited Sections 1(1), 153(1)(n)(2), and 162 of the Constitution, which assign the responsibility of revenue allocation formula review to the Revenue Mobilization Allocation and Fiscal Commission, (RMAFC).
The RKRG stressed that the RMAFC must take the lead in initiating and reviewing any amendment to the VAT formula. According to Dr. Ramalan, “Reforms should respect constitutional mandates, and any bypass of the RMAFC undermines due process. The Constitution is clear that revenue allocation frameworks are to be reviewed with input and oversight from the RMAFC”.
Acknowledging the economic disparities across Nigeria’s States, the RKRG called for a VAT-sharing formula which balances fairness with regional needs.
“We further assert that any proposed review of the VAT allocation formula must be initiated and carried out by the RMAFC, as stipulated by the Constitution. However, we also recognize the evolving nature of Nigeria’s economic environment, which may require revisiting the allocation framework to ensure fairness and equity in revenue distribution across all states, especially given the socio-economic challenges facing many regions”, it stated.
“As outlined in the Constitution, the RMAFC is tasked with determining the revenue allocation formula, ensuring that any formula reflects principles such as population, equity, revenue generation, and the derivation principle. The constitutional framework, particularly Sections 162(2) and (10), reinforces the need for any amendment to be tabled by the President after receiving advice from the RMAFC.
“The RKRG advocates for full adherence to these provisions and suggests that the RMAFC play a more active role in assessing the distribution framework, taking into account the contemporary needs of each region”, it emphasised.
The group recognised Nigeria’s reliance on VAT as a major revenue source, but argued that economically disadvantaged States, with limited internal revenue capacity, must not be overlooked in the process. It proposed a gradual and inclusive approach to reform that prioritizes equity while respecting the fiscal realities of the nation.
Among the RKRG’s key recommendations are: Phased Implementation – Gradually implementing changes to the VAT distribution formula through ongoing consultations to ensure a smooth transition; Inclusive Socio-Economic Indicators: – Incorporating data-driven socio-economic metrics to account for regional disparities and the specific needs of both wealthier and poorer States.
“Strengthening RMAFC – Empowering the RMAFC to actively assess, propose, and monitor revenue-sharing models, while enhancing its technical capacity; Transparency and Accountability – Establishing a public reporting system to ensure VAT distribution remains open, equitable, and accountable to Nigerians”.
RKRG also emphasised the importance of political consensus and legal mechanisms to ensure effective implementation. It urged national leadership to foster public consultations and promote adherence to legal provisions governing revenue sharing.
“Reform should not only be constitutional but also transparent, inclusive, and fair. A sustainable VAT sharing formula will contribute to Nigeria’s long-term development and stability”, the statement added.
In a final note, the RKRG urged the Presidency and the National Assembly to uphold the Constitution and prioritize equity, by allowing the RMAFC to fulfill its constitutional mandate in leading the VAT reform process.
