The Senate appeared to have succumbed to a tsunami of pressure yesterday as it suspended further action on President Bola Tinubu’s controversial Tax Reform Bills.
The decision followed widespread public backlash and strong opposition from northern governors, who described the proposals as “anti-democratic.”
Deputy Senate President Jibrin Barau announced the resolution during plenary, stating that the Senate Committee on Finance has been directed to halt public hearings and deliberations on the bills until all stakeholders’ concerns are addressed.
Barau revealed that a special committee has been formed to liaise with the executive branch to resolve contentious issues.
“We have decided to set aside politics, ethnicity, and regionalism to resolve the issues surrounding the tax reform bills,” he said. “In collaboration with the Executive, we will establish a forum to identify and address contentious areas to ensure national unity.”
The Deputy Senate President further disclosed that the Attorney General of the Federation (AGF) would be involved in addressing legal disputes surrounding the bills.
The special committee, which includes Senate leaders and members such as Adamu Aliero, Orji Kalu, Seriake Dickson, and Sani Musa, is set to meet with the AGF today to deliberate on the issues.
The Senate reaffirmed its commitment to supporting President Bola Tinubu’s economic reforms but emphasised that new policies must not exacerbate the country’s fiscal challenges.
The suspended bills include: ‘A Bill for an Act to Establish the Joint Revenue Board, the Tax Appeal Tribunal, and the Office of the Tax Ombudsman,’ aimed at harmonising, coordinating, and sett A Bill for an Act to Repeal the Federal Inland Revenue Service (Establishment) Act, No. 13, 2007, and enact the Nigeria Revenue Service (Establishment) Act,’ which seeks to establish the Nigeria Revenue Service with responsibilities for revenue assessment, collection, and accounting;
‘A Bill for an Act to Provide for the Assessment, Collection, and Accounting for Revenue,’ focused on revenue accrual to the federation, federal, state, and local governments while prescribing the powers of tax authorities;And ‘A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate Legal Frameworks on Taxation,’ which aims to enact the Nigeria Tax Act to tax income, transactions, and instruments.
While the bills are designed to reform Nigeria’s tax system, they have sparked criticism over provisions such as the proposed value-added tax (VAT) derivation formula, which opponents argue could disproportionately affect northern states.
Northern governors had vehemently opposed the bills, with the Borno State governor, Babagana Zulum, warning that they could “crumble the economy of the North.”
The National Economic Council (NEC), led by Vice President Kashim Shettima, also recommended withdrawing the bills for broader consultations.
Speaking on behalf of the NEC, Governor Seyi Makinde of Oyo State stressed the need for a consensus, noting that some regions found the bills unacceptable.
In response to the controversy, the Senate had invited President Tinubu’s Economic Team, led by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, and Zacchaeus Adedeji, Chairman of the Federal Inland Revenue Service, to clarify the bills.
Despite their explanations, stakeholders’ concerns persisted, prompting the Senate to prioritise dialogue.
Also, Lagos State has been described as the biggest loser under the new value-added tax (VAT) revenue-sharing formula for Nigeria’s sub-nationals.
This revelation comes from an analysis of some provisions in the new reform by Agora Policy, a civic organisation focused on proffering solutions to national issues.
The Abuja-based think tank, using a simulation based on actual VAT data for October 2024, indicated in a post on X (formerly Twitter) that Lagos, Nigeria’s main commercial hub, would have received a share of N32.2 billion based on the planned allocation template, contrary to the N39.7 billion it received for the month. That represents a 23.3 per cent decline.
“Despite the overall increase, 14 states will be worse off, while 22 states will be better off,” said Agora Policy, which employs an evidence-led and solution-driven model in its policy research.
The states, excluding Lagos, are Bayelsa, Rivers, Ebonyi, Nasarawa, Taraba, Adamawa, Gombe, Niger, Borno, Yobe, Jigawa, Zamfara, and Sokoto.
Meanwhile, the Senate yesterday passed the Investments and Securities Bill 2024, significantly boosting the operations of the Securities and Exchange Commission (SEC) and the Nigerian capital market.
The bill, which seeks to repeal the existing SEC Act, was approved during plenary.
During the presentation of the report on the bill by the Committee on Capital Market, Senate Chief Whip Tahir Monguno stated that the legislation aims to protect investors and eliminate fraudulent activities in the capital market.
Leading the debate, Senator Osita Izunaso, Chairman of the Senate Committee on Capital Market, explained that the bill seeks to repeal the Investments and Securities Act of 2007 and enact the Investments and Securities Act of 2024.
According to him, the bill has the potential to transform the capital market, encourage the influx of foreign investors, and boost investor confidence, among other benefits.
“The bill seeks to repeal the existing Investments and Securities Act 2007 and establish a new market infrastructure with a comprehensive regulatory framework for investments and securities businesses in Nigeria,” Izunaso said. “It will address areas such as derivatives, systemic risk management, financial market infrastructure, and Ponzi schemes and platforms.”
He added that the bill aims to establish the SEC as the apex regulator of the Nigerian capital market. “It will regulate the market to ensure capital formation, protect investors, maintain a fair, efficient, and transparent market, and reduce systemic risks,” he noted.
Izunaso further explained that the bill’s primary objective is to align Nigeria’s capital market legislation with global standards by providing an innovative regulatory framework.
“The bill will safeguard the integrity of the securities market against all forms of market abuse and insider dealings. It will prevent unauthorised, illegal, unlawful, fraudulent, and unfair trade practices related to securities and investments,” he said.
The senator emphasised that the overarching purpose of the proposed legislation is to strengthen the SEC’s capacity to perform its statutory mandate effectively and to reposition this vital sector of the economy for national economic transformation.
Announcing the bill’s passage, Senate President Godswill Akpabio remarked that the legislation would inspire confidence among potential investors, who would feel more secure knowing that many risks in the market have been minimised.
Speaking recently, the Director-General of the SEC, Dr Emomotimi Agama, noted that the bill includes harsher penalties for Ponzi scheme operators. Under the proposed Investments and Securities Bill 2024, offenders face a minimum fine of N20 million, up to 10 years in prison, or both.
Agama highlighted that the bill explicitly prohibits Ponzi and pyramid schemes, strengthening investor protection against illegal fund managers. He added that it aims to shield Nigerian investors from fraudulent schemes while enhancing the global competitiveness of the country’s capital market.
A notable amendment in the bill allows the Investor Protection Fund (IPF), established by securities exchanges, to cover investor losses related to the deregistration of brokerage firms, extending its scope beyond the current coverage of losses due to bankruptcy or negligence.
Also, a bill seeking to create a new coastal state out of Ondo State passed its first reading in the Senate yesterday.
The proposed legislation, sponsored by Senator Jimoh Ibrahim, representing Ondo South Senatorial District, seeks a constitutional amendment to establish the state and foster rapid development in the riverine communities of Southern Ondo.
Ibrahim expressed optimism that the bill would pass the subsequent stages, highlighting its importance for the socio-economic advancement of the region.
He insisted that the new coastal state must be carved out solely from Ondo State to meet the specific needs and aspirations of the people in the Southern Senatorial District.
The senator also opposed any proposal to incorporate Ondo South into the planned Ijebu State, categorically stating, “Ondo South cannot and will not be part of the proposed Ijebu State.”(Guardian)
