The Nigeria Governors’ Forum (NGF) has strongly opposed the federal government’s proposal to raise Value Added Tax (VAT) from 7.5% to 10%, describing the move as untimely.
In a communiqué released after its meeting on Thursday, January 16, 2025, in Abuja, the forum also proposed an equitable VAT sharing formula to ensure fair resource distribution across states. 
The communiqué, signed by NGF Chairman and Kwara State Governor Abdulrahman Abdulrazaq, emphasized the governors’ support for the ongoing legislative process of the tax reform bills currently before the National Assembly.
However, they insisted that a VAT rate increase at this time would destabilize the fragile economy and place an additional burden on citizens.
“Members agreed that there should be no increase in the VAT rate or reduction in corporate income tax (CIT) at this time to maintain economic stability,” the communiqué read.
The forum further advocated for a revised VAT sharing formula to prioritize fairness, proposing a distribution of 50% based on equality, 30% on derivation, and 20% on population.
Moreover, the governors urged the continuation of exemptions on essential goods and agricultural produce from VAT, stressing the importance of protecting citizens’ welfare and boosting agricultural productivity.
“We must safeguard the welfare of our citizens while promoting growth in key sectors such as agriculture,” the statement added.
The NGF also discussed broader fiscal reforms, acknowledging the need to modernize Nigeria’s tax system to enhance stability and align with global best practices.
The forum reiterated its backing for ongoing legislative efforts to pass the tax reform bills, which aim to address long-standing gaps in the country’s fiscal policies.
Additionally, the governors called for a permanent framework for agencies like TETFUND, NASENI, and NITDA in the sharing of development levies within the proposed bills.
Governor Abdulrazaq reaffirmed the NGF’s commitment to advocating for policies that balance national economic growth with the needs of individual states.
This opposition to the VAT hike highlights the critical need for a people-centered approach to fiscal reform, as Nigeria seeks to balance economic stability with social equity.
The NGF’s recommendations highlight the importance of collaborative policymaking that prioritizes both government revenue generation and citizen welfare.
