The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) has raised strong objections to President Bola Tinubu’s proposed tax reform bills currently under review by the National Assembly. The commission argues that the bills could violate constitutional provisions and undermine Nigeria’s fiscal structure.
In a detailed nine-page memorandum signed by its chairman, Mohammed Bello Shehu, RMAFC outlined a series of legal, constitutional, and technical issues with the legislation. The commission emphasized its mandate under Section 162(2) of the 1999 Constitution (as amended), which exclusively authorizes it to determine an equitable revenue-sharing formula for the three tiers of government based on principles of fairness and justice.
Shehu noted that while the bills aim to expand Nigeria’s revenue base and integrate untapped sources like the informal sector, the lingering controversies over Value Added Tax (VAT) allocation and derivation principles have sparked heated debates among stakeholders. He stressed that any deviation from the constitutional framework could jeopardize the nation’s fiscal balance.
“The commission’s mandate is clear: ensure revenue sharing adheres to principles of fairness, justice, and equity. Any arbitrary allocation is not only inappropriate but also unconstitutional,” Shehu said.
To address the contentious VAT sharing formula, RMAFC proposed adopting a consumption-based approach that reflects VAT’s nature as a consumption tax. This method, the commission argues, would ensure equitable distribution based on consumption patterns, while providing support to economically weaker states.
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RMAFC also recommended – Implementing electronic invoicing and transaction monitoring to trace VAT collections to end-user locations.
Amending laws to clarify derivation rules for interstate transactions, ensuring fairness in tax allocation, and Strengthening collaboration among federal, state, and local governments to achieve a consensus on VAT distribution and related reforms.
While RMAFC acknowledges the need to bolster domestic revenue mobilization, it stressed that any tax reform must align with constitutional provisions and foster equity among all tiers of government.
As the debate intensifies, the commission’s firm stance has added a new dimension to the ongoing discussion, showing the importance of balancing revenue generation with constitutional mandates. The outcome of this dispute could reshape Nigeria’s fiscal policies and set a precedent for future tax reforms.
