The Looming Threat of Tinubu’s Tax Reforms: Can States Survive the Financial Storm?
By Bala Salihu Dawakin kudu
December 11, 2024
The newly proposed tax reforms under President Bola Ahmed Tinubu’s administration have sparked nationwide anxiety, with critics warning of severe economic consequences for Nigeria’s states, especially those already grappling with fiscal instability.
These sweeping changes, intended to increase federal revenues and reduce dependency on oil, have stirred widespread resistance from state governors, civil society organizations, and everyday Nigerians who fear the reforms could deepen economic hardships and strain the country’s fragile federal structure.
Governors from the 36 states, particularly the 19 northern states, have voiced unanimous rejection of key aspects of the tax bills. They argue that the reforms, if implemented as currently proposed, could exacerbate inequality, undermine financial stability, and leave states unable to meet their basic obligations, such as paying salaries and funding essential services.
President Tinubu’s administration has been advised to approach the reforms with caution. Governance reforms are inevitable, but their implementation must be well-considered to avoid unintended consequences. Rushing these tax bills through the National Assembly without adequate consultation and adjustment could irreparably harm Nigeria’s economic and political landscape.
Many states are already struggling to meet financial obligations, with federal allocations forming the bulk of their revenues. The proposed N70,000 minimum wage further complicates this picture, as states with limited internally generated revenue (IGR) may find themselves in dire straits.
For states like Zamfara, Jigawa, Yobe, and Kebbi, where industrialization is minimal and poverty rates are high, these reforms could mean financial collapse. The shift towards a derivation-based revenue model, which rewards states generating significant local revenue, risks marginalizing states heavily reliant on federal allocations. This structural imbalance threatens to widen the gap between resource-rich and resource-poor states, intensifying regional disparities.
Nigerians are not oblivious to the historical irony of these reforms. During former President Goodluck Jonathan’s administration, Tinubu himself led the charge against similar tax proposals, warning of the economic hardship they would impose. Today, many wonder why the same individual now appears determined to enforce policies he once denounced.
Citizens are questioning the National Assembly’s role, accusing it of being a rubber stamp for the executive arm of government. If this perception persists, it could further erode public trust in democratic institutions.
While the reforms aim to modernize Nigeria’s tax system and boost federal revenues, their potential to destabilize states cannot be ignored. Policymakers must acknowledge this duality and adopt an inclusive, balanced approach. It is not enough to focus on revenue generation at the federal level; the unique challenges faced by individual states must be considered.
Northern states, in particular, require strategic investments in sectors such as agriculture, mining, and small-scale industries to reduce their reliance on federal allocations. However, these long-term measures cannot offset the immediate financial pressures many states will face if the reforms are implemented as proposed.
The rejection of the tax reforms by the Northern Governors underscores the deep divisions they could create. To avoid a fiscal collapse, President Tinubu and the National Assembly must engage in meaningful dialogue with state governments, economic experts, and other stakeholders. A collaborative approach is essential to ensure that the reforms address Nigeria’s revenue challenges without disproportionately burdening vulnerable states.
Additionally, addressing pressing issues such as insecurity and economic diversification should take precedence. Nigerians are questioning why the government is prioritizing tax reforms over resolving these critical challenges.
The introduction of these tax reforms, coupled with other controversial policies such as the removal of fuel subsidies and cuts to education and healthcare funding, has already strained public goodwill. Persisting with the reforms in their current form risks alienating northern voters, who are warning that this could mark the collapse of the APC’s influence in the region.
“No to Tax Reform Bills.” The administration must heed this warning and take a step back to reevaluate its approach. Imposing reforms that bring widespread hardship is both undemocratic and unacceptable.
The Tinubu administration must balance its revenue-boosting ambitions with the need to preserve national cohesion and equity. The survival of several states—and the future of the Nigerian federation itself—hangs in the balance. A measured, inclusive, and equitable approach to tax reform is not just desirable but essential.
The path forward requires genuine leadership: one that listens, learns, and acts in the best interest of all Nigerians, not just a select few. Anything less would be a disservice to the nation and a betrayal of its democratic ideals.
Write:- Bala Salihu Dawakin kudu Northern Bureau Chief Democracy Newsline 08060017934.
