The Northern Governors Forum chaired by Gombe state Governor has rejected the derivation-based model for Value Added tax (VAT) distribution in the new tax bill currently in the National Assembly for deliberation.
In a communique signed by the Chairman of the Forum, Muhammed Inuwa Yahaya, Governor of Gombe state after the meeting between the elders and Governors of the Northern states, the forum frowned at the proposition stating it is against the interest of the North and other sub-nationals.
The forum called on members of the National Assembly to oppose the legislation and any other that jeopardise the interest of the people of the North.
The new tax bill currently on the floor of the National Assembly proposed a derivation principle in the distribution of VAT accruals between the federal government and subnationals.
Currently, according to Section 40 of the VAT Act, revenue is allocated as follows: 15% to the Federal Government, 50% to the States and FCT, and 35% to Local Governments. The distribution to states and local governments reflects a derivation principle of at least 20%.
Some states mostly in the South have expressed dissatisfaction with the current VAT distribution formular noting that they do not get their fair share.
