RMAFC kick against Tinubu’s tax reform bill, says its threatening national unity, cohesion and constitutional harmony

The Revenue Mobilisation, Allocation, and Fiscal Commission (RMAFC) has strongly opposed the contentious tax reform bills presented to the National Assembly by President Bola Ahmed Tinubu.

The Commission cautioned against legislative or executive measures that would undermine its authority and constitutional role and therefore advocated the implementation of systems like electronic invoicing to tag VAT collections to end-user locations as well as enhancing transparency and accuracy.

It noted that the proposed tax reform bills were threatening national unity, cohesion and constitutional harmony, emphasizing that by adhering to its constitutional mandate, RMAFC could provide an equitable solution to revenue allocation disputes while safeguarding the principles of fairness and justice.

These were contained in a nine-page memorandum by Mohammed Bello Shehu, Chairman of the RMAFC, addressed to President Bola Ahmed Tinubu, President of the Senate and Speaker of the House of Representatives, in which he pointedly said that the Constitution designated the RMAFC as the final authority on matters of revenue allocation

It therefore objected to some legal, constitutional, and technical lacuna contained in the proposed Tax Reform Bills presently before the National Assembly.

Shehu specifically noted that Section 162(2) of the 1999 Constitution (as amended) empowered the Commission the authority to determine the formula for equitable revenue sharing among the three tiers of government.

The RMAFC Chairman stressed that the mandate of the Commission also included ensuring that the formula reflects principles of fairness and justice.

In the words of Shehu; “As such, no Act of Parliament, including the VAT Act, can infringe upon this constitutional responsibility. Any such attempt would constitute a violation of the Constitution”.

Shehu therefore stressed the need for the strict observance of constitutional provisions in relations to the specific role of the RMAFC as the exclusive arbiter in developing revenue allocation formulas, adding that any deviation from its constitutional duties, could undermine the integrity of the Commission and compromise the principles of justice in revenue sharing.

The Commission therefore demanded an acceptable approach to the Value Added Tax (VAT) allocation that accounts for the unique nature of VAT as a consumption tax.

Accordingly, the RMAFC proposed a formula that would ensure equitable distribution among federal, state, and local governments.

It argued that VAT allocation and derivation should be based on a formula developed by RMAFC, saying that the formula would consider VAT’s consumption-based nature and ensure fairness in distribution.
Addressing the critical issue of recognition of consumption patterns, the RMAFC said the formula would factor in consumption rather than merely production or the location of company headquarters, thus, ensuring balanced benefits, stressing that special consideration would be given to states with weaker economies, promoting national cohesion and fairness across all tiers of government.

The Commission therefore urged the Federal Government to empower it to finalize a VAT allocation formula in line with its constitutional mandate by reinforcing its Constitutional Mandates of ensuring that VAT allocation strictly follows its framework and not the arbitrary provisions in the VAT Act or the proposed reform bills among others.

The Commission advised the federal, state, and local governments to work towards achieving consensus on its formula with a view to reducing tensions.