Governor Abdullahi Sule of Nasarawa State has clarified that northern governors are not opposed to the tax reforms introduced by President Bola Tinubu’s administration, but are concerned about the removal of the value-added tax (VAT) from the Federation Account Allocation Committee (FAAC). Sule made the statement on Thursday during the launch of innovative tax digital codes by the Nasarawa State Board of Internal Revenue Services (NSBIRS) in Lafia, the state capital.

While commending the President’s tax reforms, Sule expressed concerns about the economic impact of removing VAT from the FAAC allocation. He explained, “We are not against the tax reforms. There are many beneficial elements of the reforms, but our concern is with VAT being taken out of the FAAC.”

Sule highlighted that redirecting around 60 percent of VAT to derivation could pose challenges for northern states. Drawing from his personal experience as a former managing director of major companies, he noted the complexity of tracking VAT, especially when consumption differs from the point of purchase. He recalled an example from his time at African Petroleum, where a large order of goods was delivered to a different location than where it was consumed, making accurate VAT tracking difficult.

Sule cautioned that basing VAT distribution on consumption could lead to confusion and defaults in tax collection, urging a review of the policy to ensure fairness and efficiency in the tax system.