The new tax reform bill, though lauded as a step towards economic equity, raises serious concerns for the Northern region of Nigeria, whose economic backbone is agriculture. With the recent decision to maintain a zero VAT on agricultural products, a fundamental question arises: can Nigeria’s development be driven at the expense of the North?
While the elimination of VAT on agriculture is intended to foster food security and agricultural growth, the outcome for the North is a disproportionate disadvantage. Agriculture is a lifeline for Northern Nigeria, employing millions and sustaining local economies. The tax revenue model in the reform bill, however, fails to acknowledge the North's substantial economic contributions. By exempting agriculture from VAT, the North’s primary sector remains largely untaxed, creating a scenario where the region sees little return from the generated tax revenue pool that supports national projects and infrastructure.
The broader tax reforms aim to empower Nigeria’s digital economy and attract foreign investment, and provisions have been made for tax exemptions to promote remote work, support youth participation in business process outsourcing, and incentivize small businesses and exports. For Southern states that host the headquarters of many large corporations and tech companies, these incentives create a surge of economic benefits. Northern states, however, face an uphill battle to catch up in an economy increasingly dominated by sectors outside their traditional agricultural focus.
Among the highlights of the reform are provisions for zero-rated VAT on essentials like food, education, health, and public transportation—measures aimed at easing the burden on low-income households. While this is beneficial nationwide, it disproportionately leaves Northern Nigeria, with its unique economic profile, sidelined in terms of overall revenue gain and regional development.
The reduction of corporate income tax from 30% to 25% over two years, the elimination of “nuisance taxes” that plague small businesses, and the establishment of a National Fiscal Policy all align with modern fiscal strategies. Yet, this comes with the risk of excluding the North from the potential revenue that VAT and other taxes could generate from its agricultural wealth. Without a mechanism for equitable revenue sharing, the region’s economic power remains untapped and, worse, unrecognized.
For the North, zero VAT on agriculture without any compensatory fiscal policy means that while the region is Nigeria's agricultural heartland, it reaps minimal benefit from the very sector it sustains. To truly move forward as a united nation, policies must account for regional economic realities, ensuring that development does not come at the cost of any region’s prosperity.
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