by Sarah James

The recent news headline, “Tax Reform Will Reinvigorate Northern Economy Exports”, highlights an exciting development for Northern Nigeria. The proposed tax reforms, spearheaded by President Tinubu’s administration, aim to modernize Nigeria’s tax laws and simplify the financial landscape for businesses. These reforms hold significant promise for the North, particularly by creating a more equitable, efficient, and transparent tax system.

The reforms include measures to address outdated tax laws, reduce the burden on small businesses, and harmonize revenue collection across federal and state levels. This approach is expected to attract investments and create an enabling environment for industries, especially in agriculture and solid minerals, which dominate the northern economy. Simplifying compliance will help small and medium-sized enterprises flourish, bolstering the region’s exports.

By fostering a unified tax system, the reforms will make it easier for businesses to operate across state boundaries. This will help Northern Nigeria take advantage of its abundant natural resources, such as sesame, gum arabic, and other exportable commodities. With streamlined processes, farmers and traders will save costs and increase profits, further boosting the local economy.

The planned reduction in multiple taxation is a game-changer. Many businesses in the North, particularly small-scale enterprises, have long struggled with excessive levies that hinder growth. Cutting these burdens will encourage entrepreneurship and allow companies to reinvest in their operations, leading to more jobs and higher productivity.

Moreover, the reforms propose to improve the Value Added Tax (VAT) sharing formula, ensuring a fairer distribution of national revenue. This is a crucial step to address concerns about regional imbalances and ensure that the North benefits proportionally from its contributions to the national economy.

Critics have raised concerns about the potential disadvantages of the reforms, particularly regarding VAT derivation, but these should not overshadow the broader benefits. For instance, proposals to add 5 per cent of VAT revenue to states’ allocations will provide Northern states with much-needed funds for infrastructure and social development. This will help bridge gaps in healthcare, education, and transportation.

Additionally, the harmonization of tax laws will bring clarity and consistency to revenue collection. This is critical for attracting foreign investors, who often hesitate to invest in regions with complex and unpredictable tax systems. The Northern region stands to benefit significantly from increased foreign direct investment, which will enhance its export capacity.

Tax reforms will also ensure that revenues are used effectively. By promoting transparency in tax collection and allocation, these changes will reduce corruption and waste, ensuring that funds reach the sectors that need them most. This is especially important for addressing long-standing issues such as poverty and underdevelopment in the North.

The administration’s emphasis on creating a more inclusive tax system is commendable. By reducing the tax burden on low-income earners and small businesses, the reforms demonstrate a commitment to social equity. This is vital for fostering trust in government policies and encouraging public participation in the formal economy.

For the North, these reforms are not just about taxation; they represent an opportunity to reset its economic trajectory. With the right policies in place, the region can unlock its full potential as a hub for agricultural and mineral exports. The government must ensure that stakeholders, including farmers, traders, and local leaders, are involved in implementing these changes to maximize their impact.

Therefore, the proposed tax reforms have the potential to revolutionize Northern Nigeria’s economy by making it more competitive and export-oriented. While there are challenges to address, such as balancing regional interests, the benefits far outweigh the risks. It is a golden opportunity for Northern Nigeria to modernize its economy, create jobs, and reduce poverty.

The Federal Government, state governments, and private sector players must collaborate to ensure the successful rollout of these reforms. With collective effort, the reforms can transform the North into a vibrant economic powerhouse, driving growth for the entire nation.

This is a call to action for all stakeholders to support these initiatives. By doing so, we can create a prosperous future for Northern Nigeria and the country as a whole. Let’s seize this moment to reinvigorate the North’s economy and secure its place in the global market.

*James is a student of Mass Communication at Borno State University, Maiduguri.