Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has told lawmakers that Nigeria cannot continue to tax its poorest citizens and expect sustainable economic growth.
During a briefing at the Senate chambers on the four key Tax Reform Bills before the National Assembly, Oyedele emphasised that Nigeria’s current tax system is outdated and insufficient.
He noted that the revenue the country requires cannot be generated by taxing the poor, but rather by focusing on the wealthier segments of society.
He explained that the proposals were based on extensive consultations, including discussions with State Governors, the National Economic Council, chaired by Vice President Kashim Shettima, as well as experts from the private sector and academia.
Oyedele stated that the Tax Reform Bills are necessary to replace the existing “backward tax system,” which he believes is too weak to drive meaningful economic growth.
He highlighted that Nigeria’s current tax revenues are insufficient to meet the country’s basic social needs, such as food, housing, healthcare, education, security, and water. As a result, approximately 133 million Nigerians are classified as multidimensionally poor.
He stressed that
One of the key provisions of the proposed reform is a tax cut for low-income citizens which includes the removal of VAT on food, education, and transportation, to alleviate the economic burden on the poor.
Oyedele also proposed exempting individuals earning less than N1 million per year from Personal Income Tax, stressing that taxing Nigeria’s poorest citizens is unsustainable.
The proposed tax reform includes a 15% tax on profits for companies with an annual turnover of around N20 billion or for multinationals. Additionally, the reforms offer incentives such as eliminating the minimum tax for loss-making companies.
Oyedele further explained that the new tax bill will consolidate various taxes into a single piece of legislation, covering Company Income Tax, Personal Income Tax, Capital Gains Tax, VAT, Excise Duty, and Stamp Duty.
The second bill, the Tax Administration Bill outlines how taxes will be administered, including taxpayer registration, returns, tax audits, and the use of technology to enhance revenue collection.
The third bill which is the Nigeria Revenue Establishment Bill aims to replace the current Federal Inland Revenue Service, FIRS, which, according to Oyedele, no longer aligns with its mandate of revenue generation.
The name change would reflect a more modern approach to revenue collection, with resources shared through the newly proposed Nigeria Revenue Service.
The fourth bill which is
The Joint Revenue Board Establishment Bill seeks to replace the current Joint Tax Board with a broader body responsible for all types of revenue, allowing for better information exchange and improved auditing.
Another key feature of the reform according to him is the establishment of a Tax Appeal Tribunal, which will handle all tax disputes nationwide, alongside a Tax Ombudsman office to protect small businesses and vulnerable taxpayers.
Regarding VAT sharing, Oyedele addressed concerns by assuring lawmakers that all states would receive their fair share of VAT collected within their borders. He acknowledged that the current VAT system disproportionately benefits Lagos and urged lawmakers to adopt the political solution his committee had proposed to ensure a more equitable distribution.
Director-General of the Budget Office, Tanimu Yakubu, added that the proposed tax reforms would strengthen national growth and contribute to building a self-reliant economy.
Following the briefing, the Senate resolved to engage in extensive debates on the Tax Reform Bills, with the goal of reaching an informed decision on the pending legislation.
(Editor: Terverr Tyav)
