Speaker of the House of Representatives, Abbas Tajudeen, has assured Nigerians that the National Assembly will carefully balance public interest with the need to reform the country’s revenue system while considering the four tax bills currently before the parliament.
Speaking at the public hearing on the tax reform bills on Wednesday, Abbas emphasized that taxes must be fair, transparent, and justifiable, ensuring they support public revenue without placing excessive burdens on individuals and businesses.
He pledged that the House would thoroughly scrutinize the bills to align them with the best interests of Nigerians.
Similarly, the Chairman of the House Committee on Finance, James Abiodun Faleke, highlighted the urgency of overhauling Nigeria’s tax system to align with global economic realities.
The tax reform bills under consideration include the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill which the Speaker said represent critical proposals from the Executive to expand Nigeria’s tax base, improve compliance, and establish sustainable revenue streams the nation’s development.
He said while tax reform bills have generated widespread debate in the media, public domain, and even in private discussions, all reflecting their importance, that these debates are healthy and necessary for consolidating our democratic practice and culture.
According to him, the purpose of the public hearing is to foster robust discussions and harvest recommendations by providing stakeholders with the opportunity to make their inputs and will help the parliament identify areas requiring amendment, clarification, or improvement while also considering the compatibility of these bills with the 1999 Constitution (as amended) and other extant laws.
Speaker Abbas said the journey to the public hearing has been characterised by several critical activities in the legislative process of law-making with the House holding a pre-legislative hearing on the proposed tax reform bills on November 18, 2024.
According to him, the president’s legislative hearing allowed the House to interact with the proponents of the bills and other tax experts and administrators, adding that through the interaction, Members gained a comprehensive understanding of the bills, and appreciated their provisions, enabling them to identify contentious or controversial areas.
He said further that the House also carried out further consultations with members interfacing with their constituents including state governors, all in a bid to build consensus and produce bills that align with the interests of the executive, the legislature, sub-national governments, and Nigerians.
Abbas said: “Right from the onset of the 10th House, we identified Tax Reform as a key priority area in our Legislative Agenda because of the central role of tax in achieving sustainable economic growth and development.
“In every modern state, taxes are the bedrock of public revenue, providing the resources required to deliver education, healthcare, infrastructure, and security. Yet, Nigeria, despite being Africa’s largest economy, struggles with a tax-to-GDP ratio of just 6 percent which is far below the global average and the World Bank’s minimum benchmark of 15 percent for sustainable development.
“This is a challenge we must address if we are to reduce our reliance on debt financing, ensure fiscal stability, and secure our future as a nation.
“As we interact today, let me reiterate that the proposed tax reform bills aim to diversify our revenue base, promote equity, and foster an enabling environment for investment and innovation.
“The President Bola Ahmed Tinubu administration is deliberate in the administration’s tax reform programme ostensibly to improve Nigeria’s tax to GDP ratio by streamlining and broadening the tax base.
“However, as representatives of the people, I have continued to hold the view that, we must approach these reforms thoughtfully, understanding their potential implications for every segment of society.
Chairman of the House Committee on Finance, James Abiodun Faleke (APC, Lagos) said a public hearing represents a crucial stage in the collective effort to modernize, harmonise, and strengthen the nation’s tax system for the benefit of all Nigerians.
Faleke said: “For many decades, our tax laws have remained largely unchanged. While these laws served their purpose at the time they were enacted, the economic and business landscape has evolved significantly over time. Some provisions in our existing tax laws are now outdated and are no longer in tune with current economic realities.
He said the bill seeks to repeal Companies Income Tax Act (CITA) – 1979, Value Added Tax Act (VAT) – 1993, Personal Income Tax Act (PITA) – 1993, Income Tax (Authorised Communications) Act – 1966, Capital Gains Tax Act-1967, Stamp Duties Act – 1979, Casino Act – 1965, Deep Offshore and Inland Basin Act-1999, Industrial Development (Income Tax Relief) Act – 1971, Petroleum Profit Tax Act-1959 and the Venture Capital (Incentives) Act-1993
He said: “Most of these Acts have been amended severally over the years. Since 2019, successive Finance Acts have been introduced to provide “quick fix” amendments to some of these archaic provisions, however, these amendments have been piecemeal and have not comprehensively addressed all the issues within our tax system.
“Recognizing the urgency of a more holistic reform, the President inaugurated the Fiscal Policy and Tax Reform Committee with a clear mandate to overhaul and simplify the tax system.
“This Committee worked assiduously to produce these tax reform bills, which collectively aim to create a tax structure that is fair, efficient, and effective in revenue collection. These bills are set to ensure proper tax administration while making compliance easier for taxpayers”.
Faleke lamented: “Despite being the largest economy in Africa, Nigeria’s tax-to-GDP ratio remains one of the lowest on the continent. In 2023, data from the International Monetary Fund (IMF) showed that Nigeria’s tax-to-GDP ratio was approximately 9.4%, compared to South Africa at 21.6%, Kenya at 14.1%, and Senegal at 19.1%.
“In 2023, the total tax or levies revenue collected by the Federal, State, and local governments was N26.03 trillion. According to the Joint Tax Board (JTB), only about 35 million Nigerians pay tax, while only 9% of companies registered in Nigeria are captured in the tax net.
“This imbalance is unsustainable if we are to adequately fund the critical infrastructure needed to build the Nigerian economy to a desirable level.
“Experts have estimated that Nigeria requires $3 trillion (N1.8 quadrillion) over the next 30 years (that is, equivalent to $100 billion annually) to bridge its infrastructure deficit. However, our IGR falls significantly short of this amount, leading the government to borrow substantially to bridge the funding gap.
“This reality highlights the urgency of implementing tax reforms that will simplify and enhance revenue collection, reduce reliance on borrowing, and drive sustainable development.
“Together, these four bills represent a transformative step for Nigeria’s tax system. By streamlining tax laws, improving administration, and enhancing revenue collection, they will set the nation on a path of sustainable economic growth while ensuring that taxpayers contribute their fair share”.
He explained: “Since the Tax Reform Bills were transmitted to the National Assembly by the President. It has generated a lot of interest from all Nigerians as expected of any reform which deals with taxation.
“However, after careful study of the bills, the majority of Nigerians have come to terms with the contents of the bills.
“Extensive stakeholder engagements have been conducted to address concerns raised by various interest groups. Now, having passed the second reading, the bills are at a crucial stage where they are open for public scrutiny and input.
“This public hearing serves as an opportunity for all concerned stakeholders to deliberate and propose necessary amendments to the bills to ensure the reforms achieve the intended objectives.
“The tax laws that we seek to reform will affect all Nigerian individuals and businesses operating within our economy. It is, therefore, imperative that we gather input from a broad range of stakeholders to ensure that these laws serve the best interests of the people.
“We expect contributions from all invited stakeholders, who will present their views on the provisions that may require further refinement. We urge industry players, tax professionals, accountants, lawyers, the organised private sector, and economic experts to provide constructive feedback on how these bills can be improved to better achieve their intended objectives.
“This hearing is not just a legislative formality-it is an opportunity for us to collectively shape Nigeria’s tax system for the future. We must ensure that our tax laws are practical, fair, and capable of driving economic growth while maintaining equity and fairness for taxpayers.
“The tax reform bills provide us with a once-in-a-lifetime opportunity to create a modern, efficient, and effective tax system for Nigeria. We must seize this moment to make the process as robust, inclusive, and credible as possible”.
