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  • Tax bills: Govs, stakeholders in high wire consultations

    Tax bills: Govs, stakeholders in high wire consultations

    • Intensify horse-trading ahead National Assembly resumption

    Stakeholders across the country are using the current Christmas and New Year period to review and discuss the controversial Tax Reform Bills ahead of resumption of debate on the bills by the National Assembly early in 2025, The Nation can now report.

    It is understood that governors and federal legislators have been reaching out to critical interest groups and individuals in their states and constituencies to feel their pulse on the matter.

    While the issue appears almost settled in the South West, South East and South-South with the governors and the NASS caucuses from the three geo-political zones expressing their support, it continues to generate intense opposition  in the North East, North West and North Central.

    Only on Christmas Day, Bauchi State Governor Bala Mohammed said in Bauchi that the planned tax reforms were not good for northern Nigeria because “we are not going to get money to pay you salaries.”

    The federal government, he said, “must listen to us! They must not come up with a policy that favours only one state in the country.”

    He added: “It is not about religion. It is not about tribe. It is about national unity. It is about national hegemony.

    “We are all about good leadership, and we will continue to urge them for the time being. But if the situation persists, they will see our real colour.”

    The Senate suspended action on the tax reform bills on December 4 and mandated its ad-hoc committee chaired by Abba Moro to meet  with the Attorney General of the Federation and Justice Minister Lateef Fagbemi (SAN) to resolve contentious clauses of the bills. These include those dealing with derivative and VAT sharing formula.

    The Senate also asked its Finance Committee to stay action on public hearing on the issue to enable it address public agitation first.

    Read Also: Proposed tax bills: Tinubu harps on gains of reform, seeks stakeholders’ collaboration

    Some zonal caucuses in the Senate which did not directly oppose the bills said they would be engaging with their constituents during the ongoing Christmas and New Year break.

    A source close to the Nigerian Southern Senators Forum told The Nation yesterday that the Yuletide celebration had delayed the commencement of meaningful consultations between Senators and their constituents.

    “As far as I know, nobody’s doing any consultation at the moment. Everybody is concentrating their efforts on satisfying their constituents during this Yuletide,” the source said.

    “The pressure of Yuletide is really too much for anybody to talk about the Bills. I believe things will kick off in the new year before the resumption of plenary,” the source added.

    Another source close to the South East Senate caucus said the holiday was not a hindrance as Senators were working at different levels to engage their constituents.

    He also said the good thing is that since the Governor’s Forum has endorsed the Bills, the Senators would work to be in sync with their governors.

    “Even though some senators have gone on holidays, they are equally doing things at other levels,” the source said.

    “You know that most of these consultations will take place in their homes and those of their constituents. They will consult individually before they articulate their positions.”

    “But I don’t think they are against the Bills. They want to carry out further consultations.

    “In fact, they want the Bills and the intended reforms but they don’t want their support for the Bills to appear unilateral hence their decision to consult more widely.

    “You know that the governors in the South East have supported the bills, and in that case they would want to be in sync with their governors.

    “If you check very well, you will notice that the South East is not pushing back on the Bills,” the source added.

    Speaking on the bills during his media chat last Monday, President Bola Tinubu said tax amendments require negotiations and concessions, and he was open to such.

    But he also said the reforms had come to stay.

    His words: “That reform is here to stay. We cannot continue to do what we were doing in past years. We cannot retool the system using the old methods.

    “I am focused on what Nigerians need and what I must do for Nigeria. It is not going to be an El Dorado for everyone.

    “Tax matters are subject to debate, review and negotiation until you reach a consensus. That is all I am going to say about that.”

    Taking a cue from the position of the Northern States Governors Forum (NSGF) on the bills, Borno State Governor Babagana Zulum had said early this month that the VAT sharing formula proposed by the bills was designed to benefit Lagos and Rivers states more than other parts of the country.

    But in a reaction to the governor’s fears, Presidential spokesman, Bayo Onanuga, said the bills were generally conceived to “enhance the quality of life for Nigerians, especially the disadvantaged, who are trying to make a living.”

    He said most of the comments on the issue were not grounded in facts, reality or sufficient knowledge of the bills.

    He said: “While some commentators have attempted to incite the people against lawmakers, others have polarised one section of the country against another.

    “The tax reform bills will not make Lagos or Rivers more affluent and other parts of the country, as recklessly canvassed, poorer.

    “The bills will not destroy the economy of any section of the country. Instead, they aim to enhance the quality of life for Nigerians, especially the disadvantaged, who are trying to make a living.

    “Contrary to the lies being peddled, the bills do not suggest that NASENI, TETFUND and NITDA will cease to exist in 2029 after the passage of the bills.

    “Government agencies, such as NASENI, TETFUND and NITDA, are funded through budgetary provisions with company income tax and other taxes paid by the same businesses that are being overburdened with the special taxes.

    “One reason President Bola Tinubu embarked on the tax and fiscal policy reforms is the need to streamline tax administration in Nigeria and make the operating environment conducive for businesses.”

    Opponents of the bills are kicking over the proposed increase in VAT derivation from 20 percent to 60 per cent.

    Section 77 of the Nigeria Tax Administration Bill, 2024 states that: “Notwithstanding any formula that may be prescribed by any other law, the net revenue accruing by virtue of the operation of chapter six of the Nigeria Tax Act shall be distributed as follows: (a) 10% to the Federal Government; (b) 55% to the State Governments and the Federal Capital Territory; and (c) 35% to the Local Governments. Provided that 60% of the amount standing to the credit of states and local governments shall be distributed among them on the basis of derivation.”

  • Proposed tax bills: Tinubu harps on gains of reform, seeks stakeholders’ collaboration

    Proposed tax bills: Tinubu harps on gains of reform, seeks stakeholders’ collaboration

    President Bola Tinubu on Monday, December 16, said the ongoing deliberation on the four proposed tax bills before the National Assembly is a good example of the collaboration needed to deepen the nation’s democracy.

    He said the reforms when enacted, promise to streamline tax administration, enhance revenue generation, and promote equitable resource allocation.

    He added that the reforms are pivotal to his mission of building an inclusive, prosperous, and sustainable Nigeria and making the country competitive to attract foreign direct investment.

    The president, who was represented by the director general of Nigeria Institute of Peace and Conflict Resolution (IPCR), Dr Joseph Ochoku, spoke in his goodwill message at the 75th posthumous birthday of a late former governor of Oyo State, Senator Abiola Ajimobi.

    The event which also doubles as the 7th Annual roundtable of the deceased governor was organised by the Senator Abiola Ajimobi Foundation (SAAF) in collaboration with the Institute for Peace and Strategic Studies, University of Ibadan at The Senator Abiola Ajimobi Resource Centre of the Institute.

    The roundabout themed “Legislative Oversight and Accountability in Nigeria: Challenges and Prospects”, also attracted political bigwigs from the state, region, and country including political associates, family members, friends, and party loyalists among others.

    The event had in attendance Vice President Kashim Shettima, the National Chairman, All Progressives Congress (APC), Dr Umar Ganduje, Governor of Imo state, Hope Uzodinma, Deputy Senate President, Barau Jibrin, a Leader at the 10th Senate, Senator Opeyemi Bamidele, Chairman/Chief Executive Officer, Federal Inland Revenue Service (FIRS), Dr Zaccheus Adelabu, former deputy governors Moses Alake-Adeyemo, Rauf Olaniyan, the Olubadan of Ibadanland, Oba Owolabi Olakulehin who was represented by Senator Sharafadeen Alli, the Oluwo of Iwo land, Oba Abdulrashidi Akanbi, Soun of Ogbomosho, Oba Ghandi Olaoye among other dignitaries.

    Speaking, President Tinubu stressed that the need to forge a consensus is at the heart of his sustained engagements since the inauguration of the Renewed Hope Administration on 29th May 2023, noting that, as a Democrat, he is committed to the separation of powers and the legislature’s responsibility in carrying out oversight functions.

    On the theme, the President said it is timely and crucial for the country’s future adding that effective legislative and executive collaboration is needed to entrench efficient legislative oversight of public policies and programmes in the drive of the Renewed Hope Agenda through fiscal, economic, energy, tax, and other critical reforms.

    He added that in initiating and facilitating the reforms, his government is mindful of the legislature’s position and the imperative of building consensus among all the stakeholders in a democratic setting.

    Tinubu said: “The need to forge a consensus is at the heart of our sustained engagements since the inauguration of the Renewed Hope Administration on 29th May 2023. As Democrats, we are committed to the separation of powers and the legislature’s responsibility in carrying out oversight functions.

    “The commitment of our administration to open government, constructive scrutiny, accountability, and transparency has positioned us to strengthen the anti-graft institutions, especially the Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices and Other Offences Commission (ICPC), the Code of Conduct Bureau (CCB), as well as institutionalizing effective mechanisms for enhanced institutional collaboration.

    “On Legislative Oversight and Governance: In any thriving democracy, legislative oversight is the backbone of governance. Through this mechanism, the legislature ensures the accountability of the executive arm and evaluates policies, thereby maintaining public trust. However, this process is challenging, particularly in a diverse and dynamic nation like Nigeria. 

    “My administration is determined to forge a harmonious relationship between the executive and legislative arms of government. Despite occasional tensions, we recognize that effective governance is a shared responsibility. Collaboration, not confrontation, must define our interactions as we work towards the collective goal of improving the lives of our people. 

    “An example of this collaboration is the ongoing deliberation on the four proposed Tax Bills before the National Assembly. These reforms, when enacted, promise to streamline tax administration, enhance revenue generation, and promote equitable resource allocation. They are pivotal to our mission of building an inclusive, prosperous, and sustainable Nigeria and making our country competitive to attract foreign direct investment.

    “We firmly believe that democracy, as the best form of government, guarantees the independence of the legislature and judiciary. We also believe in press freedom and in holding government accountable.

    “Thus, in our drive to deepen and consolidate the culture of democratic governance, we have been working assiduously to insulate the constitutional roles and functions of each arm of government from primordial sentiments, lack of engagement, and the dissemination of fake news and hate speeches. We are constructively engaging critical issues of governance, democracy, and development through reforms to meet citizens’ hopes and expectations and restore their confidence in the government’s capability to provide security and enhance their well-being.”

    Commending the virtues of the deceased, President Tinubu said late Senator Ajimobi was not just a political ally but also a brother and friend to him, and it was a deeply felt loss.

    Admiring the courage, humility, honesty, diligence, commitment, and dedication of late Senator Ajimobi to his beloved wife, his family, and most importantly, to Nigeria, the President said the deceased unwavering commitment to democratic ideals over the years has been a source of inspiration for all.

    Read Also: Seyi Tinubu donates state-of-the-art hub to empower, inspire young leaders

    He recalled that Ajimobi played a critical role in the opposition movement and the All Progressives Congress (APC), which became the ruling party in 2015, highlighting what he described as his sincerity and people-centred commitment in the early days of the fourth Republic which earned him the senatorial seat and the opportunity to serve as Deputy Minority leader of the Nigerian Senate.

    In his keynote address, Senator Opeyemi Bamidele enumerated the oversight powers of the National Assembly as enshrined in the 1999 constitution adding that despite the best efforts, “a lot more remains to be done in respect of oversight.

    “Effective legislative oversight requires close collaboration with the executive. In conducting oversight, the principles of cooperative government and intergovernmental equations must be taken into consideration, including the separation of powers and the need for all spheres of government and all organs of state to exercise their powers and perform their functions in a manner that does not encroach on the geographical, functional or institutional integrity of government in another sphere.”

    Earlier in her remarks, the SAAF President who is also the wife of the former governor, Dr Florence Ajimobi said the event was not only in honour of her late husband but also in further realising his wishes and desire to advance the course of good governance at all levels in the country. 

  • 10 ways Tax Bills will make states richer, by Temitope Ajayi

    10 ways Tax Bills will make states richer, by Temitope Ajayi

    Human beings naturally resist change. When comfortable where we are, we find it extremely difficult to embrace an uncharted path or seek greater glory. Those who are risk averse often don’t want to venture out to embrace unfamiliar territories no matter how tempting the possible reward may appear. We should not, however, be so imprisoned by the fear of the unknown not to explore new possibilities because we find our present circumstances satisfying enough.

    Since the public debate around the Tax Reform Bills started,  the strongest push back against it  has come largely from the north.  Borno State Governor, Professor Babagana Zulum has become the face of the resistance for the reasons he has pushed forward,  even when some of them didn’t speak to the facts and provisions of the bills.

    If  Governor Zulum and other voices of resistance who think the states will be shortchanged had actually taken time to examine the four executive Bills, they will see how progressive and transformative the Bills are. They will also discern the thought behind them which is primarily to make both the Federal and sub-nationals fiscally stronger and buoyant.

    In his public presentations and the most recent being the Channels TV Town Hall moderated by Seun Okinbaloye Monday evening, Chairman of Presidential Committee on Tax and Fiscal Policy Reforms, Taiwo Oyedele and other panelists again made convincing arguments for the passage of the  Bills before the National Assembly.

    Here are the 10 ways the Tax Bills will serve the states better and enhance their capacity to earn more revenue:

    1. The federal government will cede 5% out of its current 15% share of VAT revenue to states.

    Read Also: Understanding Tinubu’s tax bills of reliefs for Nigerians, businesses

    2. The Bills will transfer income from the Electronic Money Transfer levy exclusively to states as part of stamp duties.

    3. The Bills seek to repeal obsolete stamp duties law and re-enactment of a simplified law to enhance the revenue for states.

    4. Under the new dispensation the Tax Bills will usher in, states will be entitled to the tax of Limited Liability Partnerships.

    5. When passed by the National Assembly, the Tax Bills will enable the state government to enjoy tax exemption on their bonds to be at par with federal government bonds.

    6. Under the proposed tax reform, states will enjoy a more equitable model for VAT attribution and distribution that will lead to higher VAT income.

    7. Integrated tax administration will  provide tax intelligence to states, strengthen capacity development and collaboration, and scope of Tax Appeal Tribunal to cover taxpayer disputes on state taxes.

    8. The proposed tax laws grant powers for Accountant General of the Federation to deduct taxes unremitted by a government or MDA and pay to the beneficiary sub-national  government on personal income tax of workers of federal institutions in states.

    9. Framework to grant autonomy for states internal revenue service and enhanced Joint Revenue Board to promote collaborative fiscal federalism.

    10. Legal framework for taxation of lottery and gaming and introduction of withholding tax for the benefit of states.

    From the aforementioned, it is clear that the Tax Bills are not in any way injurious to the states. Apart from streamlining the tax system  in Nigeria and catalysing economic output, the tax and fiscal policy reforms provide incentives for states to become economic powerhouses. The challenge for governors will be to put on their thinking cap by investing in manpower and critical social and physical infrastructure in their states  that will support businesses and socio-economic activities to flourish.

    -Ajayi is Senior Special Assistant to the President on Media and Publicity

  • Understanding Tinubu’s tax bills of reliefs for Nigerians, businesses

    Understanding Tinubu’s tax bills of reliefs for Nigerians, businesses

    • By Dare Adekanmbi

    The transmission of four bills that aim to overhaul Nigeria’s tax system to the National Assembly by President Bola Tinubu has sparked debates in the polity about the purpose of the bills. Some have expressed fears that the bills may encapsulate proposals calling for a raise in tax rates in a way that will further burden the citizens. Some Nigerians have received the news with mixed feelings, while others have chosen to wait for details before commenting on the development.

    There is no basis to entertain any fear about these bills. If anything, Nigerians are going to commend President Tinubu for focusing on laying a solid foundation that will ensure fiscal stability of the country. When Nigerians get to know the details of the bill in the documents, they will know that the president is actually working to bring reliefs to them and their businesses.

    The four executive bills seek to tidy up the fiscal policy and legislation environment in the country. They are: Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and Joint Revenue Board (Establishment) Bill. These bills seek to translate the recommendations by the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by Taiwo Oyedele, into implementable legislative framework for the benefits of Nigerians. 

    It is common knowledge that one factor which has continued to impede efficiency in Nigeria’s tax system and has negatively impacted revenue is multiplicity of taxes. President Tinubu, in his inauguration speech, had pledged to address the issue of multiple taxation and remove all hurdles against investment in the country. Multiplicity of taxes is one of the issues that the Nigeria Tax Bill seeks to end. This will certainly bring reliefs to corporate Nigeria. Imposition of tax by more than one agency or level of government, without a shadow of doubt, constitutes a chokehold on businesses, especially micro and small businesses as well as individuals.

    How will this bill address multiplicity of taxes? In Nigeria today, laws dealing with various aspects of taxation are scattered in different legislations. Some of these laws are: Companies Income Tax Act, Personal Income Tax Act, Capital Gains Tax Act, Value-Added Tax Act, Stamp Duties Act, Petroleum Profits Act, Tertiary Education Fund Act, Petroleum Industry Act and so on. In addition to the tax-specific laws, there are plethora of tax provisions in non-tax laws such as the NLNG Act, Tertiary Education Trust Fund Act, NASENI Act, Lottery Act, Companies and Allied Matters Act among others. The list is seemingly endless.

    In enforcing these disparate tax provisions, unintended multiple taxation occurs and this is one of the things that the bill seeks to address. The Nigeria Tax Bill aims to codify  all taxing provisions into one single document to be known as the Nigeria Tax Act when passed into law. In the bill, chapters are devoted to the various tax types in a simplified format. The proposed tax law is also written in a simple language that anyone with basic literary education can read and understand. The complexity of the extant law, for instance, is such that it will be pretty difficult for a Professor of Mathematics to compute his personal income tax on his own because of all the inter-twinning provisions that will befuddle him as to what income is taxable or what deduction is allowable. All these complications and complexities have been removed in the new proposals.

    In the proposed law, companies doing businesses within the country have been re-classified into two: small and large. This is done in accordance with the companies’ respective turnover thresholds. A company will be deemed small if its turnover is N50 million or less in a year. Under the extant law, any company which records a turnover of N25 million or less is not required to pay Companies Income Tax (CIT). In the new tax bill, companies with yearly turnover that is up to N50 million will not pay CIT. As regards large companies, that is, those whose turnover thresholds are above N50 million, there is a proposal in the bill to give some relief to them. The objective of this succour for such companies is in line with President Tinubu’s avowed commitment to protect small businesses and eliminate inhibitions that negatively impact entrepreneurship in the country.

    Read Also: Stakeholders kick against tax bills in Rivers

    Perhaps the game-changer among the several pleasant provisions of this document is what the bill seeks to do with VAT. It is an eloquent testimony to the fact that President Tinubu has listened and harkened to the complaints by Nigerians, particularly the ordinary Nigerians who are bearing the substantial brunt of the initial pain of the government’s economic reformation policies. In the proposed law, VAT will not be charged on all items that have direct existential impact on the common people. Items such as food, medicals, education, transport business and agriculture are not chargeable to VAT.  For instance, tuition fee or rent paid by proprietors or purchases made by school owners for the purpose of the business of educating Nigerians will be free from VAT. It is the same for owners of hospitals, those in agric business as well as those who buy vehicles for transportation. These are the areas where the lives of the common people will be significantly positively affected, especially in view of the temporary pain of the ongoing reforms.

    In addition, certain input VAT which hitherto is not possible to claim under the current law can now be claimed. Another relief the president has put in the bill is that for VAT refunds will be made within 30 days upon completion of paper work by the such companies or entities. Already VAT is not being charged on diesel and petrol. The president had in July this year directed the suspension of duties, tariffs and taxes on importation of food commodities as part of measures to arrest the rising cost of living.

    It may interest many to know that VAT rate of 7.5 per cent currently being charged in Nigeria is the lowest on the continent and one of the lowest in the world. Madagascar and Morocco charged 20 per cent VAT in 2022, while it is 19.25 per cent in Cameroon. Many countries of the world, recognising the importance of tax revenue in providing public services, have this year reviewed their VAT upwards with one of the most striking examples being Saudi Arabia which upped its rate from 5.0 per cent to 15 per cent in July.

    Further to the Nigeria Tax Bill, the table of tax rates for individuals has been restructured in a way that brings huge respite to low-income earners. It is worth mentioning that the Federal Inland Revenue Service (FIRS) does not collect taxes from individuals. It is within the jurisdiction of states’ revenue authorities to collect such income tax from individuals. The only set of individuals who pay personal income tax to FIRS are members of the Armed Forces, members of the diplomatic corps and foreigners earning income in Nigeria. In the new bill, individuals whose annual income is N800, 000 after the deductions of pension and deductible items will not be required to pay personal income tax (PAYEE). However, the elite who earn fat annually will pay more. This is in line with the global principle of progressive taxation which takes more tax from the high earners and a little lower tax from middle earners, while low income individuals pay very little. The pledge of  the president is that his administration’s fiscal policy will tax prosperity and not poverty. 

    The second bill, the Nigeria Tax Administration Bill, basically seeks to consolidate administrative provisions for all taxes. This bill harmonises all tax administration issues such as registration, filing, payment, dispute resolution, etc for all tax-types and revenue authorities. It also clearly delineates the roles and objectives of all tax authorities in the country as well as their relevant jurisdictions. The aim of this bill is to promote the ease of tax administration, lessen tax compliance burden on the citizens and improve the ease of doing business in the country.

    As for the proposed Joint Revenue Board (Establishment) Bill, this is seeking to replace the Joint Tax Board (JTB) which has been wobbly since its establishment because it was built on quicksand. The proposed replacement not only addresses the glaring shortcomings in JTB, but also retains the joint control of the body by the federal and state governments. It also seeks the creation of the office of Tax Ombuds to resolve all complaints that may arise from the operations of JRB.

    Today, we cannot run away from the cryptocurrency ecosystem because it is the in-thing.  But as it stands in Nigeria today, there is no law that regulates cryptocurrency operations. One key highlight of the Nigeria Tax Bill is that it seeks a legislation to regulate the digital currency market said to be worth $1 trillion globally. The bill, when passed into law, will arrest the revenue the country has haemorrhaged in the sector. It will be recalled that some executives of one of the biggest cryptocurrency platforms, Binance, are in court for non-payment of taxes among other offences.

    The Nigeria Revenue Service (Establishment) Bill is primarily proposing a change of name for the Federal Inland Revenue Service (FIRS) to the Nigeria Revenue Service. This bill is one which seeks to correct the error of 2007 when Nigeria’s apex tax authority, FIRS, became autonomous as an operational arm of the Federal Board of Inland Revenue (FBIR). The mandate of FIRS is to administer tax laws to assess, collect and account for revenue accruable to the federation and not the Federal Government. Especially when we consider the current sharing formula on VAT revenue, only 15 per cent goes to the Federal Government. The remaining 85 per cent is shared between the states and the local government areas.

    Today, tax revenue from FIRS is the main reason the 36 states and the local government councils smile to the banks monthly during their Federation Account Allocation Committee (FAAC) meeting. A total of N17.8trillion accrued to the Federation Account between January and July this year. FIRS tax revenue alone contributed N11.7 trillion, representing 65.8 percent of the total money disbursed to the federal, state and local government councils to meet their needs.

    Giving such a critical agency an appellation which suggests it is collecting tax solely for Federal Government is improper and must be corrected. Another error in the current name is contained in the word ‘Inland’ which restricts the agency to the collection of taxes within the interior territory of the country. Nigeria has huge revenue to collect from offshore transactions and only a repeal of FIRS (Establishment) Act 2007 to pave the way for the Nigeria Revenue Service (Establishment) Act can make that happen. Those suggesting that the proposed name change will translate to other revenue agencies being subsumed or merged with NRS need to get copies of the bill to clear their doubt.

    The general principle of the four tax bills is not just to modernise the tax system in the country, but also to ensure that relief is created for ordinary Nigerians and businesses. And so, for insulating the poor from VAT payment through exemptions of good and services that directly impact their lives, for making VAT neutral for businesses through enabling deduction of input tax from out VAT, President Tinubu has demonstrated fidelity to his commitment that government policies must allow the poor to breathe and not suffocate. Tinubu deserves to be applauded as a leader who listens to the yearnings of the citizens. 

    • Adekanmbi is the Special Adviser on Media to the FIRS chairman.