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  • Tax Reform Bills not against North, Presidency declares

    Tax Reform Bills not against North, Presidency declares

    • No plan to scrap TETFund, others
    • Dogara, Dickson: Bill in order
    • Kano House kicks

    The four tax reform bills are not against the interest of the North, the Presidency said yesterday.

    Apart from refuting the claims that the bills will undermine the economy of any region, the Presidency also clarified that the reforms are designed to streamline tax administration and promote equitable economic development across the country.

    The bills have scaled the second reading in the Senate. It is now at the committee stage where it will undergo public hearing.

    Also yesterday, Senator Seriake Dickson and former House of Representatives Speaker Yakubu Dogara, gave reasons why the tax reform is desirable and passage of the bills is necessary at this time.

    While Senator Dickson (PDP Bayelsa) is optimistic of the bills’ passage, Dogara said the bills would make the North self-reliant hence the region should support it.

    Also, House of Representatives spokesman, Akin Rotimi, confirmed that member of the House of Representatives had been informed of the postponement of discussions on the tax bills. The debate ought to hold today.

    He said: “The postponement is due to the need for further and broader consultations with all relevant stakeholders.”

    Kano State House of Assembly yesterday kicked against the bills, calling on the National Assembly to reject them. It made this position known after its sitting.

    Presidential Spokesman Bayo Onanuga also refuted claims that the bills recommended the dissolution of key federal agencies, such as the National Agency for Science and Engineering Infrastructure (NASENI), Tertiary Education Trust Fund (TETFUND), and National Information Technology Development Agency (NITDA).

    Onanuga said: “Since the public debate around the transformative tax bills before the National Assembly began in the last few weeks, various political actors and commentators have tried to obfuscate the facts, deliberately misinforming and misleading the public.

    “Unfortunately, most reactions are not grounded in facts, reality, or sufficient knowledge of the bills. 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.

    “For decades, businesses, investors, and private sector players in Nigeria have complained of being overburdened by a myriad of taxes and levies, including those earmarked to fund various government agencies and initiatives.

    “The multiple taxes complicate the economic environment, making Nigeria uncompetitive for investment and preventing many businesses from growing or continuing their operations.

    “Some companies have had to make the rational decision to relocate to other countries. We cannot continue on this path or wait for 20 years if this country is to deliver the prosperity we need for our people.

    “The proposal, as contained in Section 59(3) of the Nigeria Tax Bill, only seeks to consolidate some of the earmarked taxes imposed on companies and replace them with a single tax to be shared with the key agencies as beneficiaries in a phased manner until 2030.

    “The time frame offers ample opportunity for the affected agencies to explore other funding sources in addition to budgetary allocations in line with the constitution and international best practices.

    “It is a misrepresentation of facts to conclude that changing an agency’s funding source amounts to scrapping it. None of the countries leading globally in education, science, engineering, or information technology have similar earmarked taxes.

    “The government imposes major taxes, be it income tax, consumption tax, or other taxes, to channel resources to its areas of priority at the time. Imposing a separate tax to fund an agency is an aberration that has yet to yield results despite the huge burden on businesses. The tax bill seeks to address this problem.

    “Relevant stakeholders and public analysts owe it a duty to properly educate themselves about the bills’ contents and avoid misleading the public for any reason. We may be entitled to our opinions, but such views must be informed and based on facts, not emotions targeted at inflaming passions.

    “In a period like this, when our people across the country look up to leaders for guidance and direction on matters of public importance, such as the Tax Reform Bills, leaders should be more measured in their public utterances to avoid heating the polity and polarising the country unduly.

    “President Tinubu welcomes the public interest these bills have generated. He encourages leaders across the country, including governors, traditional rulers, civil society activists, students, trade associations, professional associations, and the general public, to take advantage of the Public Hearings that the National Assembly will organise to present their views on how best to reform our taxes and fiscal regime.

    “What is never in doubt is the imperative of changing the existing tax laws and administration that have become obsolete and unhelpful in achieving the growth and development we desire for our country”, the statement said.

    National Assembly will pass bills, says Dickson

    Dickson, Chairman of the Senate Committee on Ecology and Climate Change, said the opposition to the bills notwithstanding, the Senate would pass them in national interest.

    He also allayed the fear in some quarters that the planned public hearing would be chaotic, if it is not postponed for further consultations.

    “Those opposed to the bills should come to the public hearing with facts, if they have issues with any section of the bills.

    “During the debate on the PIB, the Niger Delta leaders asked for 10% of the Operating Expenses or Expenditure (OPEX) of oil companies for host communities, but only 3% was granted.

    “The late President Umaru Musa Yar’adua proposed 10% for the host communities, the National Assembly passed three per cent after about two decades without any protest.

    He said: “The Senate has passed the Tax Reforms Bills for second reading. Public hearing will take place and people should get ready to present their positions. The tax bill is a law like every other law and it has to go through the normal legislative process.

    “Right now, taxes from Bayelsa State are paid to Lagos State and I don’t want that to continue. When there is consumption of goods or services from any state it should be calculated and paid to that state.

    “Now there is an opportunity to review the tax laws, to correct the anomalies and that’s why I’m in support.“I know there are states that are feeling that when they apply the new sharing formula, they will earn less. It’s for them to raise those issues and bring the statistics. I don’t go by sentiments. I go by what is right and in the national interest.”

    “Forget about uproar, there will be no uproar. Public hearing is an opportunity for people to present their matters, and nobody is going to be intimidated by uproar.

    “The PIA was passed. We wanted 10%, which was what Yar’adua proposed. They (federal lawmakers) reduced it to 3%. Heaven did not fall. This tax reform bills will pass and heavens will not fall.”

    Dickson spoke during an interaction with reporters at the National Assembly.

    Dogara: North should accept reforms

    Speaking on a national television programme last night, Dogara said: “We should remove the cap of regionalism, the cap of sectionalism, the cap of religion and put on the cap of leadership because that is what will resolve the quarrel that we have.”

    He added: “I think one of the major objections is related to the issue of timing. I’ve heard this from leaders that I respect.

    “But in leadership, when you talk about timing, the way I have heard them talk about is a tragic misconception of the notion of time itself because there’s nothing like the future, there’s nothing like the past,” he said.

    “All we have is now. It is what you are doing now that will become your past. It is what you are doing now that will affect your future”.

    “I don’t even care if it was part of the president’s agenda. All I am bothered with as a leader is: is it the right thing?”

    “Secondly, I have heard about insufficient consultation. I had even heard legislators speaking as if they were spokespersons for some governors’ forum or others instead of looking at what is right, and proffering solutions.

    “Now, I don’t know why he [Taiwo Oyedele), who leads the Presidential Fiscal Policy and Tax Reforms Committee and a panelist for the event] didn’t address some of these issues. But I believe in the course of our interface, he will address whether there was enough consultation with the governors.

    “But I want to say this: at the state level, how many people do governors consult when they are making laws? I’m not challenging them. As a matter of fact, in some cases, state laws are written from the living rooms of governors.”

    Read Also: Why we postponed debate on Tax reform bills, by Reps spokesman

    On derivation, Dogara said: “I say to them, if that is the case, let us define it.”

    “I want to talk to my brothers in the North. I don’t think this is the time to begin to condemn the President and be saying that these bills are anti-North.

    “So, we, as northerners, should better embrace this opportunity to build our region, and for our people to be generating wealth and building our economy.

    “These bills will make us more independent and to look inwards to generate wealth.

    “These bills discourage us looking at the government every time for money.

    “I want to remind us that the President has done something that is significant.  And in my life-time, if the President can pursue this to the end, it will mean that no Northern leader in my life-time has done what the President has done for the North. And that is the creation of the Livestock Ministry.

    “There is a global business around that. The global market size of dairies, of beef in the next three years will rise to about $2.5 trillion. You can Google it. So if in the north, we are able to organize ourselves in such a way that we can corner just 5%, just 5% of this global market size of dairies and beef, I tell you that gives us $250 billion.

    “We don’t need VAT from any state in Nigeria to survive. The North can survive on its own. We are the most endowed part of Nigeria.”

     “We have all the resources, we can survive”, Dogara added.

    Dogara, who noted that the President has done much for the North, said the claims that the bills are against the region are unfounded.

    Kano House kicks

    At the plenary presided over by the Speaker Isma’il Falgore, the lawmakers rejected the bills after extensive deliberation.

    Majority Leader Lawan Husseini (ANPP-Dala) introduced a motion of ‘urgent public importance,’ emphasising the need for northern lawmakers and the Conference of Speakers to prevent the passage of the bills.

    Husseini argued that if passed into law, the bills would not benefit the Northern States.

    He condemned the Senate’s decision to approve the bills, saying, “we view it as a deliberate effort to sabotage the economy, increase hardship and further impoverishing the region.”

    Husseini expressed concern over the proposed Value Added Tax (VAT) allocation system, noting that states like Lagos, where major corporations such as banks, telecommunications companies and multinational companies have their headquarters, would receive the largest share of the VAT.

     “Lagos and its environs would account for 80 percent of the VAT collected in Nigeria, leaving northern states with a minimal share,” he said.

    He warned that if allowed to scale through, the bill would further weaken northern states, potentially rendering some unable to pay salaries and worsening poverty and hardship.

    Supporting the motion, Salisu Mohammed (APC-Doguwa) urged the upper legislative house to focus on more pressing national issues, such as attention insecurity and unemployment, instead of rushing the tax reform bills through the legislative process.

    Murtala Kadage (ANPP-Garko) called for unity among lawmakers to prevent the bills from passing, for the benefit of the region.

    The house called on northern members of the Senate and House of Representatives, along with the Conference of Speakers, to take a swift and decisive action to block the passage of the bills

  • Why I’m opposed to Tax Reform Bills, by Zulum

    Why I’m opposed to Tax Reform Bills, by Zulum

    Borno State Governor, Babagana Zulum, yesterday raised concerns over the proposed tax reform bills, frowning at the speed they are receiving legislative attention.  

     Speaking in an interview with BBC Hausa, Zulum expressed fears that the bills could have catastrophic consequences for the north and other parts of the country.  

    Unsettled by the speedy attention the bills are getting, the governor rhetorically asked: “Why the rush?”

    Continuing, he said: “The Petroleum Industry Bill took almost 20 years before it was finally passed. But this tax reform bill is being transmitted and receiving legislative attention within a week. It should be treated carefully and with caution so that even after our exit, our children will reap its benefits.

    “We condemn these bills sent to the National Assembly. They will drag the North backward and also affect the South East, South West, and some South-Western states like Oyo, Osun, Ekiti, and Ondo.”

    Read Also: Reps to continue consultations on Tax Reform Bills

    Calling on President Tinubu to review the decision, Zulum clarified that his stand is not tantamount to opposing the government. “Based on our understanding, these bills will destroy the North entirely. We call on President Tinubu to review this decision. He secured 60% of his votes from the North. He should not listen to those telling him the North is not supporting him. What we need is the withdrawal of these tax bills.”

    If these bills are passed, Zulum said “we won’t even be able to pay salaries. And if we do, it won’t be sustainable the following year.”

    Reemphasizing his opposition to the bill, he emphatically said : “We are against it, and even Lagos State is against it. If this bill is dragging regions backward, why won’t they rescind it? Our National Assembly members, including some from the South, are not in support of it.

    “This is our position, and it doesn’t mean we are against the government. We supported and voted for President Tinubu. But these bills will not be beneficial to us.”

  • RHAN commends Senate as Tax Reform Bills scales through second reading

    RHAN commends Senate as Tax Reform Bills scales through second reading

    The Renewed Hope Ambassadors Network (RHAN) has hailed the Senate for passing the Tax Reforms Bills for second reading.

    The group said by this action, the Senate has demonstrated its commitment to creating a more equitable and prosperous Nigeria for all citizens.

    According to the RHAN, the passage of the Tax Reform Bills attests to the Senate’s dedication to promoting economic growth, transparency, and accountability in Nigeria’s tax system.

    The network applauds the Senate for prioritising the welfare of Nigerians and taking bold steps to address the country’s economic challenges.

    In a statement signed by Opialu Fabian Opialu, its Secretary-General, RHAN also urged the House of Representatives to justify the confidence Nigerians have reposed in them by ensuring the timely passage of the Tax Reform Bills.

    The network called on the Representatives to put aside partisan interests and prioritise the interests of Nigerians.

    “We advise the Representatives to put aside partisan interests and prioritise the interests of Nigerians. The Tax Reform Bills have the potential to stimulate economic growth, promote transparency, and ensure fairness in the tax system,” Opialu added.

    “The benefits of the Tax Reform Bills are multifaceted. The bills will provide a comprehensive framework for taxation in Nigeria, enhancing revenue generation and promoting transparency, accountability, and fairness in the tax system.

    “The passage of the bills will also stimulate economic growth by promoting a more effective tax regime. We commend President Bola Tinubu for initiating these crucial reforms. His dedication to creating a more equitable and prosperous Nigeria for all citizens is evident in his efforts to promote economic growth and transparency.

    Read Also: Arewa youths laud Senate over passage of Tax Reforms Bill for second reading

    “The President’s commitment to reforming Nigeria’s tax system is a testament to his administration’s resolve to address the country’s economic challenges. The Tax Reform Bills are a significant step towards promoting economic growth and development in Nigeria.

    “The bills will provide a framework for taxation that is fair, transparent, and accountable. The bills will also promote economic growth by encouraging investment, creating jobs, and stimulating economic activity.

    “In conclusion, we urge the House of Representatives to expedite the passage of the Tax Reform Bills into law.”

  • Reps to continue consultations on Tax Reform Bills

    Reps to continue consultations on Tax Reform Bills

    After more than two hours of a closed-door discussion on Thursday, the House of Representatives decided to extend its consultations on the tax reform bills proposed by President Bola Ahmed Tinubu. 

    The President had previously presented four tax bills to the parliament for consideration. However, northern leaders and the governors of the 36 states have called on the President to withdraw the bills to allow for further discussions and consultations. 

    However, the Presidency has insisted that the bills be allowed to go through the usual legislative process, stressing that any suggestion or opposition to any of the bills can be done during a public hearing.

    However, at Plenarybon Thursday, November 28, the House went into an executive session which lasted for over two hours to discuss the issues surrounding the tax reform bills.

    When the issue of the bills was not listed for discussion, The Nation gathered that some members had insisted that the issue be discussed by the lawmakers.

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    After the over two-hour closed-door meeting, Deputy Speaker Benjamin Kalu who presided over plenary said the decision at the meeting was to allow room for further consultations on the bills.

    He said: “What we did was to continue our consultation which we promised the House on the tax bills and the agreement at that session was to continue that conversation. This consultation is going to continue from now till Tuesday when we will hold a special session when we will invite these resource persons to be here in the House to engage us.

    “Thereafter, we decide which way to go. This is to make sure that it is well documented that we did our consultation in the form of an executive session and we are continuing that consultation till next week Tuesday.”

  • FIRS boss, Oyedele, DG Budget Office brief Senate, seek passage of Tax Reform Bills

    FIRS boss, Oyedele, DG Budget Office brief Senate, seek passage of Tax Reform Bills

    The Chairman of the Federal Inland Revenue Service (FIRS), Zaccheus Adedeji, Director General of the Budget Office, Tanimu Yakubu and Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele on Wednesday appeared before the Senate.

    The team appealed to the lawmakers to support and pass the four Tax Reform Bills before the National Assembly to enhance progressive development of the country.

    The team told the federal lawmakers that tax reform bills are four different legislation that seeks to bring everything about taxation and administration of tax in Nigeria under four different pieces of legislation.

    The bills are, the Nigeria Tax Bill; the Nigeria Tax Administration Bill; the Nigeria Revenue Service Establishment Bill and the Joint Revenue Board Establishment Bill.

    They explained that the bills contain all major taxes imposed on individuals and companies and that it is just like a compendium of taxes charged in Nigeria.

    They said, contrary to what some mischievous persons are pushing in the public domain, the Bills are meant to radically transform tax administration in Nigeria for greater efficiency.

    They said the bills will update  archaic tax laws and simplify the nation’s complicated tax ecosystem.

    Apart from these, they said the tax reforms clearly favours the low income earners and small businesses, which will be exempted from paying income taxes.

    They said bills are simply pro-poor, pro-growth and pro-efficiency.

    They therefore urged the senators to support their passage in order to move the country forward.

    Adedeji after a brief remark called on Oyedele to make his presentation which is basically to make lawmakers understand the Bills and get their buy-in.

    Oyedele in his presentation, said: “I want to start briefly by providing some background to the work that the committee has done that led to the tax reform bills.

    “First is to look at our socioeconomic reality for our country.

    Read Also: Senate passes Bills to establish FCT Satellite Towns Commission, college of skills acquisition, technology in Anambra

    “If these slides come up, you will see the study done by the Bureau of Statistics showing that 133 million of our citizens live in multidimensional poverty. The reason why they live in poverty are four dimensions.

    “The first one is that they are deprived of education.

    And this is just basic education, about first nine years of learning. They are deprived of access to health, including nutrition, food security.

    “They are also deprived of living standards, basic things like safe drinking water.

    They do not have access to sanitation, as well as water reliability. The fourth dimension of poverty that our people are having to deal with is underemployment, unemployment, and insecurity.

    “Our economy has not been growing well enough over the past 10 years. Our growth rate on the average has been under 2% below our population growth rate and this means that more people get into poverty every day than the previous day.

    “Our inflation is very high, so is unemployment. Government revenue is very low, and public debt is rising, as well as the cost of servicing the debt.

    “Investment in our country is declining. In the whole of Q2 of 2024, we only attracted about $29 million in foreign direct investment.

    “We have seen a number of companies exit the country. We have seen those that have closed down, and some that have scaled down their operations from having about five plants to about two, including some local companies.

    “On the next slide, we have significant areas of work in progress in reforming our economy and taking Nigeria to a place where we all aspire for the country to be. We also have areas where we are beginning to see positive results.

    “For the areas where we need to make improvements, this includes our exchange rates, the strength of the Naira, and the stability of the Naira. We need to rein in inflation, as well as the cost of doing business. We need to address rising poverty in the land and the cost of doing business, as well as finding decent jobs for our people, particularly our young population.

    “Our interest rate environment is very high, almost impossible to do any legitimate business, borrowing at 40-50 percent. We also have challenges around efficient public financial management, coordination of government policies across different levels, as well as public communication.

    “But areas where we’re beginning to see positive results include the balance of trade and current account surplus. We are beginning to see inflation slowing down in developed markets, which means as they cut their rates, more investments will come in our direction. We’re seeing a decline in budget deficits, we’re seeing rising revenue, though remains small, and we’re seeing crude oil local refining in Nigeria, which is good news.

    “We have our capital markets not doing badly, could be better and these are some of the context about what led to the reforms.

    “So Mr. President of the Federal Republic of Nigeria set up the Presidential Fiscal Policy and Tax Reforms Committee last year, August, and the team is comprised of over 80 Nigerians from all the six geopolitical zones across Nigeria, including over 45 young people from 22 universities, head of internal revenue services, more than 22 government institutions, the organized private sector from Manufacturing Association of Nigeria to Small Business Association to Chambers of Commerce, as well as professional bodies, ICAN, ANAN, CITN, Nigerian Bank’s Association and so forth.

    “Some of the findings driving our recommendations today is that our budget is very low.

    It’s not enough to fund our development.

    “For the year 2024 that is coming to an end, the total of the budget of the federal government, including the amendment to the Appropriation Act, and all the 36 states of the federation, comes to about N51.1 trillion only.

    “If we convert this to the United States dollars, it is just barely $32 billion dollars. This amount is the size of the budget of Kenya, that has only 54 million people and a lot of poverty in the land as well. This amount is less than one quarter of the budget of South Africa. $130 billion is their budget, and they have about 60 million people.

    “Even by African standards, we are not doing well. As much as the budget is very low, our revenue is even lower. The entire revenue that we generated from taxes is barely N18 trillion in 2023.

    This amount is not even up to fund half of the budget across the federation. And if you look at individual tax contributions from personal income tax, for example, in the whole of last year, Nigeria only collected N1.53 trillion in personal income tax. In that same year, South Africa collected N50.5 trillion equivalent.

    That is more than 30 times what Nigeria collected. Even Kenya, with 54 million people, collected 5.8 trillion naira, almost four times what Nigeria collected. It is instructive to note that in South Africa, you do not pay personal income tax until your income is up to 660,000 naira per month. Below that level, you are totally exempted.

    “In Kenya, you will not be liable to pay personal income tax until you earn more than N282,000 per month equivalent. But in Nigeria, you are asked to pay personal income tax once you earn N30,000 per month.

    “That’s N1,000 a day. Nigeria is taxing its poorest people. We are taxing poverty and it’s not showing in our tax collection because in our analysis, we could not find any country in the world where they place so much burden on their poorest and most vulnerable population.

    “That’s not where our revenue will come from. The N50 trillion equivalent that South Africa collected from personal income tax alone, which by the way, is more than twice all our revenues combined from taxes, as well as from proceeds from oil.

    “This N50 trillion that South Africa collected, 90% of it came from the top 5% of their population. So we believe that the time is right for us to provide exemption for our poor citizens, given that they live in multidimensional poverty. They have no ability to pay taxes and to ask some of us who are not so poor to pay a little bit more so that we can reduce the size of budget deficits and not have any need to print money to spend to fund the government.

    “In every country that they have decided to print money to spend, the outcome is predictable. In Zimbabwe, a few years back, there was a 100 trillion Zimbabwe dollar and I used to have the note but I didn’t bring it here. That note of 100 trillion was barely enough to buy a loaf of bread because they kept printing money.

    “When government cannot raise revenue rightly and they print money to spend, it is effectively taxation without legislation because the value of the money in everybody’s pocket reduces proportionately.

    “Unfortunately, this way of imposing taxes without legislation further imposes more burden on the lower end of the ladder and this will promote inequality and further fuel insecurity because of the social tension, hopelessness and not caring for our people enough.

    “The question we ask ourselves is that if we do not do these reforms now, then when should we do it? If it’s not us, then who should do these reforms?

    “We conducted a national study trying to find out from the Nigerian people their perception towards paying taxes because you know that tax is at the heart of the social contract, is the reason why societies can exist. It turns out that only 17% of Nigerian adults believe that they should pay their taxes and that tax evasion is wrong and punishable. 83% of Nigerian adults would do anything but pay their taxes.

    “This is the lowest that we have seen of any country where this study has been conducted. When we asked them why is it that they don’t want to pay taxes, they gave us three very important reasons. The first one is that they said they do not trust governments.

    Number two is they said even the ones we pay, what are we getting in return for those taxes we pay? Number three is they said even when they want to pay the taxes, the process are cumbersome and corrupt.

    “Two in three adults said they were asked to pay a bribe in the process of wanting to pay their taxes. When we asked them what government should prioritize in terms of spending, they said government should prioritize spending on education number one, health number two, electricity number three, security number four.

    “This request from the Nigerian people is very consistent with the reason why we live in multi-dimensional poverty. So the voice is clear from our people about what we must do. Many of the laws that we have in Nigeria today around taxation we inherited from our colonial masters.

    “For example, the stamp duty law is a law of 1939. In 1939, the world had not envisaged that there would be an internet. Trying to apply a law of 1939 in 2024 does not show that we are people that are ready for the next generation.

    “Because of this, we decided that instead of amending our old laws that we inherited from the colonial masters, why don’t we write new ones for ourselves? And this has been done in many countries across the world.

    “This is what led to us trying to harmonize so many taxes that we have in Nigeria into a few high revenue yielding broad-based taxes and eliminate those taxes that impose burden on our poorest people and small businesses so they can have the opportunity to thrive.

    “It is when our people are prosperous that you have the ability to pay taxes.

    Our finding is that the fiscal system we have today inhibits growth. And in my private sector experience before my current role, I was involved for over a decade in looking at tax system in more than 180 countries worldwide.

    “I can tell you with all sense of responsibility, Nigeria’s tax system is one of the most backward in the world.

    This cannot help us with our ambition of a great country which is what we desire and truly deserve.

    “We also find that governments can do much better in terms of the priority and quality of spending as well as how we borrow in addition to issues around harmonization of taxes.

    “On the next slide, we decided to put all the official levies and taxes collectible in Nigeria today, one by the federal government,the states and by the local government, altogether, more than 60 taxes and levies that we impose on our people today.

    “Yet we have no revenue to show for it. Whereas countries where they collect multiples of what we collect, they collect all those taxes less than 10 taxes.

    So we believe that if we continue to do the same thing and expect a different result, the results will not be different. We believe it is time for us to take a step back and say what taxes should we be collecting today. If you go into the constitution, you find collection of taxes on wheelbarrow, taxes on bicycle, produce, TV and radio.

    “In the days when those laws were written, having a television is an indication of wealth. Today is not and we believe it’s time for us to do the reform. So this leads me now to the four major bills before you and I’ll give the highlights of those bills one by one.

    “First and foremost, there’s a structure that we use to develop the bills. We focus on some principles to guide our recommendations. Those principles include simplicity, harmonization, alignment with our economic objective.

    “We cannot want to grow manufacturing and then we are taxing investment. We thought it’s important for us to make sure that our tax and fiscal policies are consistent with our growth and development aspirations.

    “Tax neutrality, so that tax does not become a burden for those who are doing business. Competitiveness: can we attract investment to Africa, just within Africa. What we are beginning to see from our analysis, Nigeria’s income tax rate for companies runs in the top 10 highest tax rate in the world, Nigeria is in the top 10.

    “Now if anybody wants to start a business in Africa today under the African continental free area or other net worth analysis, they will conclude that Nigeria is the least preferred location for you to set up your investments. If we don’t address this issue urgently, the crisis we have will get worse because what will happen is even Nigerian companies will decide to go and set up in Ghana and bring the produce to come and sell in Nigeria, since they have a more favorable environment.

    “For example, Nigerian businesses are forced to pay tax even when they have made losses. When you force a company to pay tax when they have made losses, you’re asking them to pay tax out on their capital. It’s the fastest way to kill any company in the world.

    “One of the reasons why America is one of the greatest countries in the world today is they support their businesses. Even when the business has made a loss, America allows you in some states to go and sell the loss and collect money so you can continue to fund your business.

    “Some of the largest tech companies in the world made losses for more than 10 years before they began to make profit. We want to do the same thing in Nigeria.

    “Today, if you want to set up a factory and you buy equipment and assets, you pay VAT on those assets. You will not be able to get credit for those VAT you have paid.

    “If you go to Ghana, even though their VAT rate is higher, every amount you pay on VAT, you will get it back from the government. We want to do the same thing in Nigeria. We do not want to tax capital anymore. We do not want to tax investments. We do not want to tax poverty.

    “Of course, we do not want to tax seed. We need to wait and tax the fruits when people have invested and they are making prosperity.

    “We also want to modernize our system because we’re beginning to lose our tax base to other countries. Within the international community, there’s a project going on that we call base erosion and profit shifting. And if we don’t respond quickly, as other countries are taking care of themselves, we’ll be losing our tax base to those other countries.

    “So this is why this is very urgent, amongst so many other reasons. The work we have proposed before the National Assembly is data driven. We ensure that we focus on data and we prioritize what is good for our country in the national interest over and above everything else.

    “It is our belief that if Nigeria works, every group, every segment, every association will find a space under Nigeria that is working.

    “So we have four bills. The first one is the Nigeria Tax Bill.

    The Nigeria tax bill brings all the major taxes in Nigeria together in one piece of legislation once it’s enacted, it will cover things like companies’ income tax, personal income tax, capital gains tax, value added tax, excise duties tax, staff duties.

    “The idea is, why do we have to repeat things in different laws? And it’s difficult for the taxpayer to find out what they should pay. It’s already hard to pay taxes. It should not be hard trying to find out the taxes you need to pay. Our belief is bringing these taxes together in one piece of legislation, writing it in simple language that people can understand, will help us significantly.

    “The second bill, before I go into some of the provisions in the bills, is a Tqx Administration Bill. This tax administration bill tells us about how to administer our taxes from issues about taxpayer registration, filing of returns, assessment, payment, tax audits, using technology in revenue administration. All of these are covered under the tax administration bill.

    “Number three is the Nigeria Revenue Service (Establishment) Bill. This bill is seeking to replace the current Federal Inland Revenue Service. Our major reason is because the Federal Inland Revenue Service is not the revenue agency of the federal government.

    “So the name that we have for FIRS today is inconsistent with its mandates. The taxes that FIRS collects are shared. So we believe that a better name for the FIRS will be the Nigeria Revenue Service.

    “But beyond a name change, we also believe that the FIRS needs to be able to connect with other agencies of government collecting revenue so that taxpayers will not have the opportunity to explore loopholes because of information asymmetry.

    “For example, if I import goods and I need to pay duties, I have a selfish interest to under-declare the goods so that I do not pay the right amount of duties. On the other hand, when I’m submitting my returns to the FIRS, I have another interest to overstate my expenses so I can reduce my profits and not pay taxes.

    “This is happening in Nigeria today and sometimes we never find out. If we do, it takes years. We’re saying, why can’t we connect all the systems together? Why can’t we even connect the system at the center with the sub-national?  In the United States of America that we like to refer to for a good federalism or federation, you pay federal income tax and you also pay state income tax.

    “If you file your returns with the federal, it replicates immediately to the states. So by connecting together, we have not in any way compromised our federalism. We have strengthened it because now we have more information accessible to governments at all levels to carry out their mandates.

    “The last one is a joint revenue board establishment bill. This bill is trying to replace the current joint task force to become the joint revenue board. Why is that important? The joint task force that we have today was and we say to just only help us with personal income tax matters.

    “But what we now know today is that the issues we are dealing with go beyond personal income tax. In fact, those issues go beyond taxes to broader revenue matters. So therefore, we think that a better name is joint revenue board.

    “In addition to that, we are expanding the scope of that joint revenue board to help us ensure that there’s harmonization across Nigeria, to help us ensure that there’s collaboration between tax authorities because we are stronger together, to ensure that we can share information, that we can build capacity together, that in fact it is possible for us to do audits together. Why can’t federal and a state decide to audit a company at once?

    “Sit down there as a group of people who are working for Nigeria. You reduce the cost of doing audits, both for the government as well as for the taxpayer.

    “Another thing that we have on this fourth bill is a tax appeal tribunal. This tax appeal tribunal today is established under the federal revenue service establishment Act and that gives the impression that the tax appeal tribunal is only a federal matter. We leave out our taxpayers whenever they have disputes with states and with local governments.

    “We believe that it’s better to set up this tribunal in a way that it can deal with all tax disputes across Nigeria and therefore is appropriate to set up this body under the joint revenue board establishment bill.

    “The third very important element of this fourth bill is the setting of the Tax Ombudsman Office. Today in Nigeria over 30 million small businesses do not understand the taxes they need to pay because they don’t need to be finance experts before they can do their small business.

    “They do not have the resources and the means to hire accountants and lawyers or tax consultants. Therefore when they are faced with tax assessment from the tax authorities they are left out in the cold. They have only two options.

    “One option is to fight a fight that they can never win. The second one is to negotiate and sometimes when they negotiate they are made to pay taxes under the table. They are meant to pay more than they’re supposed to pay.

    “There’s nobody to protect them. We believe that setting up the office of the tax ombudsman will provide the opportunity for us to protect our taxpayers particularly small businesses and vulnerable taxpayers.

    “As a result of following what I’ve just given as overview of all the four Bills, I will quickly go to each of them without wasting your time because I do understand how precious your time is.”

    “Today, our tax laws come in the way of you restructuring your business to be efficient. It’s almost like a crime for you to want to restructure your businesses to be efficient. We believe we must address that to allow businesses to operate efficiently.

    “The more efficient they are, the more value they can create. The more value they create, the more taxes they can pay to the government.

    “Last but not least, the important highlight on this Nigerian tax bill is that our small businesses are overburdened with taxes. They have to do PAY, they have to do VAT, they have to do withholding tax, companies income tax, an endless amount of levies and charges, particularly at the local government level.

    “We believe that it is time for us to create a threshold that is high enough to protect the small businesses. Our proposal before the National Assembly is that any business that earns 50 million Naira a year or less should not be asked to carry the burden of taxes here and there. Because our data shows that out of the informal sector and small businesses, SMEs, only about 3% of them are capable of carrying the tax burden. And this 3%, if we do it well, is in fact more than the number of people that are active in the tax system today.

    “In other words, we are attempting to tax everyone, yet we are not making progress. What other countries do is to target their top heads who have the ability to pay, put all your efforts on them, and you begin to see the result that is transformational in terms of your revenue. So we also have this proposal before you to protect our small businesses.

    “On the next slide is the analysis I just spoke to in terms of how we identify the essential consumption by the Nigerian people. For example, the average household in Nigeria today spends 52% of their income just to eat. The lower you go down the ladder, the higher that percentage is.

    “So we do not think that anybody should have to suffer hunger because of taxes. So I’ll leave that slide and speak to an issue that has been very, very hotly debated since these bills have been presented to the National Assembly. And that is to do with the revenue sharing formula for VAT.

    “And if you permit me, I’ll spend a minute or two just to give some background. In 1986, the military introduced the sales tax decree, and it was collected by states across Nigeria.

    “Five years, they did not make progress. In 1991, the military set up a committee and asked the committee, help us look at why is the sales tax not working? Should we be considering VAT? Because at that time, more than once, the military introduced the VAT decree.

    “And in 1994, the implementation commenced. By 1999, when we got into the Fourth Republic, we needed a constitution. If you read the constitution of 1999 and 1979, they have a lot of similarities. We believe that the 1999 constitution, because it was fashioned after the 1979 constitution, they did not remember to put VAT in the 1999 constitution because in 1979 there was no VAT.

    “Because VAT has not been mentioned specifically in the 1999 constitution, and we have seen judgement, even as recent as last week, about gaming, lottery, that says it has to be house of assembly of the states.

    “Before then, we had monohospitality and tourism. It also says the Supreme Court said it is the states. That is why Rivers State went to court. Lagos State has been to court on VAT and they have warned that VAT should be taxed on the states. But the final appeals at the Supreme Court, a final determination has not been made.

    “We see danger that if we wait for the court to tell us the answer to this problem, that answer will create chaos for us.

    “Number one, every state will collect less than half of what they are getting now. Number two, businesses will struggle because you bought something in Kaduna and you are selling it in Ekiti.

    “They will not allow you for the input. And the more the cost piles up, the more businesses will struggle. In addition to that, in the US today, United States of America, they do sales tax and it is collected by states.

    “But the states cannot collect sales tax on imports or international services because that is the exclusive preserve of the federal government.

    “If states should begin to collect VAT today, they will not be able to collect import VAT. Import VAT and international VAT is about half the VAT we collect in Nigeria today. If anybody could benefit at all, it would be the Federal Government.

    “We believe that the right solution is for us to address the concerns that those states have so that we can have a political solution to this problem rather than the one that says let’s wait for the Supreme Court.

    “Therefore, we looked at the current formula for sharing VAT and it says federal government should take 15%, the state should take 50% and local government should take 35%.

    “That is the vertical distribution. But amongst the states, which is the horizontal distribution, it says at least 20% of the VAT revenue should be on derivation. The derivation for VAT is not the same thing as derivation for oil and gas. Every single state in Nigeria has derivation of VAT.

    “When a state awards contracts for the infrastructure, there is VAT. That is derivation. When any business invoices for goods, that is derivation.

    “But that derivation today is lopsided in favour of legal states because legal states are where the head offices of major companies in Nigeria are located.

    “Today, VAT is attributed to the state where the VAT is paid to the government. For example, the largest VAT payer in Nigeria is MTN, followed by Dangote. When MTN remits VAT in Lagos, they are remitting VAT on all the calls that are made in Nigeria.

    “Why is that credit given to only legal states? We believe that’s lopsided. If Dangote sends cement across Nigeria to their distributors, Dangote’s head office in Lagos, they will pay VAT in Lagos. All the VAT on Dangote cement, BUA cement, Lafarge cement, are credited to Lagos.

    “We said the number one problem we must solve is to correct this lopsidedness of how VAT is attributed to states.

    Our proposal before you is that going forward, if we have your approval for the bills, every state will receive credit for the consumption within their territory.

    “MTN will tell us these are the states where they made calls, and they can tell us from their masts. They have equipment. If I call here now, the call cannot go through until it connects, so they know where I am, I’m making a call.

    “When Dangote does not sell one bag of cement to retailers, they send it to their distributors. Their distributors have addresses that can be tracked to states. So Dangote can tell you, I’ve sold 10 million bags of cement, and I sold one million in Kaduna, 10,000 in Ekiti.

    “They can give you that information. So every state will get credit for the economic activities within their jurisdiction. We believe that once that correction has been done, we should then allow states to keep more of the economic activities that they have generated within their jurisdiction.

    “One, because it is fair to do so. Number two, to discourage any state from going to the Supreme Court to get a judgement that they want to administer VAT on their own, which is not what we want.

    “So this is the summary of the proposal we have that is creating a lot of debate, but we do appreciate those debates, but we believe and we appreciate and we are grateful for this opportunity to explain the reason for our proposal to the Nigerian people and of course to this Distinguished Senate.

    “I will take a few of the other important provisions in those bills that I haven’t explained. One of which is Personal Income Tax and like I said in my opening remarks, today we are taxing people that earn 30,000 Naira a month. That’s 1,000 Naira a day.

    “How can anybody survive earning 30,000 Naira a month, even if they live alone? They will do transport, they will buy food, they will pay rent, they will pay electricity. They cannot survive.

    “So we are proposing in the bill before you that anybody earning 800,000 Naira per month, including an extra N200,000 for rent, about N1 million a year, should not pay personal income tax.

    “By the way, this threshold is not even the highest in Africa. It’s still lower than many small African countries, but it’s a good start for us to show that we are considerate of our poorest people.

    “In addition to that, people who earn about 1.5 million Naira a month and less than that will see a reduction in their personal income tax bill because it’s hard for everybody.

    “We need to protect even the low-middle-income earners. These proposals, if approved by the Senate, will reduce the tax on 90 per cent of our workers, both in the private and the public sector, and it will exempt more than 30 per cent of our citizens who earn minimum wage of around 50,000, 60,000, 70,000 Naira.

    “Then the remaining 10 per cent who are not so poor will now pay a little bit more. The top rate today is 24 per cent in the long, and we are proposing it goes to 25 per cent.

    “We are doing some other reforms around allowances and relief. So effectively, if somebody earns 100 million Naira a month, clearly not in 4%, the maximum they will pay even on that approval side is only 25 per cent.

    “If they were in South Africa, they would be paying 41 per cent. If they were in Kenya, they would be paying 35 per cent. Of course, if they were in the UK or the US, they would be close to 40 per cent, but we are doing only 25 per cent. One other reason why we believe it is important to adjust that rate for high-net-worth individuals is to encourage formalisation.

    “Today, if I’m doing a business, and I call it Taiwo Enterprises, I do not register with CAC, and I’m honest to pay my taxes, the maximum personal income tax I will pay is 90%.

    “If I make a mistake to register that as a company the following day from next year, my company income tax is more than 40 per cent. We are trying to correct this so that businesses will be encouraged to formalise their businesses.

    “When they formalise their businesses, they open the door for growth, and then because they grow, they pay taxes. The second bill is the Nigerian Tax Administration Bill. This is the bill that is seeking to set up a minimum standard for how we administer taxes across Nigeria, including harmonisation of our tax identity.

    “Today, someone like me can have about three identities in Nigeria. So for someone like me, I reside in Lagos. I do most of my work in the FCT, and I also have a number with joint task board. I have like three identities.

    “So we’re saying let’s harmonise it. Let Nigerians have their own identity. So we also, as part of this proposal for the Nigerian Tax Administration Bill, we are proposing that we use technology to administer taxes in a way that is efficient, and to be able to connect intelligence across Nigeria, so that if there’s anyone who is evading taxes, we can find out and if there’s anyone who is too poor to pay taxes, we can exempt them.

    “We also have provisions for exchange of information between and among tax authorities. We have proposals for tax reforms.

    “So if companies have overpaid their taxes, we should allow them to get a refund, so that they do not have to borrow at 30 – 40 per cent to pay government, instead of doing their businesses.

    “The third bill is the Nigerian Revenue Service Establishment Bill. This bill, as I explained earlier on, is trying to make the FIRS play its proper role as the revenue agency of the federation that collects money for the federation, and to then connect with other agencies as well as subnational in terms of tax intelligence, use of technology, capacity building, and collaboration and exchange of information.

    “The last bill is the Joint Revenue Board Establishment Bill. I already explained this bill. It’s trying to reform the Joint Tax Board to play a bigger role. It’s trying to set up the tax abatement tribunal in a way that can handle tax disputes across Nigeria.

    “Of course, taxpayers have the right to appeal to the court if they are not happy with the decision of the tax abatement tribunal, which the National Assembly has set up, but under a different framework.

    “And the last one is a tax ombudsman to protect our small businesses and vulnerable taxpayers. Our revenue must be organized in a way that is conducive and investment-friendly.

    “Our fiscal and tax policies must be purposeful and coherent, easy to understand and administer. Our laws must be enabling of businesses and dynamic, and governance must be simple and efficient.

    “I’ll conclude with our prayers to the Distinguished Senate and the National Assembly.

    “Our prayer is that our Distinguished Senators will go through these bills and help us consider the opportunity to come and explain, to be able to do so even to committees or any groups as the Senates may so decide.

    “We pray before the Senate that these proposals be favorably considered. Like I said, there are over 200 proposals trying to reform different areas of our tax system and the economy.”

  • National Assembly will pass Tax Reform bills, says Hon Jibrin

    National Assembly will pass Tax Reform bills, says Hon Jibrin

    …says Tinubu is giving his today for Nigerians’ tomorrow

    A member of the House of Representatives, Hon Abdulmumin Jibrin on Sunday declared that President Bola Ahmed Tinubu’s Tax Reform Bills will be passed by both chambers of the National Assembly.

    Jibrin’s assertion came barely 24 hours after the Northern Elders Forum (NEF) called on federal lawmakers from the region to kick against the Bills.

    Hon Jibrin who chairs the House of Representatives Committee on Housing and Habitat, gave the assurance while featuring as a guest on TVC’s “Politics Today” program aired on Sunday night.

    He said that President Tinubu, through the tax reform bills and other economic policies, is giving his today for Nigerians’ tomorrow.

    He said: “I have never had any doubt about the consideration and passage of the Tax Reform Bills. We will pass the tax reform bills.”

    He added that though wrong perception about the reform bills is very strong in the North where he comes from but sensitization on the merits and necessity for the reforms is being done to correct the wrong notions.

    “For those of us who have read through the bills very thoroughly, the aggregate of their advantages, far surpassed whatever perceived disadvantages by anybody or part of the country.

    “President Tinubu is not out for a battle on the bills just like the Chairman of the Federal Inland Revenue Service (FIRS), but for understanding their objectives and goals, which are all geared towards better revenue generation and distribution for economic survival of the country.

    Read Also: Reforms: Stay patient, hopeful in Tinubu administration, Renewed Hope GVTHC urges Nigerians

    “Yes, there may be contentious clauses in the bills, but that should not mean that they should be thrown away or not considered by the National Assembly.

    “Since the bills are already with us, the onus lies with both chambers to allow them pass through the required legislative processes which would pave way for amendment of contentious clauses, since they are not cast in stone in the first place.

    “As I said a couple of days ago in a similar programme like this, many of those kicking against the bills, have not read them but are just listening to wrong narratives being reeled out by some other people,” he said.

    He added that the fuel subsidy removal and floating of the Naira carried out by President Tinubu last year and the proposed tax reform, will transform the nation’s economy despite the hardships and pains being experienced by Nigerians.

    “President Tinubu, to me, is giving his today for Nigerians’ tomorrow through the courageous and long-term result-oriented reforms being carried out now,” he said.

  • Group calls for speedy passage of tax reform bills

    Group calls for speedy passage of tax reform bills

    The Parliamentary Monitoring Group (PMG) has called for the speedy passage of the tax reform bills.

    President of PMG, Dr. Adebayor Lion Ogorry, in a statement on Monday, called on both chambers of the National Assembly to give the bills speedy passage as it is a matter of urgent national importance.

    The pro-democracy organisation assured that the bills were designed to rescue the country from economic quagmire.

    It assured Nigerians that President Bola Ahmed Tinubu meant well for all segments of the country,

    Read Also; In defence of Wike on Abuja demolitions

    Dr. Ogorry urged President Tinubu not to be distracted in his quest to lift Nigerians out of hardship.

    He called on the National Assembly to consider the four Bills as their own contribution towards revamping the nation’s ailing economy.

    “We know it’s a very difficult time for every Nigerian, but the people in authority must stand up and be counted as partners in nation building and economic rejuvenation. The President must not be distracted, he must remain focused in his quest to liberate Nigerians from the economic quagmire.

    “Members of National Assembly should not listen to any distractions. They should give these Bills accelerated passage. There’s no other matter of urgent national importance like the state of our economy and anything done to salvage it, is not only commendable, it’s godly,” he said.

    The PMG said that President Tinubu was on the right track to reposition Nigeria amongst the economic viable nations.

    On the general principles of the Bills, Dr. Ogorry said, “The bills propose lowering income taxes for low-income earners and completely eliminating them for those in the minimum wage bracket.

    “It will reduce companies’ income tax from 30 per cent to 25 per cent and give tax relief for loss-making companies. The bills also seek to eliminate so-called nuisance taxes, streamline tax heads, make tax administration modern, simple, adaptive, and become a growth enabler,” he said.

    Recall that President Tinubu recently proposed four Bills seeking to reform the taxation system and tax administration in Nigeria.

    The Bills – the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill and the Joint Revenue Board Establishment Bill, are currently before the National Assembly as executive Bills.

    They stemmed from the recommendations of the Taiwo Oyedele-led Presidential Committee on Tax and Fiscal Policy Reform, inaugurated in August 2023 by Tinubu.

  • Tax reform bills will stimulate economic growth – Reps Deputy spokesman

    Tax reform bills will stimulate economic growth – Reps Deputy spokesman

    The Deputy spokesman of the House of Representatives, Philip Agbese (APC, Benue), said on Tuesday that the tax reform bills before the National Assembly will stimulate the nation’s economy and ensure a smooth take-off of a new tax administration devoid of multiple taxation.

    The four tax reform bills presented to both Chambers of the National Assembly on September 3 for consideration and passage have generated lots of controversy with the National Economic Council(NEC) asking the President to withdraw them to allow for more consultations.

    But the Presidency said that the bills products of the Presidential Committee on Fiscal and Tax Reforms headed by Taiwo Oyedele should be allowed to go through legislative process, saying there was no need to withdraw them as stakeholders have an opportunity to make their inputs during the public hearing.

    The bills are the Nigeria Tax Bill 2024, is expected to provide the fiscal framework for taxation in the country, the Nigeria Tax Administration Bill, which will provide a clear and concise legal framework for all taxes in the country and reduce disputes, the Nigeria Revenue Service Establishment Bill, which will repeal the Federal Inland Revenue Service Act and establish the Nigeria Revenue Service, and the Joint Revenue Board Establishment Bill, which will create a tax tribunal and a tax ombudsman.

    Speaking with Assembly correspondents in Abuja, Agbese said he is convinced the tax reform bills will stimulate the economy if passed into law and implemented.

    He said, “I am one of the strongest advocates of President Tinubu’s tax bills because I am a reformer and believe in changes that would better the country. I have studied the document and I’m convinced beyond every reasonable doubt that it will no doubt, help to improve the economy of the nation.”

    He informed he is lobbying his colleagues to draw attention to the importance of the bills,  adding that if implemented, the proposals “Will not only benefit Benue State where I come from, it will also benefit everyone that generates taxes and does so dutifully.

    Read Also: Ndume, Shehu Sani differ on Tax Reform Bills

    “Those who are afraid are doing so because they fear accountability and transparency. These bills will bring about consciousness to tax-payers and once people become conscious of what they pay to the government and what the government earns; they can be assured that there will be a higher demand for accountability,” he said.

    Agbese called on the 36 Governors to rethink and support the Federal Government, adding that across the sectors of the economy, there are complaints of over-taxation while a significant number of people doing business are not remitting taxes to the government.

    “Everyone talks about nations that render social services to their citizens. Those citizens pay their taxes when due. The truth is that in the past few years, many Nigerians have raised the alarm of multiple taxation and this is partly what these proposed reforms intend to address.

    “Again, some companies are operating in this country that are taking advantage of the gaps in our tax laws to evade taxes. This has resulted in huge revenue loss to the government and needs to be addressed. It is on this note that I humbly plead with our respected state governors to support these bills because, in the end, Nigeria will be the ultimate beneficiary,” he added.

  • Ndume, Shehu Sani differ on Tax Reform Bills

    Ndume, Shehu Sani differ on Tax Reform Bills

    Sen. Mohammed Ndume (APC-Borno) and Sen. Shehu Sani have differed on the President Bola Tinubu’s proposed Tax Reform Bills before the National Assembly.

    Ndume, a former Senate Chief Whip, in a statement in Abuja on Monday, described the bills as ‘ill-timed’, given the economic challenges Nigerians are currently facing.

    “The general thing is that Nigerians are not willing to talk, hear or pay any tax now considering the situation we have faced because this is the government of the people.

    “Right now, people can’t even afford what to eat. People are struggling to survive. Let people live first before you start asking them for tax,” Ndume said.

    Read Also: How Tax Reform Bills will boost revenue for tiers of govt, by panel

    For Sen. Shehu Sani, who represented Kaduna Central Senatorial District in 2015 to 2019, the bills were not inimical to the wellbeing of Nigerians.

    “For instance, there is a provision where companies are to pay value added tax to the host state instead of sending it to a single account that would be shared among the 36 states including the Federal Capital Territory.

    “It’s in fact economically beneficial and fair to all parts. People should keep aside sentiments and read the bills carefully.

    “It’s a comprehensive and bold move to harmonise and simplify tax administration and streamline its operations and enforcement.

    “The bill will actually generate and safeguard more revenue for the country and the states.

    “It will also combat the corruption in the so-called tax waivers granted to business cabals. There is nowhere in the document where any region will be short-changed or taxes will be increased or jobs will be lost,” he said.

    Sani, who is also a civil rights activist, said that the reform would create a paradigm shift from the outdated tax system to a robust way of generating revenue for the nation.

    Tinubu had forwarded an executive bill to the National Assembly in October, urging lawmakers to consider and pass four tax reform bills.

    They include the Nigeria tax bill, Nigeria Revenue Service Establishment Bill, the Tax Administration Bill and the Joint Revenue Board Establishment bills.

    (NAN) 

  • How Tax Reform Bills will boost revenue for tiers of govt, by panel

    How Tax Reform Bills will boost revenue for tiers of govt, by panel

    • Payment consolidated

    • The rich to pay more

    • VAT favours states, councils

    The prospects of the tax reform proposed by the President Bola Ahmed Tinubu’s administration were brought to the fore at the weekend by the panel.

    Chairman, Presidential Fiscal Policy and Tax Reform Committee, Mr. Taiwo Oyedele, whose recommendations gave birth to the four bills before the National Assembly, gave an insight into the advantages of the proposals. 

    President Tinubu last month forwarded the Executive Tax Reform Bills for legislative consideration.

    However, governors and traditional rulers from the North requested for its withdrawal, claiming that a portion of it is not in their region’s interest.

    The National Economic Council (NEC) supported the North’s position asking for wider consultation.

    But the president rejected the advice, saying the National Assembly is the place for those who have misgivings to ventilate their feelings.

    At the weekend, Oyedele said Nigeria’s tax laws are obsolete and irrelevant to modern governance.

    He said some of the laws dated back to 1939.

    Oyedele insisted that if passed, only the rich  will pay more while the consolidation would create ease of payment, adding that more money will be made available to all tiers of government.

    He insisted that the reform is not discriminating but inclusive.

    Oyedele said the tax reform promises a significant boost in revenue, particularly for states outside Lagos, where many large corporations have historically been headquartered.

    Oyedele pointed out that some of the opposition to the bill  stemmed from a misunderstanding of the bill’s provisions.

    He clarified that the VAT law resides within the Nigerian tax bill, while the adjustments to derivation are contained in the tax administration bill.

    Read Also: ‘Lakurawa’

    “Somebody picked one leg of it, didn’t find the second one, and then concluded that this was going to be against the law. This is to benefit everybody,  he explained. .”

    According to him, the VAT reform, for instance, aims to shift the focus of tax revenue to reflect economic activities occurring across all states, rather than centralising it around states where companies are headquartered.

    He explained that under the new model, the allocation of VAT will be based on where goods and services are consumed, rather than solely where they are produced.

    “Rather than saying that because the company producing the beverages is headquartered in Lagos, that’s where we derive all the VAT revenue from  Nigeria, we’ll say, where did you send them to? The ones you sent to Ekiti, to Zamfara, to Kebbi, to Abia—let them take credit for their economic activities,” Oyedele said.

    “Everyone should be excited about that apart from Lagos State. We believe it’s a fairer approach,” he added.

    The proposal to decentralise VAT allocation addresses long-standing concerns about revenue fairness among states, which has led to calls from regions across Nigeria for reform.

    The current VAT sharing formula distributes 20 per cent of VAT revenue based on derivation, 50 per cent based on equality, and 30 per cent based on population.

    Under the proposed model, however, the Bill recommends a formula that would attribute 60 per cent based on derivation, 20 per cent based on population, and 20 per cent based on equality.

    This adjustment aims to ensure that states that prioritise economic activities and consumption directly benefit from these contributions.

     To further incentivise states, the Bill proposes that the Federal Government reduce its share of VAT from 15 per cent to 10 per cent, allowing for an additional five per cent to be used as a fiscal equalisation buffers for states.

    “This guarantees every state that as a result of our reform, they will not collect less than they would have under the old formula,” Oyedele assured.

    “The upside is significant—your VAT revenue could double in less than two years if this reform is implemented, he stressed.”

    Oyedele noted that the redistribution would also encourage state governments to take a vested interest in their economic growth.

    He said with higher potential revenue based on local economic activities, states are expected to have a stronger incentive to support small businesses, promote investment, and reduce informal trading to broaden their tax base.

    Efficient, equitable, capable

    Oyedele spoke extensively on the vision and strategic direction behind Nigeria’s tax reform efforts.

    According to him, these reforms aim to streamline Nigeria’s tax framework, making it more efficient, equitable, and capable of driving sustainable economic growth.

     Oyedele explained the essence of these reforms, saying: “So, there are four bills, but in fact, one of that, the Nigeria tax bill, is also a bill that has now harmonised about seven, eight different tax laws. Seven, eight different tax laws? Companies’ Income Tax Act; Petroleum Profit Tax Act; Personal Income Tax Act; Capital Gains Tax Act; Stamp Duties Act; Excise Duty Tax, and VAT.”

    The decision to unify these tax laws under a single legislative framework, according to Oyedele, stems from the realisation that the current fragmented structure complicates compliance.

    He asked a rhetorical question that underscored the rationale for this unification: “Why should it be so complicated to find out my tax obligations? Why don’t you pull all of that together in one piece of legislation and find commonality?”

    Oyedele emphasised that the objective is not merely to create a single, consolidated tax bill, but also to simplify the language of tax legislation, making it accessible for every Nigerian.

    “It’s already hard to pay tax. It shouldn’t be harder than trying to find out how much you pay. So, while there are four bills, you could actually say, in principle, maybe there are about 12, 15 bills that would be compress into four,” he said.

    In addressing Nigeria’s myriad “nuisance taxes”—taxes that are low revenue-yielding and administratively burdensome, Oyedele stressed the need to eliminate them.

    His solution is a tax system that is “broad-based, high revenue-yielding, easy to collect, and hard to evade.”

     He noted the inefficiencies in the current tax framework by pointing out how some companies manipulate returns for personal gain, avoiding full tax responsibility.

    Oyedele warned that “this is something that should not happen in 2024.”

    Through this reform, the committee envisions a more robust tax intelligence network that allows tax authorities to collect taxes efficiently while allowing businesses to focus on their primary roles.

     Oyedele said: “Let the authorities that have been trained on tax matters collect taxes, let the rest of us focus on getting our jobs done in terms of our primary mandates, and watch the economy grow in a way that benefits everyone.”

    Oyedele reflected on the inevitable resistance to these changes, noting: “When you do reforms, you’re going to step on interests. You’re going to change things. People don’t like change because it’s uncertain. They don’t know what’s going to come.”

    However, he insisted that continuing with the status quo was not an option, especially in a country where inflation erodes purchasing power at alarming rates.

    The overarching goal, as Oyedele noted, is to create a tax system that serves the public good. “Why don’t we have an orderly restructuring of the system so you can protect the poorest people, small businesses, and those who are not so poor can then pay a little bit more? And then we follow the money to ensure that the money is used for the purpose of the people. That’s really what these reforms are all about.”

     Oyedele shed light on the historical and structural context of VAT in Nigeria and the ongoing reform efforts aimed at addressing issues of derivation and equitable revenue sharing among states.

    Giving the history of VAT In 1986, he said: “The military introduced a decree on sales tax, and it was to be collected by states.

    “Five years later, they weren’t making progress. So, in 1991, the military set up a committee to say, ‘Why is this sales tax not working? Maybe, we should consider VAT.’

    “The committee concluded in 1993 that VAT would be a better tax to collect since it doesn’t create inflation like sales tax does, where any time you pay it, you can’t recover it, whereas VAT can be recovered as value is added.”

    Oyedele explained how the decision was made to centralise VAT collection, allocating 15 percent to the Federal Government, 50 percent to states, and 35 percent to local governments.

    However, when the 1999 Constitution was adopted, it replicated the 1979 Constitution without recognizing VAT, creating a loophole that led to legal disputes over who should control VAT collection—a problem at the heart of recent litigation by Rivers and Lagos States.

    Oyedele added: “If we get a judgment from the Supreme Court today, saying VAT should be collected and administered by states, that would be chaotic. That would take us back to 1986. States would collect less, businesses would suffer, the economy would retrogress. We don’t want that.”

    The controversy centers around where VAT should be derived—where companies file returns or where consumption occurs.

    Oyedele illustrated this with the example of businesses headquartered in Lagos, such as beverage companies, that distribute their products nationwide but currently file VAT returns in Lagos, thus crediting the state with a larger share than it should proportionately receive.

    He said: “That VAT that is remitted in Lagos is attributed to Lagos as being derived from Lagos. But it’s not derived from Lagos. When you make calls, it’s derived from across Nigeria. That’s why we thought we should move away from where VAT is remitted to where the consumption takes place.”

    To create a more balanced system, Oyedele and his team proposed changes to how VAT is shared, with a focus on correcting distortions in derivation and increasing incentives for states to drive local economic growth.

    He proposed an allocation model of 60 percent based on derivation, 20 percent on population, and 20 percent on equality.

    Also, Oyedele urged the Federal Government to reduce its share from 15 percent to 10 percent, creating a five percent buffer for fiscal equalisation, guaranteeing that no state collects less than it would have under the previous model.

     He attributed the opposition to the Tax Reform Bills in part to misunderstandings within the National Economic Council (NEC) and the Governors Forum, where he observed misinterpretations stemming from incomplete information.

    He clarified that the reforms aimed to benefit all states, urging stakeholders to consider the comprehensive framework, which separates the tax administration bill from the Nigerian tax bill, ensuring equitable, streamlined, and growth-oriented VAT revenue for Nigeria’s states.

    Why change of FIRS to NRS

    Oyedele said the Federal Inland Revenue Service (FIRS) should ideally serve as a revenue agency for the entire federation, rather than solely the federal government.

    Thus, renaming it to the “Nigeria Revenue Service” would better reflect this unified role. Initially, options like “Federation Revenue Service” were considered, but ultimately, a simpler name was preferred.

    He also noted the inefficiency of having over 60 federal agencies (and many more across states) collecting various taxes and levies, a practice uncommon in both Africa and globally.

    To streamline operations, Oyedele and his team advocated for a single, centralized agency to handle all tax collection, allowing other government agencies to focus on their core mandates, such as regulation, rather than tax collection.

    The Bills recommend that agencies like the Nigeria Upstream Regulatory Commission, which collects royalties from oil companies, should solely regulate the sector instead of collecting taxes. Similarly, Nigeria Customs Service could shift its focus from revenue collection to trade facilitation and border security, as seen in countries like the United Kingdom, South Africa, and Kenya, where centralized revenue authorities manage all tax collection.

    This consolidated approach, Oyedele argued, would not only improve efficiency and transparency but also enhance capacity for data and intelligence gathering.

    He said by centralizing tax collection, Nigeria could better track and manage revenue, reducing under-declaration and tax evasion while simplifying the process for taxpayers.

    Oyedele said under the proposed reforms, tax collection in Nigeria would involve a unified and cooperative approach, with the Nigeria Revenue Service (NRS) playing a central role.

    Also, while states will continue to collect their own taxes, the new bills proposes a framework for stronger cooperation among tax authorities at all levels—state-to-state, center-to-state, and even with local governments.

    The collaboration would focus on sharing data, enhancing tax intelligence, and building capacity, which Oyedele believes will transform the tax system.

    Currently, it’s easy for individuals to avoid proper tax payments by shifting between jurisdictions; for example, claiming residency in Lagos while primarily working in Abuja.

    By establishing a unified system through the NRS, all internal revenue services across Nigeria would be connected. Whether an individual or business operates in Abuja, Kogi, or any other state, their tax activities would be reflected on the centralized system. This would also involve linking with the Nigeria Customs Service, allowing customs-administered taxes to flow seamlessly into the unified system, further ensuring accurate and efficient tax administration across the country.

    Why Bill can’t be withdrawn

    A key issue is the limited time available. If the bill is withdrawn, it would take at least six more months to reintroduce it to the National Assembly—a delay that could negatively impact essential provisions, such as tax exemptions for low-income earners and small businesses and reduced corporate tax rates for larger firms to encourage investment.

    Oyedele emphasized the need for this bill to stimulate economic activities, including boosting exports, and argued that the stakes are too high to risk delay.

    Oyedele also expressed strong reservations about the possibility of the tax reform bills failing to pass. He underscored the high stakes, noting that this unique opportunity—backed by unwavering support from the highest levels of government—might not come again.

    The Nigerian tax system, he argued, has long lagged behind global standards, relying on outdated laws such as the 1939 stamp duty law, which no longer meets the country’s needs.

     Oyedele said failure to enact these reforms would be a major setback, not only in updating antiquated laws but also in transforming the entire tax landscape to foster economic progress.

    He voiced optimism, however, that through collaboration, remaining differences could be resolved, allowing the bills to proceed and usher in long-overdue modernization of Nigeria’s tax framework.

     Pushing tax revenue to GDP

    The Tinubu administration plans to increase tax-to-GDP ratio to at least 18 percent within three years. That is one of the reasons government established the Oyedele panel, which culminated in the report that brought about the Tax Reform Bills.

    The reforms are intended to: digitize revenue collection; create a more competitive business environment and reduce the burden on the public by streamlining the number of taxes and levies.

    Nigeria’s tax collection rate is currently one of the lowest in the world, at around 10.8 percent of its GDP. The government has identified multiple taxation as a major obstacle to the growth of small and medium-sized enterprises (MSMEs).

    The tax-to-GDP ratio is a measure of how much of a country’s GDP goes toward government funding. It’s used by policymakers to compare tax receipts from year to year.