- …why we expunged taxes on family income, inheritance from bills
The Senate has said that the passage of the four Tax Reform Bills now awaiting harmonization by the Senate and House of Representatives were aimed at the economic prosperity of the country by President Bola Ahmed Tinubu.
The Chairman Senate Committee on Finance, Senator Mohammed Sani Musa (APC-Niger East), made this assertion while answering questions from reporters after the passage of the Bills by the Senate last Thursday.
Musa also disclosed that the proposal to tax family income and inheritance in one of the Bills, which had generated heated debate, has been expunged from the Bills passed by the Senate.
He said the action became necessary to give every section of the country a sense of belonging.
Speaking during the press briefing on how the Senate passed the Bills, Musa said: “Mine is very short because the Senate has done justice to what a lot of people think is not going to be possible.
“What we have done between yesterday and today, we have passed the four tax reform bills.
“The Nigerian Revenue Service Establishment Bill, the Nigerian Tax Administration Bill, the Joint Tax Board Establishment Bill, and the Nigerian Tax Bill. We have passed all these four bills, in which all these four bills, in one way or the other, are interconnected.
“The objective of these bills is to streamline our tax administration, to make it possible that our taxes and operations meet international best practices.
“What we have done is to see that we are able to meet with the targets of our counterparts in the OECD (Organisation for Economic Cooperation and Development) and you can see the tax to GDP ratio in Nigeria, what it is today, compared to what it is in countries like South Africa, Kenya, and others.
“So what we did was to look at these tax bills and do the needful. These tax bills, when they were presented by His Excellency, the President of this country, President Asiwaju Bola Ahmed Tinubu, he brought them with one aim, and to see how there will be economic prosperity.”
He said while taxes maybe inadequate to develop a nation, they are an important segment in raising finances to develop a country.
“We all know taxes are not enough to develop a nation. But taxes are a very important segment to developing a nation, because without money, without prudence and justifiable source of any money or revenue, you will not be able to get to meeting all those appropriated projects,” Musa said.
On how the bills were passed despite initial opposition from some parts of the country, he said they ensured that all critical stakeholders, including religious leaders, were part of the process of amending the Bills.
“So we had a public hearing. After the public hearing, we had a retreat where we interacted with stakeholders and professionals.
“We had almost 76 organisations that attended all our engagements with them, and the Ulamas were not left out of it. The same thing with the Christian Association of Nigeria.
“The Islamic Sharia Council was well represented, and the League of Imams was represented, and civil society organisations, too.
“They presented their cases. The OPTS (Oil Producers Trade Section), operators of the oil and gas industries, were there. The export processing zones made their presentations, and we considered, after taking about a week of deliberations at the retreat, we sat and consulted with our consultants.
“After that, the committee now sat to come out with these bills, as proposed bills, which today they have been passed, and I believe that Mr. President will do justice to them.
“What we did in these bills, we have created the Nigerian Revenue Service with an executive vice chairman and a non-executive chairman, and we said the Nigerian Revenue Service would need not least six executive directors. The President said to me that they have 14 directors.
“But we feel, since we are trying to meet international standards, we should do it in the right way and we tried to build a kind of strong corporate governance because when you are talking about streamlining, when you are talking about a single window of taxes, revenue, levies, whatever you call it, coming into the purse of government, we need a very strong corporate governance.
“For that, we said the President needs to appoint a chairman and ex officio representatives who will be representing the various ministries that have to do with either the physical or the monetary aspect of the economy.
“We also went on to create the office of the Ombudsman, who, from time to time, will be advocating, arbitrating on issues of tax disputes.
“We also have the Tax Tribunal, where, when you are supposed to pay tax and you are not paying your tax, we know where to take you so that it will act.
“It’s not a court of record, but when the tribunal decides to act, and after acting you didn’t do the needful, then there will be cause to go to the Federal High Court and again, the tax tribunal, when in a set-up like Nigeria, a lot of people, when it comes to what is due to government, what is due as a tax, they take it with laxity. They don’t take their obligations,” Musa said.
He said the Senate considered the proposal on Value Added Tax and ensured that every part of the county was given a sense of belonging.
He said, “In the Nigerian Tax Administration Bill, we looked at the VAT and we also looked at the issue of the development levy, which has generated a lot of controversies. We also looked at the issue of so that at least to give every part of this country their fair share.
“We looked at the distribution of the VAT, and we felt VAT is a product of consumption. And when you are talking about derivation, you define derivation to be based on consumption.
“We now say the place of consumption should be what that derivation means. And that applies to the issue of VAT distribution, where the federal government is going to retain 10%, the state will take 55%, and local governments 35%. “
He added, “Again today, we did another thing. We looked at the development levy, and we retained what they brought, but reduced it by 10% from 60% to 50%, and we took 10% from that to security, defence infrastructure, which is very important.
“Every one of you knows how challenging it has been today on the matter of security, and we need adequate funding so that our men in the war fronts will continue to do the needful to return this country to a stable and peaceful nation.
“What we also did was that we gave NASENI 10% and NITDA 10%. NELFUND, the student loan, we gave them 15%. We gave cybercrime 5%, and then defence infrastructure, we gave them 10%.
“So I think these are the areas of contention and the issue of the OPTS, where they have been talking about the presidential order, the existing laws, they have not been in the PIA, all those areas have been adequately taken care of.
“The export processing zone, where we are expecting that there will be a kind of backward integration and then at the same time, if you are given a license to operate an EPZ, what is expected of you is to produce there and export, so that you’ll be able to raise foreign reserves.
“We need that foreign currency, but if you produce at a processing zone and decide to bring it in, you are creating a kind of competition that our local producers here would not be able to stand because you are not paying taxes while you are producing.
“So we now say, if you are going to bring in anything above 25%, you must be subjected to almost equal to, in terms of tax, equal to what you are bringing in.
“So I think also there, justice has been done. We have also looked at how we are going to coordinate the collection of these taxes.
“You all agree with me that there have been so many leakages. MDAs will collect revenue and keep it. Some will not even declare it.
“But now, with this Tax Reform Bill, we’ll be able to look at areas that will be able to use technology to get this revenue, at least reduce shortages to a minimum.
“And what is that? The single window. So I believe Nigerians will see something nice.
He said that President Tinubu deserves commendation for ensuring that the obsolete laws are amended and updated to meet current economic realities.
He said, “We must commend Mr. President for the vision. Some of these laws have been there for a very long time. So, what he has been able to do now, no matter what you think, no matter the resistance, there is no better time to do what we have done than now.
“I believe that Nigeria will prosper. I want to use this medium to commend the tenacity of the Senate President because he has been able to allow everyone to hear their voices. And we saw reason with some of them, and amendments were made where necessary.
“I believe we are going for harmonisation and at the end of the day, at the end of the conference, we are going to give Nigeria a document that also in the next 50 years, Nigeria will be so proud of it.
“I must tell you, I’m very proud of what we have done because we sacrificed. We did everything to the best of our ability, and I know that nobody can judge anyone, but God will judge us.
“If we do the right thing, he will see it. If we did not do it, by the time this document is out, you will be able to make your judgments.”
