The Federal Government has stated that the controversial tax reform bills currently before the National Assembly aim to ensure fairness, equity, and justice for Nigerians.
This announcement came on the same day that civil society organizations (CSOs), led by the Civil Society Legislative Advocacy Centre (CISLAC), urged the government to create a fair and inclusive tax system that aligns fiscal policies with equity and economic stabilization.
At a briefing in Asaba, Delta State, on World HIV Day, Security Awareness, Discouraging the Get Rich Quick Syndrome, World Human Rights Day, and Tax Reforms, the Director-General of the National Orientation Agency (NOA), Mallam Lanre Issa-Onilu, explained that the proposed bills are designed to eliminate over 50 nuisance taxes affecting local businesses.
Issa-Onilu added that under the reforms, VAT would no longer be calculated based on a company’s headquarters but on where the goods are consumed. He emphasized that the reforms aim to reduce the burden on hardworking Nigerians while ensuring a fair contribution from all.
Represented by the Director of General Services in NOA, Mrs. Rebecca Nasamu, Issa-Onilu outlined that the tax reform bills consist of four distinct pieces of legislation: the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
Issa-Onilu said: “The Nigeria Tax Bill is where all major taxes imposed on individuals and companies are clearly stated as well as the rates. The bill is just like a compendium of taxes charged in Nigeria.
“The Nigeria Tax Bill, basically amalgamated all the existing laws in which provisions for taxation was made. When passed, the bill will lead to the repeal of 11 laws that contain provisions on imposition and collection of taxes.”
On how the tax reforms would benefit Nigerians, he said government was working to stop different levels of authority from taxing people for the same thing and ensuring that those “earning very little pay little or no taxes, helping them manage their finances better.”
He said new digital systems were being introduced to make tax payments easier and more accountable, stressing that “by supporting this effort, we can create a tax system that works for all and funds the development projects that will improve our nation.”
Meanwhile, CSOs in a communique issued at the end of the national tax conference in Abuja yesterday,
called on the federal government to build fair and inclusive tax system that reflects alignment of fiscal policies with equity and economic stabilization.
The civil society organizations (CSOs) in attendance included Oxfam Nigeria, ActionAid, ChristianAid, the Nigerian Labour Congress (NLC), International Budget Partnership (IBP), Centre for Democracy and Development (CDD), and the Civil Society Legislative Advocacy Centre (CISLAC). Government institutions present included the Federal Ministry of Finance and the West Africa Tax Administration Forum (WATAF).
The communiqué raised concerns about several key issues, including the timing of a VAT increase, which is seen as problematic given the current inflation rate exceeding 30%. There were also concerns about the level of stakeholder involvement in determining which items will be classified as essential or non-essential in the proposed VAT reform.
Other issues highlighted were the need for data-driven evidence to support both the equity and benefits of the proposed VAT sharing formula among the different tiers of government, as well as the government’s responsibility to address Nigeria’s significant infrastructure gap. Additionally, there was a call for a review of the technical framework governing tax incentives and waivers to ensure they are effectively administered and contribute to the country’s economic development.
The communiqué concluded with a unified call for reforms that align fiscal policies with equity and economic stabilization.
“These recommendations underscore the collective effort needed to build a fair and inclusive tax system that fosters sustainable development and equitable growth for all Nigerians.
“The tax system be made more progressive to ensure that all taxpayers, especially big businesses and high-net-worth individuals pay their fair share of taxes.
“The proposed Personal Income Tax (PIT) rate risks eroding the relative gains from the minimum wage increase, as most low-income earners would exceed the N800,000 annual threshold. Rather than raising the rate for the second bracket to 15%, we recommend capping it at 10%, considering the inflationary pressures on the cost of living in Nigeria. This income group is already taxed at a 7% PIT rate when adjusted for the real value of their earnings. To offset the potential revenue shortfall from this adjustment,we propose increasing the rates for the last income bracket (above 50 million Naira) to 26%.
“The Presidential Committee should make available to the public, detailed data on the current VAT compliance rate, highlighting challenges leading to underperformance, and proffering solutions for improvement.
“The National Assembly to ensure the passage of the sections of the proposed tax bill that aim to harmonise taxes and digitize tax administration. In anticipation of this, we urge the government to expedite the process of developing an effective implementation framework and ensuring its effective use.
“In collaboration with the Federal Inland Revenue Service, FIRS, the presidential committee should release a detailed framework outlining how VAT changes will be enforced, ensuring consistency and transparency across the system.
“Government should actively engage in public education and awareness campaigns to clarify the goals of fiscal reforms, focusing on fairness and equity.
“Provide platforms for wider citizens’ engagement in the reform process to ensure their concerns are addressed and integrated into final policies.
“A portion of the additional revenue should be redistributed to benefit the owner tax brackets and the most vulnerable populations (women, girls and persons with disabilities).
“Include clear indicators for tracking and monitoring gender inclusivity in the proposed fiscal policy and tax reform.”
“Advise against increasing VAT rates during a period of high inflation, as it may exacerbate
inflationary pressures and reduce the purchasing power of Nigerians.
“Review and expand the list of VAT exemptions to include all necessary items for basic living, such as energy sources (electricity, cooking gas, fuel) and food-related items, ensuring that they are accessible to all Nigerians.
“Tax expenditure should be subject to legislation to ensure cost effectiveness and established framework to monitor milestones.”
