The Federal Government of Nigeria has revealed that the controversial tax reform bills currently under review by the National Assembly aim to promote fairness, equity, and justice for all Nigerians.
Speaking in Asaba, Delta State, the Director-General of the National Orientation Agency (NOA), Mallam Lanre Issa-Onilu, highlighted the proposed measures during a briefing on diverse topics, including tax reforms.
Represented by Mrs. Rebecca Nasamu, Director of General Services at NOA, Issa-Onilu stated that the tax reforms would eliminate over 50 nuisance taxes affecting local businesses.
He noted that the reforms would also shift VAT calculations from the location of company headquarters to where goods and services are consumed.
According to him, the initiative is designed to ease financial burdens on hardworking Nigerians and ensure fair contributions from all citizens.
The tax reform bills include the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill. These bills aim to consolidate all taxation laws under a unified system, simplify tax administration, and repeal outdated legislation.
Civil society organizations (CSOs), such as CISLAC, ActionAid, and the Nigerian Labour Congress, have urged the government to build a fair and inclusive tax system.
In a communiqué issued at the National Tax Conference in Abuja, the CSOs raised concerns about several issues, including inflation, VAT increases, and inadequate infrastructure. They called for public engagement, clearer frameworks, and gender-inclusive policies in implementing the reforms.
The communique read: “The 2024 National Tax Conference concluded with a united 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.”
