The Senate is poised to pass the contentious Tax Reform Bills today, which will exempt Nigerians earning less than N1 million per year from income tax. This decision comes after many lawmakers, who initially opposed the bills, shifted their stance following explanations from key federal tax officials.
Sources within the National Assembly revealed to OBSERVERSTIMES that prominent figures such as Tanimu Yakubu, Director-General of the Budget Office; Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service (FIRS); and Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, have played a crucial role in clarifying the benefits of the proposed reforms.
The proposed legislation aims to relieve low-income earners from the tax burden, specifically targeting individuals earning up to N1 million annually, which includes an allowance for rent. “Currently, we tax those earning N30,000 monthly, a sum that barely covers basic living expenses,” one official stated, emphasizing the need for reform. The new threshold is not unprecedented, as it remains lower than tax exemptions in several smaller African nations.
The tax reform package comprises four bills: the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill. These pieces of legislation aim to consolidate and modernize Nigeria’s tax framework, streamline tax administration, and enhance efficiency. The reforms are designed to support low-income earners and small businesses, positioning them as pro-poor, pro-growth, and pro-efficiency.
Lawmakers have been urged to back the bills to drive the nation’s progress. These reforms follow President Tinubu’s submission of the bills to the National Assembly on September 3, 2024, based on recommendations by the Presidential Committee on Fiscal and Tax Reforms led by Taiwo Oyedele.
The Nigeria Tax Bill 2024 is set to establish a comprehensive fiscal framework, while the Tax Administration Bill will provide a clear legal structure for all taxes, reducing disputes. The Nigeria Revenue Service Establishment Bill seeks to replace the existing Federal Inland Revenue Service Act, and the Joint Revenue Board Establishment Bill will introduce a tax tribunal and ombudsman.
The tax executives, who appeared before the legislators, yesterday said among others that the bills were to tax prosperity and not poverty and that those earning less than One Million Naira a year would be exempted from income tax. They also said sharing of Value Added Tax, VAT, which favours states like Lagos, will be reviewed and made more equitable
Deputy President of the Senate, Senator Barau Jibrin (APC, Kano North) said when he presided over yesterday’s plenary session that debate on the tax bills will continue today.
They said contrary to what some mischievous persons are pushing out, they are meant to radically transform tax administration in Nigeria for greater efficiency, adding that the bills will update archaic tax laws and simplify Nigeria’s complicated tax ecosystem.
Apart from these, they said the tax reforms clearly favour low income earners and small businesses, which will be exempted from paying income taxes and the bills are simply pro-poor, pro-growth and pro-efficiency.
They, therefore, urged the senators to support its passage in order to move the country forward.
Recall that on September 3, 2024, President Tinubu transmitted four tax reform bills to the National Assembly for consideration, following the recommendations of the Presidential Committee on Fiscal and Tax Reforms headed by Taiwo Oyedele for the review of existing tax laws.
Previously, the National Economic Council (NEC), chaired by Vice President Kashim Shettima, recommended that the bills undergo broader consultation. However, President Tinubu later advocated for the legislative process to proceed, allowing for public input during hearings. The passage of these bills marks a crucial step towards overhauling Nigeria’s tax system and fostering sustainable economic growth.
