Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, has stated that Nigerians earning minimum wage and slightly above will be exempted from the Pay as You Earn (PAYE) tax once the Tax Reform Bills are signed into law. Oyedele made this known during a Q&A session to educate Nigerians on the proposed tax law.
The new national minimum wage of N70,000 approved by President Bola Tinubu in July will benefit those earning N1.7 million or less as they will pay reduced tax under the proposed law. Oyedele clarified that individuals earning the new minimum wage and slightly more will be fully exempt from PAYE tax.
The current tax regime, established in 2011, has resulted in “fiscal drag” due to inflation pushing low-income earners into higher brackets. The proposed law aims to simplify the system while reducing the tax burden on workers, allowing most workers to pay lower taxes, with high earners paying slightly more in a progressive manner.
Additionally, the proposed VAT reform includes a zero rate for essential items like food, education, and health, benefiting low-income households. The bills also aim to facilitate remote work opportunities for Nigerians in the global economy, particularly in the digital space.
The Presidential Fiscal Policy and Tax Reforms Committee is focused on implementation rather than just making recommendations, distinguishing it from past committees. The tax reform bills in the National Assembly have faced opposition, especially from Northern elites, but seek to harmonize taxes and address the issue of tax multiplicity in the country.