MOST Nigerians are raising questions about transparency in the management of accruals from the proposed tax reform bills by President Bola Tinubu-led Federal Government, which have generated heated debate at the National Assembly.
The bills, which have now passed a second reading at the House of Representatives have faced stiff resistance from political heavyweights, mostly in Nigeria’s northern region.
On the flip side, the bills offer so much hope with regard to revenue improvement in the country but raise some transparency questions. Some analysts feared the gains might elude Nigerians as seen in the much-touted petrol subsidy removal by the Tinubu administration.
Most economic watchers who spoke with The ICIR expressed doubts that the revenue improvement promised by the bills might not impact much on providing governance deliverables to the masses.
“Tinubu is noted to be a tax master, but he has no credibility in accountability and transparency management of accruals from tax monies, “lead director, Centre for Social Justice (CSJ), Eze Onyekpere, told The ICIR.
Citing an example with subsidy removal, Eze said, “We all saw even partial removal of subsidy in the past and its impact. Whether it’s Abacha, we saw Petroleum Trust Fund, under Jonathan we saw Subsidy Reinvestment and Empowerment Programme-SURE P, but since Tinubu removed subsidy, we have seen nothing.
“My only challenge is that Tinubu has no track record of managing money prudently. He has a track record of improving taxes, but what he does with the money is a different kettle of fish,” he added.
The ICIR reported that amid stiff opposition from northern governors and lawmakers, the Senate passed the four tax reform bills proposed by Tinubu for second reading.
The bills passed a second reading after Opeyemi Bamidele, the Senate majority leader, led a debate on them on Thursday, November 28.
Recall that on September 3, the President submitted four tax reform bills to the National Assembly for consideration, based on recommendations from the Presidential Committee on Fiscal and Tax Reforms, led by Taiwo Oyedele, to review existing tax laws.
The bills include the Nigeria Tax Bill 2024, aimed at providing a fiscal framework for taxation in the country, and the Tax Administration Bill, which seeks to offer a clear and concise legal framework for all taxes, reducing disputes.
The other bills are the Nigeria Revenue Service Establishment Bill, which proposes to repeal the Federal Inland Revenue Service Act and establish the Nigeria Revenue Service, and the Joint Revenue Board Establishment Bill, which would create a tax tribunal and tax ombudsman
Recall, in October, the Northern Governors Forum at a gathering in Kaduna rejected the bills, stating that they could cripple the region’s economy if passed into law; a position shared by the 36 state governors the same week at the National Economic Council meeting presided over by Vice President Kashim Shettima.
One of the bills is seeking an alteration of the VAT sharing formula, reducing the Federal Government’s share from 15 per cent to 10 per cent but with a proviso that the allocation among states will consider the derivation principle.
What to know about the tax reform bill
1. Any business with less than N50 million turnover is exempted from tax payment.
2. Over 90 per cent of workers in the public and private sectors will no longer pay income tax.
3. Over 82 per cent of what low-income persons consume will be VAT-free.
4. Scrapping over 50 nuisance taxes suffered by local businesses.
5. VAT will no longer be calculated based on where the companies have their headquarters but where their goods are consumed.
6. The rich to pay more tax while the poor will stop paying.
7. Consumption tax collected by states will be eliminated.
8. The Federal Government’s share of value-added tax (VAT) to reduce from 15 per cent to 10 per cent as states and LGAs now get 90 per cent.
9. Those earning less than N1.7million monthly will now pay less income tax.
10. Customs, Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and other govt agencies will no longer collect tax as only one agency will be responsible for the collection of all taxes in Nigeria.
11. Those receiving less than N9 million per annum could have their income tax cut by half.
12. The bills could lead to the abolition of other multiple tax laws like the Stamp Duty Act.
13. Over 90 per cent of small businesses would no longer pay profit tax.
14. Gradual increase of VAT from 10 per cent in 2025 to 15 per cent in 2030..with almost every good consumed by low-income earners exempted from VAT.
15. Many Nigerian companies pay over 60 types of different taxes and levies. The bill seeks to end this.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.