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Asaba: The Federal Government has emphasized that the ongoing tax reform bills, currently under review in the National Assembly, are aimed at ensuring fairness, equity, and justice for all Nigerians.
This statement comes on the heels of a call by civil society organizations (CSOs), led by the Civil Society Legislative Advocacy Centre (CISLAC), urging the government to establish a fair and inclusive tax system that aligns fiscal policies with equity and economic stabilization.
At a briefing in Asaba, Delta State, marking several events including World HIV Day, Security Awareness, and World Human Rights Day, the Director-General of the National Orientation Agency (NOA), Mallam Lanre Issa-Onilu, announced that the tax reforms aim to eliminate over 50 “nuisance taxes” that burden local businesses.
Issa-Onilu, represented by the NOA’s Director of General Services, Mrs. Rebecca Nasamu, explained that the new reforms would change how Value Added Tax (VAT) is calculated, moving from headquarters-based taxation to location-based taxation, ensuring taxes are applied where goods are consumed.
The reforms are designed to alleviate the tax burden on hardworking Nigerians while promoting fairness in the distribution of the tax load.
Issa-Onilu outlined four key pieces of legislation integral to the reform:
- The Nigeria Tax Bill
- The Nigeria Tax Administration Bill
- The Nigeria Revenue Service Establishment Bill
- The Joint Revenue Board Establishment Bill
According to Issa-Onilu, the Nigeria Tax Bill will detail the major taxes levied on individuals and businesses, effectively consolidating existing laws. Once passed, this bill will repeal 11 laws related to tax imposition and collection.
The government aims to ensure that individuals earning low wages will either pay very little or no taxes at all, helping them manage their finances better. Additionally, new digital systems will simplify tax payments and improve accountability, facilitating the funding of national development projects.
Meanwhile, at the national tax conference held in Abuja, CSOs called for the creation of a fairer, more inclusive tax system. Among the CSOs involved were Oxfam Nigeria, ActionAid, ChristianAid, the Nigerian Labour Congress (NLC), and the International Budget Partnership (IBP), alongside government agencies like the Ministry of Finance and the West Africa Tax Administration Forum (WATAF).
In their communique, the CSOs raised several concerns, including the proposed VAT increase amidst high inflation (over 30%), and the lack of stakeholder involvement in defining essential and non-essential items for VAT classification. They also called for data-driven evidence to back up the proposed VAT sharing formula across different tiers of government and better oversight of tax incentives and waivers.
The CSOs further recommended that:
- The tax system be made more progressive, ensuring that large businesses and high-net-worth individuals pay their fair share.
- The Personal Income Tax (PIT) rate be capped at 10% for the second income bracket, instead of the proposed 15%, to protect low-income earners from further financial strain due to inflation.
- A more transparent framework for VAT changes be developed, ensuring consistency across the system.
- Public education campaigns be launched to explain the goals of fiscal reforms, with platforms for wider citizen engagement to address concerns during the reform process.
- A portion of additional tax revenue be redistributed to support vulnerable populations, including women, girls, and persons with disabilities.
The CSOs also cautioned against raising VAT rates during a period of high inflation, as it could reduce Nigerians’ purchasing power and exacerbate inflationary pressures. They recommended expanding VAT exemptions to include essential living items, such as electricity, cooking gas, and food-related products.
Lastly, they urged that tax expenditure be legislated, ensuring cost-effectiveness and a clear framework for monitoring its impact.
