Toba Owojaiye reporting
Abuja, Nigeria
The Nigerian Senate is poised to pass the controversial Tax Reform Bills today, ushering in significant changes aimed at overhauling the nation’s tax system. Among the key provisions is the exemption of Nigerians earning below ₦1 million annually from paying personal income tax, a move designed to relieve the financial burden on low-income earners.
Truth Live News gathered that the legislation, part of a broader fiscal policy overhaul championed by President Bola Tinubu’s administration, has drawn both applause and criticism. Proponents argue the reforms will promote equity and stimulate economic growth, while skeptics question the hurried legislative process and its potential implications.
The Tax Reform Bills comprise four major components:
– Nigerian Tax Bill: Harmonizes major taxes into a single framework, simplifies tax processes, and exempts low-income earners from personal income tax.
– Tax Administration Bill: Establishes standards for tax collection, integrates technology, and streamlines tax administration.
– Nigerian Revenue Service Establishment Bill: Proposes a new revenue authority to enhance coordination and efficiency in tax collection.
– Joint Revenue Board Establishment Bill: Creates a collaborative platform for tax authorities and introduces a Tax Ombudsman to protect small businesses.
Among other measures, the bills propose the removal of VAT on essential goods and services, introduce a 15% effective tax rate on large corporations, and eliminate minimum tax requirements for loss-making companies.
Addressing the Senate, Mr. Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, emphasized the reforms’ intent to “tax prosperity, not poverty.” He highlighted the inequity in current tax structures, where states like Lagos disproportionately benefit from Value Added Tax (VAT) sharing, a situation the new bills aim to rectify.
“These reforms will exempt over 60% of Nigerians from income tax while ensuring the wealthy and large corporations contribute their fair share,” Oyedele stated.
Yesterday’s plenary was marked by tension as the Tax Reform Bills were introduced unexpectedly, sparking a heated debate among lawmakers. Senator Opeyemi Bamidele (APC, Ekiti Central) invoked Order 12(1) of the Senate Standing Rules to allow tax experts, including Federal Inland Revenue Service Chairman Zacch Adedeji, into the chamber to address legislators.
However, this move was met with resistance. Senator Abdul Ningi (PDP, Bauchi Central) and Senator Ali Ndume (APC, Borno South) challenged the decision, citing procedural violations. “This matter is too significant to be rushed,” Ndume asserted. Despite objections, Deputy Senate President Barau Jibrin ruled in favor of allowing the experts to clarify the bills’ provisions.
Public Reactions and Next Steps
Public opinion on the reforms remains divided. Advocates hail the income tax exemption for low earners as a lifeline for struggling households. Critics, however, warn that the proposed restructuring of VAT allocation could exacerbate regional inequalities.
The Senate is expected to expedite the bills’ passage today, with first and second readings planned alongside an executive session. If approved, the reforms could reshape Nigeria’s fiscal landscape, potentially setting a precedent for future tax policies.
While the Tax Reform Bills promise to address long-standing inefficiencies, the rushed legislative process raises concerns about transparency and inclusivity. The introduction of a Tax Ombudsman and measures to protect small businesses are commendable, but the government must ensure equitable implementation to prevent unintended economic disparities.
As the nation awaits the Senate’s final decision, the broader question remains: Can these reforms deliver sustainable economic growth while protecting the most vulnerable? Nigerians will be watching closely.