VANGUARD
The controversy triggered by President Bola Ahmed Tinubu to reform Nigeria’s tax regime is not about to go away.
The reform controversy dominated the headlines for most of last week as the Senate debated the four bills Tinubu had sent to the National Assembly to effect fundamental changes in the tax regime.
The Senate debate degenerated into a rowdy session as supporters and opponents of the bills attempted to advance their cause.
The Tinubu administration deployed a high-powered team to the upper chamber to plead its case.
Meanwhile the bills passed the Second Reading and will now go into the Committee Stage, from where it will go into Public Hearing before returning to the Senate for the Third Reading, debate and passage or non-passage.
The Senate Committee has six weeks to do its job.
The bills will go through the same process in the House of Representatives.
So what are the issues?
Whereas many people admit that the bills will substantially address the grey areas in the Nigerian tax regime, some believe there are parts that are discriminatory and favour only a few states.
The issues include multiple taxation, under-taxation, over-taxation and tax evasion resulting from the non-capturing of the bulk of Nigeria’s potential tax payers in the tax net.
For critics, the area that irks them most is the bills’ provision for the sharing of the proceeds from Value Added Tax (VAT).
The critics of the provision include some governors who believe their states would be short-changed in terms of the revenues that would accrue to them from VAT if the bills were to be passed into law the way they are.
In league with the governors are some northern leaders who argue that the reform bid is targeted at the North to deprive that region of the country funds and are mobilizing against the bills unless the ‘offending’ provision was removed.
Indeed one of the bills provides for more VAT revenues for the states where they are generated.
Analysts say this should encourage states to engage in economic activities that generate VAT revenues.
However, Tinubu administration officials are unrelenting in their bid to push the bills into passage by the National Assembly, arguing that the bills are pro-poor and will promote prosperity in Nigeria.
One of the officials, Dada Olusegun, in explaining the tax reforms in “layman’s language”, says many basic items consumed by the poor such as food items, medical services and pharmaceuticals, educational fees, electricity etc will be exempted from VAT, leading to a reduction in prices.
He also speaks of exemption of individuals earning N800, 000 or less from paying income tax, saying: “Currently, if you earn a total of N800,000 annually, you are required to pay N84,000 out of this amount as income tax. With this bill, you will not pay anything.
“Only those earning above N50 million get to pay 25% personal income rate. Under the current law, once you earn above N3.2 million you will be charged 24% income tax.
“Exemption of small businesses from paying income tax. In this bill small companies are defined as those with annual turnover of N50 million or less. In the current law, small businesses are defined as those with turnover of N25 million or less. What this means is that up to 90% of businesses in Nigeria will be exempt from paying income tax”.
The official also speaks on the review of the VAT revenue sharing formula where states now take 55% of the revenue instead of 50% while the Federal Government’s share of VAT revenue shrinks from the current 15% to 10%.
The share of LGAs, he says, remains the same.
Olusegun, who is the Special Assistant to President Tinubu on Digital Media, in his analysis, breaks down the four bills, listing 23 things a layman may not know about the Tinubu tax.
Under the Nigeria Tax Bill, he lists 10 of such things, another 10 under the Nigeria Tax Administration Bill and three under the Joint Revenue Board Establishment Bill. His analysis:
Confused
Since President Bola Tinubu transmitted four executive bills tagged #TaxReformBills to the national assembly last month, many needless controversies have engulfed the bill.
Most of these controversies are simply borne out of inability of those flaming the controversies to carefully go through the contents of the bills currently before the parliament…
Connect with us on our socials: