The coast seems to be getting clearer in the Senate for full consideration and possible passage of the Tax Reform Bills, going by different pronouncements made to that effect by some of its leaders. TAIYE ODEWALE reports…
The Tax Reform Bills
The tax reform bills were legislative proposals drafted by President Bola Tinubu as executive bills from reports submitted to that effect by Mr Taiwo Oyedele-led Presidential Fiscal Policy and Tax Reforms Committee set up in August 2023.
The Executive Bills received by both Chambers of the National Assembly from President Tinubu on Thursday, October 3, 2024, consists of (i) The Nigeria Tax Bill (NTB) 2024, (ii)
The Nigeria Tax Administration Bill (NTAB) 2024, (iii)The Nigeria Revenue Service (Establishment) Bill (NRSEB) 2024 and (iv) The Joint Revenue Board (Establishment) Bill (JRBEB) 2024.
Intendment of the bills
Generally, the tax reform bills as contained in executive communications to both the Senate and the House of Representatives, aim at overhauling the nation’s tax system and achieving fiscal policy goals.
FIRS Executive Chairman allays fears on the proposed reform
Moments the bills on the proposed tax reform got to both chambers of the National Assembly in October last year, some Nigerians including some of the federal lawmakers , expressed fears on possibility of the reform leading to additional taxes for Nigerians and by extension, creating more economic challenges for them.
But such fears were allayed by the Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr Zacch Adedeji with his submissions to the Senate Committee on Finance during an interactive session held on Tuesday, October 15, 2024.
The FIRS boss at the fears allayment session said: “The proposed Tax reform will not introduce any taxes or increase percentage of existing ones but reduce the number of taxes being paid by Nigerians.
“No agency will be merged in the process of carrying out the reform and no job will be taken from anybody.
“The Tax reform basically seeks to increase simplicity and efficiency of tax administration in Nigeria.
“The proposed tax laws are not meant to tax poverty but prosperity, fruits and not seeds, returns and not investments”.
Fears resonates
Despite fears allayment made on the proposed reform by the FIRS Chairman before the Senate Committee on Finance in the middle of October last year, some stakeholders in the polity, still expressed fears on the proposals which led to delay by both the Senate and the House of Representatives on consideration of the bills.
Accordingly, in the heat of the fears on the proposed tax reform by critical stakeholders in the polity like the Northern Governors Forum, the Nigerian Governors Forum, the Arewa Consultative Forum and even some serving Senators and members of the House of Representatives; the Senate invited the FIRS Boss and Mr Taiwo Oyedele for fears – allaying presentations in its Hallowed Chamber.
Mr Oyedele, the tax expert, made the best of the opportunity given , to convince Senators on the need to consider and pass the proposed legislations into law.
He pointedly submitted that the aims of the bills include but not limited to the challenge of multi-layered taxation, consolidating various legal frameworks relating to taxation, expanding the country’s tax base, generating sustainable revenue streams for national development, addressing complexities of the current tax system and enhancing tax-compliance.
To individuals according to him, ” contrary to most speculations on social media, the NTB adopts a progressive personal income tax system and provides tax relief for low-income earners.
Particularly, incomes below (800,000.00) eight hundred thousand naira are completely exempted, and higher earners are taxed progressively according to their earnings.
[3] It follows, therefore, that the tax burden on low-income earners is reduced, and that the tax burden is generally spread to reflect equity and fairness in wealth distribution.
The annual tax rate, as outlined in the Fourth Schedule of the bill, is as follows: (a). First N800k – 0%
(b) N2.2m – 15%, (c). N9m – 18%, (d). N13m – 21%, (e) N25m – 23% and (f) Above N50m – 25%
“Before now, the personal income tax rates for different bands of annual income are as follows: (a). N300k – 7%, (b) N300k – 11%, (c) N500k – 15%, (d) N500k – 19%, (e)N1.6m – 21%, (f) Above N3.2m – 24%
“A glance at the two sets of rates shows that while currently a low-income earner who earns N25,000 monthly, which translates to N300,000 annually, is required to pay 7% income tax, the new rates proposed in the Nigeria Tax Bill exempts individuals who earn N800,000 or less annually from paying any income tax. In effect, every minimum wage earner in Nigeria would be exempted from personal income tax.
“For corporate entities according to the tax expert, “The Bill aims to ensure ease of doing business, which has long been a hurdle in Nigeria’s economic growth. Businesses, particularly small and medium enterprises (SMEs), have historically struggled with the complex web of tax regulations.
“By streamlining tax rules, the Nigeria Tax Bill 2024 simplifies compliance, enabling businesses to focus more on innovation and expansion rather than wading through bureaucratic red tape. In doing so it creates a more conducive environment for entrepreneurship and investment”.
Passage for second reading
Apparently convinced by presentations made by the duo of the FIRS boss, Zacch Adedeji and Mr Taiwo Oyelude on Wednesday, 27th November, 2024, the Senate 24 hours after, passed the bills for second reading after lead debate on them by its leader, Senator Michael Opeyemi Bamidele and contributions by some other senators.
In line with legislative procedures, the Senate after passing the bills for second reading, mandated its Committee on Finance chaired by Senator Mohammed Sani Musa to make further legislative inputs into the bills through public hearing which the committee is, however, yet to organise.
Ray of hope
However, strong indications emerged last week in separate pronouncements made by the President of the Senate, Godswill Akpabio, and the Leader of the Senate, Senator Michael Opeyemi Bamidele, that consideration and passage of the bills shall be at the front burner of legislative business of the Senate on resumption from recess next week.
Specifically, Akpabio in the pronouncement made in his new year message to Nigerians said: “From the various reforms put in place by the current administration, especially, the proposed tax reforms, I can assure Nigerians that we shall give the required legislations to them for Nigerians to begin enjoying sustainable dividends of democracy in this New Year”.
Giving similar assurance on consideration of the tax reform bills, the Senate Leader in his new year message, said: “We recognise that a number of unfinished tasks are currently pending before the two chambers of the National Assembly. But consistent with the principles of rational choice, we address each of these tasks in order of national priority or significance.
“Consequently, the new few weeks will be devoted to the scrutiny of the appropriation bill, 2025; tax reform bills, 2024; investigation of economic sabotage in the petroleum industry, amendment of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) and key economic reform initiatives that have been in the pipeline to open up Nigeria for real businesses that will throw up limitless opportunities.”
Ongoing lobbying
Expectedly as it is, in all democracies across the globe, intense lobbying is already going on, particularly among the 469 federal lawmakers to get the bills fully considered at both chambers and passed.
In the Senate in particular, the coast, as declared by the spokesperson, Senator Oyeyemi Adaramodu, in a telephone conversation with Blueprint, is getting clearer.
“The tax reform bills have passed second reading in the Senate since November last year, what remains is for public hearing to be held on well envisioned bills by the Finance Committee saddled with that responsibility, after which the committee will submit its report for final consideration and passage by the Senate.
“Yes, there were reservations by some Senators about some provisions of the bills, but with consultations made within the last one month, much of their reservations have been addressed, thus clearing the coast for further consideration and passage of the bills in the Senate”, he said.
