FG to Scrap Over 50 Nuisance Taxes, Introduces Comprehensive Tax Reforms

The Federal Government has announced plans to eliminate over 50 nuisance taxes through a set of tax reform bills currently before the National Assembly. These reforms aim to promote fairness, equity, and justice in Nigeria’s tax system, particularly for businesses and low-income earners.

Speaking during a press briefing in Asaba, Delta State, the Director-General of the National Orientation Agency (NOA), Mallam Lanre Issa-Onilu, emphasized the reforms’ potential to ease the financial burden on Nigerians. Represented by Mrs. Rebecca Nasamu, Director of General Services at NOA, Issa-Onilu outlined the key objectives of the tax reform bills, which include creating a more streamlined and equitable tax framework.

“The bills are designed to scrap over 50 nuisance taxes suffered by local businesses,” Issa-Onilu explained. He added, “VAT will no longer be calculated based on where companies have their headquarters but where the goods are consumed.”

The four bills under consideration are the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill. According to Issa-Onilu, these bills will consolidate existing tax laws and repeal outdated provisions to simplify tax administration in the country.

“The Nigeria Tax Bill amalgamates all the existing laws in which provisions for taxation were made. When passed, the bill will lead to the repeal of 11 laws that currently govern tax imposition and collection,” he said.

Benefits to Nigerians

Issa-Onilu highlighted the benefits of the reforms, stating they would prevent multiple taxation by different levels of government and ensure that low-income earners pay little or no taxes. “This will help them manage their finances better,” he said.

He also noted that new digital systems would be introduced to make tax payments more accessible and transparent. “By supporting this effort, we can create a tax system that works for all and funds the development projects that will improve our nation,” he added.

Civil Society’s Call for Equity

Meanwhile, civil society organizations (CSOs), led by the Civil Society Legislative Advocacy Centre (CISLAC), have called on the government to ensure that the tax reforms align with principles of equity and economic stabilization. In a communiqué issued at the end of the 2024 National Tax Conference in Abuja, the CSOs emphasized the need for a fair and inclusive tax system.

The coalition, which includes Oxfam Nigeria, ActionAid, ChristianAid, the Nigerian Labour Congress (NLC), and others, raised concerns about various aspects of the proposed reforms. These include the timing of a VAT increase amid high inflation, the classification of essential and non-essential goods, and the need for data-driven evidence to justify the VAT sharing formula among tiers of government.

Key Recommendations

The communiqué outlined several recommendations:

• Avoid increasing VAT rates during a period of high inflation, as this could worsen economic pressures on Nigerians.
• Expand VAT exemptions to include essential items like energy sources and basic food products.
• Ensure tax expenditures are governed by legislation and monitored for cost-effectiveness.
• Introduce progressive tax rates, particularly for high-income earners, while capping Personal Income Tax for low-income earners to mitigate inflationary effects.
• Allocate a portion of additional tax revenue to support vulnerable populations, including women, girls, and persons with disabilities.
• Develop a robust implementation framework for harmonizing and digitizing tax administration.

The CSOs also stressed the importance of public education on the reforms and urged the government to actively engage citizens in the policy-making process.

Next Steps

The Federal Government assured stakeholders that the proposed tax reforms aim to foster economic growth and address Nigeria’s infrastructure gaps. Issa-Onilu emphasized the importance of collaboration, saying, “By creating a transparent and fair tax system, we can lay the foundation for sustainable development and equitable growth for all Nigerians.”