The Tax Reforms Conundrum, by Ibrahim Mustapha Pambegua

It is no longer news, the leadership of Senate has constituted a committee headed by the Minority Leader, Senator Abba Moro (PDP, Benue South) to address the grey areas in the tax reform bills and report back to the committee of the whole before public hearing on the bills. It can be recalled, Tinubu tax reforms bills submitted to National assembly for consideration has received barrage of criticism in the country. The National Economy Council (NEC) ,in its meeting presided over by the vice President, Kashim Shettima, and other stakeholders have called for its withdrawal. State governors, particularly from the Northern region have vehemently opposed the VAT sharing formula which they believed will skew their states. The bills which tax and economic experts described as four in one comprise the Joint Revenue Board of Nigeria (Establishment) Bill, 2024; Nigeria Revenue Service (Establishment) Bill, 2024; Nigeria Tax Administration Bill, 2024 and Nigeria Tax Bill, 2024. The tax reforms bills if successfully pass into laws and carefully implement, will eliminate multiple taxation, improve revenues generation and allocation and above all block revenues loopholes.

Ideally, the tax reforms bills should not have generated the ongoing heated debates looking at the expected benefits to be derived from. Besides, Nigeria has the lowest tax to- GDP-ration in sub-saharan Africa, which couple with dwindling revenues from predominantly oil-based exports, puts the country in a fiscal quagmire. Poor tax collection and high incidence of tax evasion from wealthy Nigerians call for pragmatic reforms of our archaic or old tax laws to be at par with best global practice. While the Tinubu’s tax reforms bills have been hailed by many tax experts, the Value Added Tax (VAT) sharing formula is the bone of contention that pitched major stakeholders with federal government. With the VAT collection under the new bill to change from derivation to location, fears are being nursed that, some big states like Lagos and Rivers will get more revenue to the disadvantage of other federating states.

There is also speculation that president Bola Ahmed Tinubu, will use consultants to collect taxes as experienced in Lagos during his time as governor. One recalls, throughout his tenure in office, Tinubu employed the service of alpha beta, a tax consultant company ,to collect and remit tax on behalf of Lagos State. However , it seems this rumours has been dispelled or debunked by the chairman of the tax reforms committee ,Mr Taiwo Oyedele. The tax reforms bills have also come at a wrong time when majority of Nigerians are grappling with high cost of living due to removal of fuel subsidy, floating of naira and increased in electricity tariffs. Though, president Tinubu has repeatedly stated his policies are for the general well-being of Nigerians, statistics have proven that ,many Nigerians have slide into poverty within the period under review. With the increased in hardship across the country, Nigerians feel that the new tax reforms bills which will further jerk up VAT as another ploy to inflict more pain on them.

Interestingly, the new tax reforms bill will exempt some categories of Nigerians earning bellow ₦800,000 and small scale industries with ₦30million annual turnover from paying taxes. But progressive VAT increase will hike the cost of production by our industries and add burden to consumers. This calls for more caution. The decision by the national assembly to address the grey area is a commendable and welcome development. The parliament should vet the bills and advise Mr president appropriately. The state governors who opposed the bills should meet the president and raise their concern with a view to amicably resolving the conundrum. The federal government should build trust and confidence that the new proposed tax reforms will address fiscal imbalance, united the country and spur economic development.

Ibrahim Mustapha Pambegua, Kaduna state. 08169056963.