By Adedapo Adesanya
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC) set up by President Bola Tinubu, Mr Taiwo Oyedele, has hinted that the federal government has been advised to exempt 95 per cent of the informal sector from all taxes in order to revolutionise Nigeria’s tax system.
Mr Oyedele, who disclosed this to newsmen at the weekend at the end of the close-out retreat of the PFPTRC in Abuja, stressed that the move was aimed at reducing the burden of multiple taxation on small businesses and low-income individuals.
According to him, the informal sector is populated by citizens working hard to earn a legitimate living, emphasizing that in the eye of the committee, people in the category should not be over-burdened with taxation, but rather supported to grow economically to a point where they can fit into the more affluent categories before imposing taxes on them.
Mr Oyedele also explained that a lot was considered before the panel came up with the recommendation, noting that those who earn between N25 million and less annually should be exempted from paying all forms of taxes, including income and value-added tax (VAT).
“Everybody, even if you’re not a business person, feels the impact of multiple taxation almost everywhere you turn. It affects small businesses even more than large businesses, and the poor and vulnerable population are having to deal with it.
“So, we’re using data to inform our decisions, currently if you earn N25 million a year or less, you don’t have to pay company income tax, you don’t have to worry about VAT. We’re looking at increasing that significantly, first to recognize the inflation we’ve had to contend with over the past few years and also because we think that this whole idea and concept of your money is in the informal sector is not supported by data.
“We think that the informal sector are people who are trying to earn legitimate living, we should allow them be and support them to grow to a point where they can then have the ability to pay taxes.
“So, we think 95 per cent of the informal sector should be legally exempted from all taxes; withholding tax, company income tax, even payee on their staff, let them be.
“We can then focus our attention on the top 5 per cent of that sector and of course, the middle class and the elites. We think that the days of being above the law in paying taxes are over. The same thing we’re saying to our leaders, whether they are elected or appointed, we think they have to lead by example by showing that they have paid the taxes, not only on time, but correctly to the lawful authorities as contained in the various laws”, he said.
According to him, the committee’s proposal for tax reforms is expected to be submitted to the National Assembly by the third quarter of this year.
Mr Oyedele disclosed that the committee has concluded the proposal phase and is currently consulting with the private sector, with internal approvals expected by the end of June.