The Presidency has dismissed claims that the government is planning to scrap the National Information Technology Development Agency the National Agency for Science and Engineering Infrastructure (NASENI) and the Tertiary Education Trust Fund (TETFUND) through the controversial tax reform bills currently before the National Assembly.
Special Adviser to the President on Information and Strategy, Mr. Bayo Onanuga, debunked the rumour in a statement issued on Monday clarifying misconceptions about the bills.
Onanuga also dismissed the claims that the bills were designed to impoverish certain regions of the country, adding that they aimed to enhance the quality of life for disadvantaged Nigerians, rather than destroying the economy of any section of the country.
Why Tinubu is pushing tax reform
Onanuga said the main reason President Bola Tinubu embarked on the Tax and Fiscal Policy Reforms is the need to streamline tax administration in Nigeria and make the operating environment conducive for businesses.
“Contrary to the lies being peddled, the bills do not suggest that NASENI, TETFUND, and NITDA will cease to exist in 2029 after the passage of the bills.
“Government agencies, such as NASENI, TETFUND, and NITDA, are funded through budgetary provisions with company income tax and other taxes paid by the same businesses that are being overburdened with the special taxes,” he said.
- According to Onanuga, for decades, businesses, investors, and private sector players in Nigeria have complained of being overburdened by a myriad of taxes and levies, including those earmarked to fund various government agencies and initiatives.
- He said the multiple taxes complicate the economic environment, making Nigeria uncompetitive for investment and preventing many businesses from growing or continuing their operations.
- He added that some companies have had to make the rational decision to relocate to other countries. We can not continue on this path or wait for 20 years if this country is to deliver the prosperity it needs.
Consolidating agencies tax
Onanuga said the proposal, as contained in section 59(3) of the Nigeria Tax Bill, only seeks to consolidate some of the earmarked taxes imposed on companies and replace them with a single tax to be shared with the key agencies as beneficiaries in a phased manner until 2030.
“The time frame offers ample opportunity for the affected agencies to explore other funding sources in addition to budgetary allocations in line with the constitution and international best practices.
“It is a misrepresentation of facts to conclude that changing an agency’s funding source amounts to scrapping it. None of the countries leading globally in education, science, engineering, or information technology have similar earmarked taxes.
“The government imposes major taxes, be it income tax, consumption tax, or other taxes, to channel resources to its areas of priority at the time. Imposing a separate tax to fund an agency is an aberration that has yet to yield results despite the huge burden on businesses. The tax bill seeks to address this problem,” he said.
What you should know
There have been different controversies around the proposed tax reform bills which some factions of the country have taken back that the new tax model may not be favourable to them.
- For instance, the Northern Governors Forum expressed their opposition to the bill, urging legislators from the region to resist any legislation that undermines the interests of Northerners nationwide.
- Additionally, the National Economic Council (NEC), which comprises the 36 state governors and is chaired by the Vice President, called for the withdrawal of the bills to allow for proper consultations before proceeding to the National Assembly.
- However, President Tinubu disregarded the recommendations from both the Northern Governors Forum and the NEC, stating that the process is legislative and that inputs can be incorporated during public hearings.