The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has stated that the need to pass the Tax Reforms Bills is “urgent” because most Nigerians are struggling.
Oyedele made this statement on Wednesday during an Arise News interview, monitored by Nairametrics, in response to comments made by Borno State Governor, Professor Babagana Zulum, about the proposed bills that are currently before the National Assembly.
Zulum recently accused Oyedele’s team of rushing the enactment of the tax reforms, alleging that the bills are accompanied by misconceptions that require deeper consultations.
“On this tax issue, there are a lot of misconceptions. We felt that the VAT provision in the tax law, based on the calculations we did, would only benefit Lagos and Rivers States. We did our own research and concluded that we would lose,” Zulum said.
“Why are we in a rush? We advised the Federal Government to take a pause and expunge some of the clauses that are inimical to Northern Nigeria. What we are saying is, give more time, let us do a deeper consultation to understand the nitty-gritty of this tax regime before passing it into law,” Zulum added during an interview on Channels Television.
Relief for Nigerians Is Urgent
Responding to Zulum’s comments, Oyedele denied rushing the bills, adding that everyone, including the governor, “needs to acknowledge that we are at a stage where the majority of our people are struggling and are in multi-dimensional poverty.”
- He pointed out that small businesses are dealing with over 60 official levies and taxes, as well as more than 200 unofficial ones. While many people are struggling to feed themselves due to escalating food inflation.
“We have people who don’t have decent jobs. That’s why the poverty rate is high, even though officially they say the unemployment rate is low. We are dealing with all these issues.”
“If you want to provide relief for your people, you should do it quickly because it’s urgent. It’s an emergency. The way we should respond to these issues should be similar to how the world responded to COVID-19.”
“There were countries where laws were passed within two days because it was an emergency. We are not even doing it in two days. We’ve been working on this for over a year,” he said.
- Oyedele explained that his team had a session with the governors around May, sharing drafts with them.
“And I said jokingly to the governors that I don’t expect your excellencies to read all these details because we’ve also shared them with your technical people.”
“But we’ve done all of that. The bills are now in the National Assembly. As we speak, the bills have been there for over a month already. So, I don’t think that’s rushing it,” he said.
- He added that there is no rush, as the bills are currently before the National Assembly.
However, he emphasized that stakeholders should work to finalize the bills quickly so that relief can be provided to the Nigerian people.
What You Should Know
The new tax bills under consideration in the National Assembly propose adopting a derivation principle in the allocation of VAT revenues between the federal government and sub-national entities.
- These proposals have sparked controversy, with northern elites openly rejecting them, arguing that the changes may not favor their region.
- Under the current Section 40 of the VAT Act, VAT revenue is allocated as follows: 15% to the Federal Government, 50% to the States and Federal Capital Territory (FCT), and 35% to Local Governments. The allocation to states and local governments incorporates a derivation principle of at least 20%.
- Although not explicitly detailed in the VAT Act, other factors influencing the distribution include 50% based on equality and 30% based on population.
Additionally, 4% of collections are allocated to the Federal Inland Revenue Service (FIRS) as a collection fee, while 2% goes to the Nigeria Customs Service (NCS) for import VAT.