.Insist taxes should be fair, just, transparent.
CHIGOZIE AMADI
The House of Representatives has pledged proper legislative scrutiny of the four tax reform bills as it began a 3-day public hearing on the tax reform bills sent to the two chambers of the National Assembly by President Bola Tinubu in October 2024 for speedy consideration.
The bills include the Nigeria Tax Bill, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
These proposed legislations seek a uniform approach for taxation and for a consistent and efficient administration of tax laws, facilitating tax compliance in line with the present Nigerian realities.
Key stakeholders, including Ministries, Departments and Agencies, MDAs, business leaders, tax experts and administrators, representatives from the private sector and civil society organizations, used the advantage of the hearing to provide useful contributions that will guide the House in the consideration and passage of the bills.
In his opening remarks, Speaker of the House Rt Hon Tajudeen Abbas explained that the bills represent critical proposals from the Executive to expand Nigeria’s tax base, improve compliance, and establish sustainable revenue streams for the nation’s development.
He promised that the House would scrutinise the bills thoroughly, ensuring they align with the best interests of constituents and the nation at large.
The speaker, who explained that the proposed tax reform bills aim to diversify Nigeria’s revenue base, promote equity, and foster an enabling environment for investment and innovation, noted that the present tax-to-GDP ratio of just 6 percent is far below the global average and the World Bank’s minimum benchmark of 15 percent for sustainable development.
“In every modern state, taxes are the bedrock of public revenue, providing the resources required to deliver education, healthcare, infrastructure, and security. Yet, Nigeria, despite being Africa’s largest economy, struggles with a tax-to-GDP ratio of just 6 percent which is far below the global average and the World Bank’s minimum benchmark of 15 percent for sustainable development. This is a challenge we must address if we are to reduce our reliance on debt financing, ensure fiscal stability, and secure our future as a nation, “he said.
Represented by the House Leader Hon.Prof Julius Ihonvbere, the speaker who noted that President Bola Tinubu’s administration is deliberate in the administration’s tax reform programme ostensibly to improve Nigeria’s tax to GDP ratio by streamlining and broadening the tax base, however, said ” as a representative of the people, I have continued to hold the view that, we must approach these reforms thoughtfully, understanding their potential implications for every segment of society.”
“Taxes should be fair, transparent, and justifiable, balancing the need for public revenue with the burdens they impose on individuals and businesses.
“The House will, therefore, scrutinise these bills thoroughly, ensuring they align with the best interests of our constituents and the nation at large. We owe this duty to Nigerians, and as the People’s House, we must always be accountable to the people, ” he added.
According to him, the 10th House recognizes the critical importance of the tax reform bills, the anxiety among Nigerians and the desire of the government to revamp the economy through improved tax system and resolved to ensure a thorough legislative process that is open, transparent and inclusive.
“It is for this reason that we created a Special Committee, chaired by Hon. James Faleke, to oversee the legislative process. This committee includes members of the House Committee on Finance, and co-opted members from the 36 states of the Federation and the Federal Capital Territory (FCT). This arrangement is to ensure inclusive representation and broad-based deliberation on the proposed bills.
“I thank the Hon. chairman and members of the Special Committee on the Tax Reform Bills for the good work done so far, and to urge the committee to diligently drive the process to its logical conclusion, “he said.
Noting also that the tax reform bills have generated widespread debate in the media, public domain and even in private discussions, all reflecting their importance, he said:”It should be noted however, that these debates are healthy and necessary for consolidating our democratic practice and culture. ”
“Therefore, the purpose of this public hearing is to foster robust discussions and harvest recommendations by providing stakeholders the opportunity to make their inputs. Importantly, this public hearing will help us identify areas requiring amendment, clarification, or improvement while also considering the compatibility of these bills with the 1999 Constitution (as amended) and other extant laws. We have therefore set aside three days for the public hearing to enable as many stakeholders as possible to air their views and make their recommendations.
“The journey to this public hearing has been characterised by a number of critical activities in the legislative process of law making. First, the House held a pre-legislative hearing on the proposed tax reform bills on November 18, 2024.
“This gave us the opportunity to interact with the proponents of the bills and other tax experts and administrators. Through the interaction, Hon. Members gained comprehensive understanding of the bills, and appreciated their provisions, enabling them to identify contentious or controversial areas. Subsequently, further consultations were made, with members interfacing with their constituents including state governors, all in a bid to build consensus and produce bills that align with the interests of the executive, the legislature, sub-national governments and Nigerians. The Bills were then considered on the floor of the House, and unanimously passed for second reading.
“Right from the onset of the 10th House, we identified Tax Reform as a key priority area in our Legislative Agenda because of the central role of tax in achieving sustainable economic growth and development, ” he added.
On his part, Chairman, House Committee on Finance Hon James Falake, explained that the public hearing represents a crucial stage in the nation’s collective effort to modernize, harmonise, and strengthen its tax system for the benefit of all Nigerians.
The lawmaker said that there was the need to reform the nation’s tax laws given that for many decades, the nation’s tax laws have remained largely unchanged.
“While these laws served their purpose at the time they were enacted, the economic and business landscape has evolved significantly over time. Some provisions in our existing tax laws are now outdated and are no longer in tune with current economic realities, “he said.
Speaking further, he said:”Despite being the largest economy in Africa, Nigeria’s tax-to-GDP ratio remains one of the lowest on the continent. In 2023, data from the International Monetary Fund (IMF) showed that Nigeria’s tax-to-GDP ratio was approximately 9.4%, compared to South Africa at 21.6%, Kenya at 14.1%, and Senegal at 19.1%.
“In 2023, the total tax or levies revenue collected by the Federal, State, and local governments ₦26.03 trillion. According to the Joint Tax Board (JTB) only about 35 million Nigerians pay tax, while only 9% of companies registered in Nigeria are captured in the tax net. This imbalance is unsustainable if we are to adequately fund critical infrastructure needed to build the Nigerian economy to a desirable level.
“Experts have estimated that Nigeria requires $3 trillion (₦1.8 quadrillion) over the next 30 years (that is, equivalent to $100 billion annually) to bridge its infrastructure deficit. However, our IGR falls significantly short of this amount, leading the government to borrow substantially in order to bridge the funding gap.
“This reality highlights the urgency of implementing tax reforms that will simplify and enhance revenue collection, reduce reliance on borrowing, and drive sustainable development.”
The nation’s tax laws that ‘ll cease to exist after the enactment of the tax reform bills are as Companies Income Tax Act (CITA) – 1979;Value Added Tax Act (VAT) – 1993;Personal Income Tax Act (PITA) – 1993;Income Tax (Authorised Communications) Act – 1966 and Capital Gains Tax Act – 1967.
Others are the Stamp Duties Act – 1979;Casino Act – 1965; Deep Offshore and Inland Basin Act -1999;Industrial Development (Income Tax Relief) Act – 1971;Petroleum Profit Tax Act – 1959 and Venture Capital (Incentives) Act – 1993.
“Most of these Acts have been amended severally over the years. Since 2019, successive Finance Acts have been introduced to provide “quick fix” amendments to some of these archaic provisions, however, these amendments have been piecemeal and have not comprehensively addressed all the issues within our tax system.
“Recognizing the urgency of a more holistic reform, the President inaugurated the Fiscal Policy and Tax Reform Committee with a clear mandate to overhaul and simplify the tax system.
This Committee worked hard to produce these tax reform bills, which collectively aim to create a tax structure that is fair, efficient, and effective in revenue collection. These bills are set to ensure proper tax administration while making compliance easier for taxpayers” Faleke stated.
