The Organised Private Sector on Monday demanded a fresh review of the Tax Bills, particularly the proposed increase in the Value Added Tax which it said would discourage investment in the economy.
The Association of Capital Market Academies of Nigeria, and the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture were concerned by the planned hike in VAT from the current 7.5 per cent to 10 per cent in 2025, 12.5 per cent in 2026 and 15 per cent by 2030, as well as the proposed removal of the sections of the tax bills related to free zones.
The OPS spoke on Monday during the commencement of the two-day public hearing on the tax reforms organised by the Senate Committee on Finance, at the National Assembly Complex, Abuja.
The proposed tax reforms included the Joint Revenue Board Bill, the Nigeria Revenue Service Establishment Bill, the Nigeria Tax Administration Bill and the Nigeria Tax Bill. Although the four bills were eventually passed for a second reading in November by the Senate, they were met with hostility at the House of Representatives, where the northern lawmakers took sides with their governors that the bills be withdrawn for further consultation.
The Northern Governors’ Forum kickstarted the opposition against the bills, followed by the Nigeria Governors’ Forum and the National Economic Council.
They advised President Bola Tinubu to withdraw the bills for wider consultations.
Prominent northern political leaders, including former Vice President Atiku Abubakar, governors of Bauchi and Borno states, Bala Mohammed and Babagana Zulum, respectively, as well as former Sokoto State governor, Aminu Tambuwal, also kicked against the bills, arguing that they were designed to favour a section of the country to the detriment of the northern region.
The senator representing Borno South Senatorial District of Borno State, Ali Ndume and his counterpart from Bauchi Central Senatorial District of Bauchi State, Abdul Ningi, led the opposition against the bills at the Senate.
The 48 North-East lawmakers from Bauchi, Gombe, Adamawa, Taraba, Borno and Yobe states in the Green Chamber and various northern associations and youth groups also vowed not to support the bills until they were withdrawn for further consultation.
Despite the opposition, the President insisted that the bills should be allowed to pass through the legislative process, adding that aggrieved persons or entities should vent their views at the public hearings.
However, a compromise was reached in January at a meeting between the Nigeria Governors’ Forum and the Taiwo Oyedele-led committee over the VAT sharing formula.
At the meeting, the 36 governors proposed that the VAT revenue should be shared 50 per cent based on equality, 30 per cent on derivation and 20 per cent based on population, to guarantee a fair distribution of resources.
The development appeared to have assuaged the northern governors and lawmakers, as the House promptly debated and passed the bills for a second reading.
Speaking at the public hearing on Monday, ACMAN’s President, Prof Uche Uwaleke, expressed support for the proposed tax reforms but noted that the association feared that the bills would bring about VAT increment and possible negative impact on the economy.
He said, “The proposal to increase the Value Added Tax from the current 7.5 per cent to 10 per cent in 2025, 12.5 per cent in 2026 and 15 per cent by 2030 will increase transaction costs in the Nigerian capital market and discourage investments.
“In this regard, ACMAN does not support any increase in the VAT rate at this time, which tends to compound the current inflationary pressure.”
Calling on Nigerians to give the bills a chance to revamp the nation’s economy, the ACMAN boss noted, “Studies have shown that tax policies have a strong influence on the development of the capital market and by extension the economy of any country.
“It is against this backdrop that ACMAN welcomes the raft of fiscal incentives contained in the tax reform bills.
“It is pertinent to note that Chapter 8 of the Nigeria Tax Bills 2024 contains tax incentives capable of boosting the capital market in Nigeria.
“For example, Section 164 grants income tax exemption in respect of dividends distributed by authorised collective investment schemes, among others. This has the full support of ACMAN.
“ACMAN is also in full support of Section 56 of the Nigeria Tax Bills 2024 which has proposed a gradual reduction in the income tax on total profits of large companies in Nigeria from the current 30 per cent to 27.5 per cent in 2025 and to 25 per cent from 2026.
“This reduction will go a long way in improving the business climate in Nigeria as the country’s CIT is one of the highest in Sub-Saharan Africa.
“It bears repeating that the reduced income tax rates and other generous incentives to small businesses through increased exemption thresholds will most likely spur business activities, and create more job opportunities essential for the growth of the Nigerian economy.”
NACCIMA defends FTZ
NACCIMA emphasised the need to remove sections of the tax bills related to free trade zones.
Represented by its National President, Dele Oye, the association said, “All sections that affect free zones should be stepped down. There is an assumption that those in free zones don’t pay taxes. This is not true. They are only exempted from income tax.”
ANAN backs TETFund
The Association of National Accountants of Nigeria called for a review of the abrogation of the education tax that funds the Tertiary Education Trust Fund.
A representative of the body, Prof Abuchi Ogbuju, observed that the 2024 Nigeria Tax Bill proposed to end the education tax that funds TETFUND by 2030.
He said, “TETFUND has helped a lot in terms of the physical development that we see in our higher institutions today. If you remove them, there may be no laboratories and research centres.
“We will end up having more crises on our hands. How do you then take care of the critical role of TETFUND?”
RMAFC okays bills
On its part, the Revenue Mobilisation Allocation and Fiscal Commission endorsed the bills.
Speaking at the public hearing, RMAFC Chairman, Muhammed Shehu, stated, “We are 100 per cent in support of the tax reforms. If implemented, they will ensure the stability of the economy while freeing up funds for infrastructural development.”
He, however, expressed concern about VAT distribution as proposed in the bills.
“We are concerned about VAT distribution to sub-nationals. We urge the committee to adopt the governors’ position on this,” he added.
Akpabio urges synergy
The Senate President, Godswill Akpabio, called for a synergy among the three tiers of government and the private sector to drive a new tax administration regime.
This, he said, would culminate in a revived economy which guarantees job creation for the teeming Nigerian populace.
Speaking at the commencement of the public hearing, Akpabio commended the President for coming up with the executive bills, even as he described the current tax laws as archaic and incapable of availing the country the needed revenues to execute development projects.
He said, “We must come together—federal, state, and local governments, alongside the private sector and civil society—to create a tax system that truly works for all.
“Today, we gather at a pivotal moment, one that calls us to reform, modernise, and optimise our tax system.
“This is not just a task; it is a profound responsibility we must embrace with courage, wisdom, and a steadfast commitment to the Nigerian people.
“As we look to the future, we must remember that a nation that fails to adapt its revenue system to the realities of our time risks stagnation and decline.”
He further stated, “An old African proverb teaches us: ‘A bird that does not leave its nest will never know the richness of the forest.’ Today, we are choosing to leave behind outdated tax practices and bureaucratic hurdles, spreading our wings toward a tax administration that is robust, transparent, and conducive to business.”