An unending controversy has continued to greet the introduction of the tax reform bills from stakeholders and lawmakers alike. While backers claimed the reform would restructure the tax net and eliminate double taxation, among others, those against it believe the reform would stifle some business and state governments’ revenue stream. AKIN ADEWAKUN reports on these controversies and possible way out of the conundrum.
THE four tax reform bills, since they were sent to the National Assembly in October this year by the President Bola Tinubu administration, have been one of the most discussed and contentious issues in Nigeria of late.
The bills are the Joint Revenue Board of Nigeria (Establishment) Bill, 2024-SB. 583; the Nigerian Revenue Service (Establishment)) Bill, 2024-SB,584; the Nigeria Tax Administration Bill, 2024-SB, 585; and the Nigeria Tax Bill, 2024-SB,586
Opinions are as diverse, divided and divisive, on these bills, which its proponents argued would lift the tax burden on 90 percent of Nigerian workers, simplify the tax landscape, reduce the burden on small businesses and streamline tax collection in the country, when fully operational.
While explaining what the bills are designed to achieve, Senator Opeyemi Bamidele, representing Ekiti Central Senatorial District, noted: “In broad terms, the four bills seek to ensure uniformity in tax revenue administration in Nigeria, in accordance with the provisions of the Constitution, eliminate the incidence of double taxation across the country, deploy taxation as a tool to encourage private sector investments in critical industries and boost individual disposable incomes through targeted tax exemptions as captured in the various bills.”
Interestingly, a representative of the Lagos State government echoed the same sentiments at a conference held by the Commerce and Industry Correspondents Association of Nigeria (CICAN) in Lagos recently.
The Special Adviser to the Lagos State government on Public Private Partnerships, Mrs Bukola Odoe, believed enhancing tax collection processes not only boosts revenue generation but also contributes to sustainable economic progress, and supports the realisation of national economic targets.
Odoe, who was represented by Consultant and Financial Analyst, Lagos State Office of Public Private Partnerships, Mr Adefisoye Adekunle, at the event, argued that for the Federal Government’s $1 trillion economy target by Year 2030 to be achieved, optimising the tax collection process has become imperative.
While stressing the need for a balanced approach to tax collection, Odoe said: “We need to focus and optimise our collection process, make it simpler, make it easier in such a way that people with a small Android phone can access. You should be able to access your tax records, and pay without any stress,” she noted.
While throwing her full weight behind the bills, Odoe emphasised the pivotal role of infrastructure sustainability in facilitating tax reforms, advocating for the automation of revenue collection processes in Nigeria to improve effectiveness and transparency.
“There is a saying that there is no budget without revenue. When you look at the key sectors of Nigeria’s economy, health care, road infrastructure development, power, and education, anything you can talk about, we need money to do most of these things. There is a need to automate the revenue collection process in Nigeria and sub-nationals,” she stated.
Interestingly, the Chief Executive Officer, Mallinson & Partners Ltd, Mr Afam Mallinson Ukatu, stated that businesses are always ready to pay once such taxes are fair and not stifling.
While calling for more investments in the non-metallic mining sector of Manufacturers Association of Nigeria (MAN), since it has the capacity to lift the country out of its present economic quagmires, Afam, the former Chairman of the Non-Metallic and Mineral Products Sectoral Group/Council Member of MAN, however, urged the Federal Government to urgently rework the policies of the sector, which has gone obsolete to make it more investment-friendly and attractive.
Afam would also want the government to look into the issue of multiple taxation and how it is administered.
But Adetunji Esho, who runs a supermarket on Lagos Mainland, does not share in Afam’s optimism about the tax reforms. Even the possibility of Esho’s business being out of the new tax net does not seem to thrill him either.
He is suspicious the government may come up with other forms of taxes for such small businesses at the end of the day.
“Besides, what happens to those that come in here frequently to demand our TV rates, and others? Does the Federal Government have the power to stop these categories of tax collectors? If these people, who always claim to come from the local governments, come with such levies, who do we turn to? Is the new tax reform addressing how the Federal Government will ensure the spirit and letters of such bills are complied with?” he asked rhetorically.
If Esho has his reservations about the bills, Yusuf, a truck driver, is not excited either, despite his business likely to be a major beneficiary of the new process, if passed into law.
“Does it take care of those touts on the road, who collect thousands of naira from truckers, and would sometimes unleash mayhem on those who are not ready to abide by their rules? Are the bills taking all these into consideration? Sometimes I spend over N25,000 from Lagos to Badagry on these illegal ‘toll points’ mounted by these boys,” the 39-year-old truck driver, who plies Lagos-Sango Ota-Badagry Route, stated.
Yusuf would only be enthusiastic about the bill if all these issues are fully addressed.
Mr Oyedele Ibrahim (real name withheld), a civil servant in one of the ministries in Lagos would want the issue to be treated with caution despite being one of the 90 percent of Nigerian workers whose tax burdens are intended to be lifted by the bills.
While some provisions of the bills may see his income, being a junior worker, out of the tax net, he is of the opinion that the bills are not without some financial burdens on him, and other workers in his category, after all.
For instance, asking a big manufacturer, such as Dangote, who is into petroleum products refining, and cement production, among others, to pay more tax would further punch some hole in his pocket, since he uses the company’s products daily.
“The fact remains that Dangote, Lafarge and others are not charity organisations. When you begin to place humongous taxes on their personnel and operations, you are inadvertently punching more holes in the pockets of some of us who patronise them. Whatever tax increment you place on them would be transferred to the hapless consumers, such as you and I,” he reasoned.
But a financial expert and CEO of Wealthgate Advisors, Mr. Biyi Adesuyi, would, however, want the bills to be given a chance.
“President Tinibu is trying to introduce a form of fiscal federalism. What you are bringing to the table is what will entitle you to the shares of what is being contributed to the pool. It is wrong for some states to insist on an outright ban on sales and consumption of beer in their domains, and still want to share from the proceeds of beer, which come in form of Value Added Tax (VAT),” he stated.
Adesuyi would want some of the states that see the tax reform bills as designed to starve their economies to see the development as a game changer.
“They should begin to innovate, and explore ways of increasing their internally generated revenue (IGR) without having to wait for the monthly allocations for survival,” he counselled.
Adesuyi, however, expressed his fears about the bills sailing through even after passing the second reading. He believed the odds are stacked against the bills, and those vehemently opposed to it might use their numerical strength to stifle it.
His fears may not be unfounded. While Senator Bamidele is over the moon regarding the benefits of the bills to the nation’s tax space and her economy, his colleague, Senator Ali Ndume has a different view about the reforms.
On a TV Show, the lawmaker stated that while it had become imperative for the nation’s tax space to be reformed, he however, queried the haste behind the process of getting the bills through.
Doing the process hastily, he believed, would not allow an exhaustive discussion that should go with passing such a sensitive document, he argued.
Perhaps, there is the need to allay some fears, such as those of the lawmaker that the bills are for the betterment of the nation’s tax process.
Perhaps it has also become imperative for these state governors, who have since been crying foul, too, to begin to see some sense in Adesuyi’s advice on the need for them to begin to think out of the box. Without this, the controversies generated by the tax reform bills may be with us for some time to come.
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