How the New Tax Reform Bill Benefits Most Nigerians

 

Picture: Courtesy of Steve Buissinne of Pixabay

On November 20th, 2024, I had the privilege of attending a meeting organized by the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by Mr. Taiwo Oyedele. This meeting provided me with a firsthand understanding of the tax reform bill and inspired me to delve deeper into its details. At the conclusion of the meeting, Mr. Oyedele encouraged attendees to inform other Nigerians in both the private and public sectors about the bill's benefits. So, here I am, doing my part to spread the word.

Why is this bill beneficial for Nigerians? There are several reasons, but I'll highlight three key points:

First, the bill aims to simplify and streamline tax administration, eliminating multiple taxation and some of the levies paid by companies, thereby protecting businesses. Currently, many businesses pay taxes to local, state, and federal governments. The new bill seeks to address this issue, making the tax administration process more efficient and business-friendly.

Second, the bill proposes a new formula for revenue sharing, where local governments will receive 35% of value-added tax (VAT), state governments will receive 55%, and the federal government will receive 10%. This shift means less VAT-based revenue for the federal government and more for state and local governments. This change is expected to boost economic activities at the state and local levels, as increased business activities will translate into more VAT-based revenue. Additionally, essential items consumed by Nigerians, such as food, medical supplies, pharmaceuticals, and education, will be exempt from VAT.

Third, the bill aims to provide relief to low-income earners by reducing their tax burden, preventing a situation where the poor are disproportionately taxed despite their limited earnings.

If approved, the bill is expected to boost Nigeria's economy by increasing production and tax revenues, which are essential for economic transformation. It should also promote transparency and accountability in the tax system. 

So, I encourage you to stay positive and trust that the tax reform bill is a right step in the right direction. Until next time, be a good citizen and continue contributing to the development of our beloved nation.