In a move set to shake up Nigeria’s tax system, the Senate is poised to pass four major tax reform bills that promise big changes for Nigerians, especially those earning below N1 million a year. If passed, these reforms will exempt low-income earners from paying personal income taxes, making life a little easier for many struggling Nigerians.
Why These Reforms Matter
For years, Nigeria’s tax system has been seen as outdated and complicated, often burdening the wrong people. But now, the Federal Government wants to change that by simplifying the system and ensuring fairness. According to officials like Tanimu Yakubu, Zacch Adedeji, and Taiwo Oyedele—key players in Nigeria’s tax landscape—this isn’t about taxing the poor but about making sure those who can afford to pay more do so.
Oyedele, who leads the Presidential Committee on Fiscal Policy and Tax Reforms, made it clear: “We want to tax prosperity, not poverty.” He explained that anyone earning less than N1 million annually would be exempt from income taxes, allowing them to keep more of their hard-earned money.
What Happened in the Senate
The road to getting these bills passed hasn’t been smooth. Yesterday’s session was particularly heated, with lawmakers clashing over how the bills were introduced. Many felt blindsided by their sudden appearance on the agenda.
Senator Abdul Ningi and Senator Ali Ndume were among the most vocal critics, insisting that the Senate follow proper procedures. Ndume’s passionate plea emphasized the importance of transparency and fairness, saying, “We swore to represent the interests of Nigerians. We can’t rush something so important.”
Despite the uproar, Deputy Senate President Barau Jibrin allowed the session to proceed, inviting tax experts into the chamber to explain the details of the reform. This decision was met with resistance but ultimately prevailed.
What the Experts Said
The presentations from the experts changed many minds. They laid out a comprehensive plan:
- Nigerian Tax Bill: Combines various taxes into one streamlined law.
- Tax Administration Bill: Sets standards for how taxes are collected and promotes the use of technology.
- Nigeria Revenue Service Bill: Proposes a new revenue agency for better efficiency.
- Joint Revenue Board Bill: Aims to improve cooperation between tax authorities and create a Tax Ombudsman to protect small businesses.
Key highlights include removing taxes for low-income earners, eliminating minimum taxes for companies that aren’t making profits, and cutting VAT on essential goods.
VAT Sharing Changes
One of the most contentious issues is how VAT revenue is shared. Currently, states like Lagos benefit disproportionately because they host many corporate headquarters. The new proposal seeks to distribute VAT revenue more fairly, based on consumption within each state.
What This Means for You
If you earn less than N1 million a year, you might soon stop paying income taxes altogether. This change is designed to ease the financial burden on everyday Nigerians. Oyedele pointed out that it’s tough for someone earning N30,000 a month to survive, let alone pay taxes.
The reforms also aim to protect small businesses and encourage economic growth by making the tax system less complicated and more transparent.
What’s Next
The bills are expected to move quickly through the Senate, with debates continuing today. If passed, these reforms could mark a turning point for Nigeria’s economy, making it fairer and more efficient.
President Bola Tinubu, who initially submitted these bills to the National Assembly in September, emphasized the need for public input. A public hearing will allow Nigerians to weigh in before the final vote.
For now, all eyes are on the Senate as the nation waits to see how these reforms will shape Nigeria’s future.
