After months of debate, the House of Representatives on Wednesday advanced the four tax reform bills transmitted by President Bola Tinubu to the National Assembly. The bills successfully passed second reading after lawmakers reached a consensus on the contentious Value Added Tax (VAT) provisions during plenary.
The proposed legislations which are Nigeria Tax Bill 2024, Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and Joint Revenue Board (Establishment) Bill) were developed based on the recommendations of the Presidential Taskforce on Fiscal Policy and Tax Reforms, led by Taiwo Oyedele.
The tax reforms initially faced opposition, particularly from northern leaders, who expressed concerns over the VAT revenue-sharing formula. The disagreement led to a temporary suspension of debates in the House, with many lawmakers calling for the withdrawal of the bills. However, President Tinubu stood firm, and following negotiations between the Nigeria Governors Forum and the Oyedele-led task force, a revised VAT sharing formula was proposed:
50% based on equality
30% on derivation
20% based on population
This compromise helped pave the way for the bills to move forward.
During Wednesday’s plenary, House Leader, Prof. Julius Ihonvbere, commended President Tinubu and Speaker Tajudeen Abbas for allowing extensive consultation before finalizing the bills.
I commend those who expressed reservations. We need a total overhaul of our tax administration system to drive economic transformation that will improve the lives of all Nigerians,” Ihonvbere said.
He criticized the current taxation system, which imposes multiple levies on Nigerians through nearly 15 different agencies, arguing that the proposed reforms would create a uniform tax system.
The lawmaker also highlighted provisions for tax exemptions for small businesses, aligning with Tinubu’s policy to support micro-enterprises.
Small businesses are the focus of this administration. This reform supports them to expand the economy, while also providing incentives to help them grow,” he added
Several lawmakers backed the reforms, describing them as crucial for Nigeria’s economic development.
Bamidele Salam (PDP, Osun) emphasized that reforms, though challenging, are necessary for national progress.
Ibrahim Isiaka (APC, Ogun) praised the harmonization of taxes, arguing that it would reduce confusion for businesses and contractors.
Kingsley Chinda (PDP, Rivers) acknowledged the need for tax reform but urged careful scrutiny of certain provisions.
Despite the support, some lawmakers raised concerns over ambiguities and constitutional conflicts in the bills:
Sada Soli (APC, Katsina) criticized Section 141 of the bill, arguing that its supremacy clause contradicts existing tax laws, such as the Personal Income Tax Act and Company Income Tax Act.
Ahmed Jaha (APC, Borno) questioned the definition of derivation, asking whether it was based on consumption or revenue generation.
George Ozodinobi (Labour Party, Anambra) described the tax reforms as a form of fiscal restructuring, subtly shifting revenue control to states.
Abubakar Fulata (APC, Jigawa) demanded a clearer interpretation clause, warning that a lack of definition could lead to misinterpretation and abuse.
In response to the debates, Speaker Tajudeen Abbas directed that the bills be consolidated into one for further review.
While lawmakers remain divided on specific provisions, the passage of the bills for public hearing marks a major step in Nigeria’s tax reform process.
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