The Tax Reform Bill, a landmark legislation aiming to recalibrate Nigeria’s tax system, has recently drawn sharp criticism from Joe Ajaero, President of the Nigeria Labour Congress, NLC.
Mr Ajaero’s call for the bill’s withdrawal has sparked debate among stakeholders, but tax analyst Arabinrin Aderonke argued that the bill is essential for fostering economic growth and alleviating the financial burden on Nigerian workers.
In a detailed critique, Mrs Aderonke questioned Mr Ajaero’s stance, highlighting the bill’s extensive consultations with stakeholders and its potential to benefit the majority.
“The Tax Reform Bill is not just another policy document; it is an initiative aimed at ensuring a more inclusive and equitable economy for all Nigerians,” she asserted.
“One of the bill’s standout features is its provision for targeted tax relief. Workers earning up to ₦1 million annually will be exempt from PAYE taxes, while salaries below ₦1.7 million monthly will see reduced tax rates.
“Essential goods and services like food, healthcare, and electricity are zero-rated for VAT, directly cutting living costs for low and middle-income earners.
“Small businesses, often hailed as the backbone of Nigeria’s economy, will benefit from an increased tax exemption threshold, rising from ₦25 million to ₦50 million in annual turnover.
“This change means many small enterprises can enjoy full exemptions from company income tax, thereby reducing operating costs and enabling growth,” Mrs Aderonke noted.
For larger corporations, the bill reduces the corporate income tax rate from 30% to 25%. It also introduces the Office of Tax Ombud to address disputes and prevent arbitrary assessments, fostering transparency and fairness in tax administration.
President Bola Ahmed Tinubu’s administration has emphasized harmonizing tax policies across states to eliminate overlapping levies.
The bill allocates 60% of VAT revenue to states where goods and services are consumed, giving states more financial control to improve local infrastructure and services.
“This approach empowers states to rely less on federal allocations, fostering economic independence,” Mr Aderonke explained.
The reforms also prioritize modernizing Nigeria’s tax administration system.
“By simplifying processes and protecting taxpayers’ rights, the government signals its commitment to creating an investor-friendly economy,” Mrs Aderonke added.
This is expected to attract local and foreign investments, stimulate job creation, and promote business expansion.
Critics, including Mr Ajaero, have raised concerns about the bill’s implementation and its alignment with workers’ interests. However, Aderonke countered these claims, urging the NLC leader to examine the bill’s provisions more closely.
“This is a once-in-a-generation opportunity to reshape Nigeria’s economic sector,” she concluded, emphasizing the need for accurate information to guide public opinion.
As the debate unfolds, the Tax Reform Bill remains a pivotal step towards economic equity and growth, promising to transform Nigeria’s tax landscape for the benefit of its citizens.
