Tax reform bills scale second reading at House of Reps

• Tax reform bills have scaled second reading at the House of Representatives
• The passing for a second reading follows lawmakers’ deliberation on the bills
• The bills will go on to the next steps, including committee scrutiny and a public hearing

The House of Representatives has passed for second reading the four tax reform bills transmitted to the National Assembly in 2024 by President Bola Tinubu.

The bills scaled second reading on the floor of the House on Wednesday, February 12, six months after the President transmitted them to the National Assembly for consideration.

The bills include the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.

Among other things, the bills seek to review the sharing formula of the Value Added Tax (VAT) to accommodate what each state gets VAT for what it generates within its territory, as well as remove VAT from essential consumption, education, healthcare, transportation, and accommodation to benefit low-income earners.

Lawmakers’ opinions about the bills

During plenary on Wednesday, lawmakers spoke in support of the bill. They stressed that the proposed reforms would harmonise tax administration, eliminate multiple taxations, and create a structured framework for tax dispute resolution.

The legislators also advocated for the judicious use of tax revenues by all tiers of government.

Some legislators raised concerns over revenue mismanagement and lack of accountability in tax utilisation and urged the executive to ensure that increased tax revenue translates into improved infrastructure, social services, and economic development.

A lawmaker, Sada Soli, feared that some sections of the new bills might contradict the 1999 constitution.

Soli stated that the issue of derivation must be clearly defined to avoid any ambiguity and hoped that the committee saddled with the responsibility to scrutinise the bills would address the issues that might arise before the bills are passed.

Also, other lawmakers drew attention to the 40 acts that the bill sought to amend and requested that they should be laid before Parliament.

Next steps

Having scaled second reading, the bills will now proceed to the committee stage, where lawmakers will refine its provisions before a final vote.

The bill will also be subjected to public hearings where stakeholder engagements, including input from tax experts, business leaders, and government agencies, are expected to shape the final versions of the bills before they are passed into law.

Tax reform bills faced criticisms and opposition

The tax reform bills were greeted with controversies and criticisms from different quarters, with some calling for wider consultations before passage, while others, like the Afenifere, have endorsed the bills.

During a meeting in October, the Northern Governors Forum said some aspects of the bills, especially the VAT components, are skewed against the interests of the North, even as the National Economic Council challenged the bills, asking President Tinubu to withdraw the bills from the National Assembly for further consultations.

In early December, President Tinubu directed the Federal Ministry of Justice to work with the National Assembly to ensure that “genuine concerns” associated with the Tax Reform Bills are addressed before their passage by the lawmakers, but due to public agitation and objections to the bills, the Senate paused public hearing of the tax reform bills after it passed second reading.

However, on January 16, 2025, the Nigeria Governors’ Forum (NGF) supported the tax reform bills and proposed a new Value Added Tax (VAT) sharing formula.

Senate passes tax reform bills for second reading

Meanwhile, TheRadar earlier reported that the Senate passed for a second reading the tax reform bills forwarded to it by President Bola Tinubu in October 2024.

The bills were passed on Thursday, November 28, following a debate among the lawmakers. They were then referred to the Committee on Finance for further legislative action and asked to report back within six weeks.