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- The House of Representatives has adopted the tax reform bills
- It also retained Value-Added Tax at 7.5 per cent
- The bills’ adoption followed a clause-by-clause consideration of the bills’ reports during plenary on Thursday
The House of Representatives has considered and adopted the Committee on Finance’s report on the tax reform bills.
The bills were adopted following a motion for a clause-by-clause consideration of the bills’ reports moved by the finance committee’s chairman, James Faleke, during plenary on Thursday, March 13.
The bills’ reports were subsequently considered, and the committee’s recommendations were approved at the Committee of the Whole, chaired by the Speaker, Abbas Tajudeen.
With the consideration and adoption, the bills are now set to be passed for third reading at the next legislative day.
Reps retains VAT at 7.5%
Key among the clauses considered and adopted include Value-Added Tax (VAT) distribution formula based on 50 per cent equality; 20 per cent population and 30 per cent consumption as earlier proposed by the Nigerian Governors’ Forum (NGF).
The House rejected the proposal for incremental review of VAT rates and approved that the current 7.5 per cent VAT rate be sustained.
The House deleted the use of the controversial word, “ecclesiastical” from one of the clauses and replaced it with “religious.”
Also among the clauses adopted is the continuous funding of TETFUND, NASENI and NITDA from the development levies fund.
The House also modified the contentious clause on inheritance tax, saying that an inheritance before dissolution cannot be taxed.
Tax reform bills faced criticisms and opposition
The four tax reform bills sent to the National Assembly on October 3, 2024, by President Bola Tinubu are the Nigeria Tax Bill (NTB) 2024, the Nigeria Tax Administration Bill (NTAB) 2024, the Nigeria Revenue Service (Establishment) Bill (NRSEB) 2024, and the Joint Revenue Board (Establishment) Bill (JRBEB) 2024.
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.
The bills were greeted with controversies and criticisms from different quarters, with some calling for wider consultations before passage, while others, like the Afenifere, 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.
The bills passed a second reading in the House of Representatives and the Senate and were forwarded to the Committee on Finance for further legislative scrutiny.
Akpabio says only 30% of Nigerians pay tax, declares public hearing on tax reform bills open
Meanwhile, TheRadar earlier reported that the Senate President, Godswill Akpabio, said just about 30 per cent of Nigerians pay taxes to the Federal Government but expect the government to deliver essential services such as infrastructure, education, and security.
Akpabio stated this on Monday, February 24, while declaring open a public hearing on the tax reform bills sent to the National Assembly on October 3, 2024, by President Bola Tinubu.
