By Halimah Olamide
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has disclosed plans of the committee to propose a law to reduce the Value Added Tax on food, healthcare, education, and exemption for rent, transportation, and small businesses.
Oyedele disclosed that the committee is working to consolidate multiple taxes in Nigeria to ensure a reduction, adding that the draft tax law will be submitted to the National Assembly.
He further revealed that these are the areas where the average person spend almost all their income, meaning their VAT burden will reduce.
However, the upward rate adjustment is on other items to partly offset the reduction in rate and exemption for basic consumptions ensuring that the masses are protected.
“We have significant issues in our tax revenue. We have issues of revenue generally which means tax and non-tax. You can describe the whole fiscal system in a state that is in crisis.
“When my committee was set up, we had three broad mandates. The first one was to look at governance: our finances as a country, borrowing, and coordination within the federal government and across sub-national.
“The second one was revenue transformation. The revenue profile of the country is abysmally low. If you dedicate our whole revenue to fixing roads it will be insufficient. The third is on government assets.
“The law we are proposing to the National Assembly has a rate of 7.5% moving to 10% from 2025.
“We don’t know how soon they will be able to pass the law. Then subsequent increases are also indicated in terms of the year they will kick in.
“While we are doing that, we have a corresponding reduction in personal income tax. Anybody who is earning about N1.5 million a month or less will see their income tax come down. Companies will have income tax rates come down by 30% over the next two years to 25%. That is a significant reduction.
Other taxes they pay are quite many: IT levy, education tax, etc. All these we are consolidating into a single one.They will pay 4% initially. That will go down to 2% in the next few years,” he said