Taiwo Oyedele: Tinubu’s Tax Reform Policy Will Ease Tax Burdens For Over 90% Of Nigerian Workers In Public, Private Sectors

The Chairman of the Presidential Policy on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has said that President Bola Ahmed Tinubu’s Tax reforms will cover over 90 per cent of workers in Nigeria’s public and private sector, and that there is a sense of urgency for the reforms to be implemented to ease Nigerians of their tax burdens.

Oyedele said this in an interview with ARISE NEWS on Thursday night, hours after the tax reform bill passed the second reading at the Senate.

Advocating for the tax reforms, Oyedele said, “The exemption and the reduction in taxes for individuals is going to cover about 90%, actually more than 90% of workers in both public and private sector. There is no better time to provide that relief to the Nigerian people than now. The exemption threshold we’ve created and proposed for small businesses who exempt 97 percent of small businesses from almost all the burdens of taxes.”

In response to those who said that the tax reform bill needs more consultation before it is enacted, Oyedele said that his team has had consultations all across various sectors of Nigeria. He said, “Of course I recognise that consultation is important, I think it’s not a process that has an end. Even after enacting the laws, you need to continue to consult, so we welcome any opportunity to further consult.

“So, in putting these bills together, we were very mindful of where we are today as a country. So, there are issues around government revenue, and how we are funding our budget. We spent the past few years in the last administration, printing naira, which is part of why we are having inflation today, and it’s pushing people into poverty, and low income earners are struggling to survive- we need to address that problem.

“We also are in a position today where small businesses are having to deal with over 60 taxes. Large businesses, many of them are winding down, some are exiting completely. So, we can’t fold our arms and just hope that everything will be fine. Actually, I think the time we find ourselves now calls for that urgency of intervention. The best time to cut tax rate, to reduce tax burden, to make Nigeria attractive for investment, to encourage small businesses to grow, to protect the most vulnerable people, to exempt low income earners and minimum wage earners from taxes is today, and not tomorrow. So it shouldn’t even wait any longer because there is a sense of urgency at this time.”

Oyedele further clarified that these reforms did not mean that those who earn significantly higher than the average Nigerian will not be overtaxed, but will only have to pay a little more tax at 25 percent, which is still cheaper than in other countries

“We didn’t say we are coming for the big men, we said that the big men need to pay a little bit more. Because if you’re exempting minimum wage earners up to about 80,000 naira per month, they will be completely exempted. Then people earning about 1.5-1.6 million naira per month, or less, will see a reduction in their personal income tax and PAYE. If you do all of that and you do nothing to the guys who earn a hundred million naira, 200 million naira, you’re going to create more problem for government revenue, and when we cannot fund government finances, we have to then borrow or print naira, and that creates another problem. Even for the richest people that we said should pay a little bit more, it’s still one of the lowest rates in the world,” he explained.

In response to the questions and oppositions raised by Northern governors and Senators that the tax reforms will affect the North negatively, Oyedele explained that the reforms would benefit every region.

He said, “I think many people are not familiar with what is being done currently. So as we speak today, VAT is distributed amongst states based on 20% derivation, 50% equality of state and 30% based on population. That deviation of 20% is based on where remittances are made, basically head office locations. And for most companies, the large ones, their head officers are in Lagos. So Lagos gets that benefit to the disadvantage of many other states. We thought we should correct that. Then number 2, we have states like Lagos and Rivers state that are in court already, trying to get the Supreme Court to pass a judgment that says VAT should be administered by states, The law should be enacted by the House of Assembly of a state, and we know that will be chaotic.

“So why are they planning to do that? Because they feel that they’re not getting enough for the contribution that they make. So, we thought, correct the derivation so that it recognises the consumption based on every state, and then allow every state to keep about 60% of their contribution, so that nobody has the motivation to go and get a Supreme Court judgement that VAT is now a state tax. The second thing is to ensure that the way we calculate that VAT derivation recognises the contributions of every state so that every state, in addition to getting more of what they contribute, will have the incentive to want to promote economic activities within their jurisdiction.

“I think the bottom line is, the way I see it, is there is a lack of trust, even between government- between states and local governments and between state and federal government. So, that’s why people in my view are just suspicious, they say- oh, is there something they’re not telling us? Meanwhile, we’re doing this just trying to do what is best for the whole country, and we’re not looking at any regions, we think everybody will benefit.”

Ozioma Samuel-Ugwuezi

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