The Finance Bill 2019 currently before the National Assembly for approval will promote fiscal equity, international tax reforms, help raise tax revenues and facilitate ease of doing business reforms, the Minister of Finance, Budget and National Planning, Zainab Ahmed, has said.
The bill was submitted to the joint session of the National Assembly by President Muhammadu Buhari on October 14 this year.
The minster who spoke during a meeting with the Chairman and members of the Senate Committee on Finance in Abuja, on Monday said when approved the Bill will introduce tax reforms to help the government realise its revenue projections for the N8.15 trillion)2020 Budget.
Mrs Ahmed said the decision by the government to come up with such Bills whenever budgets were being passed was the best practice.
She said every year when the government is doing its annual budgeting process, it looks at its existing fiscal laws to see areas that require amendments to reflect current realities in the economy.
“What we have here is a situation that for years we did not amend our laws. We have made some reviews and amendments, but we left the difficult ones. We have now resolved to handle one of such difficult ones due to the current economic situation in the country,” she said.
The minister said the Bill is slated for a public hearing in the National Assembly on Tuesday.
She said how the Bill will benefit the economy included its proposals on the increase in the Value Added Tax (VAT) rate, moderation of inefficient and ineffective tax incentives and closing of the loopholes in the existing tax laws that allowed tax avoidance resulting in tax revenue leakages.
“The Bill also proposes essential palliatives to support Micro, Small and Medium Enterprises (MSMEs) and mitigate the impact of the VAT rate increase on the most vulnerable businesses, communities and citizens in the country,” she said.
The minister said some of the measures being proposed by the government include expanding the list of VAT-exempt items, such as basic food items, educational materials and medical supplies.
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“Introducing a VAT registration threshold for MSMEs with a turnover of less than N25 million per annum and reducing the Corporate Income Tax rate for these MSMEs from 30 per cent to 20 per cent are all incentives for businesses,” she said.
The chairman of the committee, Solomon Adeola, assured the minister that the Senate would ensure that the public was educated to see reasons why the Bill should “see the light of day.”
Kashim Shettima (APC- Borno Central) describe the Bill as “very revolutionary law that would help reposition the economy.”
He urged the ministry to come up with a very broad platform of addressing the issue of digital taxation.
On insurance companies, Shettima decried a situation where companies had become economic albatross, adding that Nigeria at the moment had very few of such companies.
“Most of these companies are in a comatose condition. So, giving them respite is not the solution. They need proper monitoring and evaluation,” he said.
He said the country’s VAT was one of the lowest globally and that citizens were unaware of where the components of the VAT went to.
“The public is unaware of what percentage is going to the State, Local and the Federal Government.”
Also, Yusuf Yusuf (APC-Taraba Central) said the VAT did not have negative impact on the income of the common man.
“It is the middle and upper class. VAT is tied to these group of people and therefore this group of people are the ones benefiting immensely on the economy of the country.
“So it should be good reason why they should pay higher VAT,” Mr Yusuf said.