What Tinubu told me about tax reform bills – Senate Committee chair

President Bola Tinubu has asked the National Assembly to ensure that the proposed tax reform bills result in practical and effective legislation when passed.

The president’s request was conveyed by the Chairman of the Senate Committee on Finance, Sani Musa, during the public hearing on the bills in Abuja on Monday.

“I met President Bola Ahmed Tinubu two days ago on the tax reform bills and he told me “Mr Chairman, Senate Committee on Finance, go and do the needful. Give me a law that is workable from the tax reform bills I forwarded to the Senate and the House of Representatives in October last year,” he said.

Mr Musa, the senator representing Niger East Senatorial District, stressed the importance of enacting practical laws that would enhance tax administration without imposing undue burdens on any segment of the country.

“That request by Mr President came at a very auspicious time of this public hearing on the tax reform bills, which are not meant to add burden to any section of the country or give undue advantage to any section as well,” he said.

Controversy surrounding the bills

The tax reform bills were drafted by the Presidential Committee on Fiscal Policy and Tax Reforms.

The bills are the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill, all transmitted by President Tinubu to the National Assembly on 3 October 2024.

The proposed laws aim to adjust the Value-Added Tax (VAT) revenue-sharing formula and introduce tax exemptions for Nigerians earning below the minimum wage.

After the second reading of the bills in the Senate last November, they were referred to the Committee on Finance for further review and public engagement.

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The House of Representatives also debated and passed the bills for a second reading on 12 January.

The bills have generated significant debate, particularly regarding their regional implications since their introduction.

Lawmakers from the Northern region, including members of the Northern Governors Forum, expressed concerns that the VAT component disproportionately benefits some regions over others. In response, the forum directed its representatives in the National Assembly to oppose the bills.

Despite these objections, the Nigeria Governors’ Forum (NGF) strongly supported the reforms after engaging with the president’s economic team. However, it suggested some amendments to the bills, particularly the VAT-sharing formula.

Meanwhile, senators from the South-east indicated the need for further consultations with their governors and stakeholders. At the same time, their South-south counterparts warned against introducing ethnic or regional biases into the debate.

Senate President Godswill Akpabio assured that the National Assembly would conduct a thorough review and ensure the passage of bills that benefit the entire country.

Support for bills

During the public hearing, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, reassured that the reforms are designed to tax prosperity, not poverty.

“The tax reform bills, as repeatedly explained at different fora since their introduction last year, are for modernisation of our archaic tax laws towards effecting efficiency, equity and economic growth,” he said.

Mr Edun urged the lawmakers and other stakeholders to support the bills.

The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, endorsed the bills.

Mr Kyari maintained that the proposed reforms would enhance economic growth through a more effective tax collection mechanism.

“The proposed tax reform bills to us in NNPCL are a very necessary for the enhancement of the growth of the economy through a more efficient and effective tax collection mechanism.

“As the largest taxpayer in Nigeria, NNPCL has studied the reform bills and found the proposals to be reasonable and necessary,” he said.

Shifting perspectives on tax reform

Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Shehu, advocated adjustments in VAT distribution to subnational governments.

“RMAFC is in support of the proposed tax reforms but wants adjustments in the area of Value Added Tax ( VAT) distribution to subnationals. We hope the proposed reforms will address the endless revenue remittance reconciliation with NNPCL and others,” he said.

Chairman of the Fiscal Responsibility Commission, Victor Muruako, affirmed that the bills align with the Fiscal Responsibility Act 2007.

Addressing concerns of the North

The Arewa Think Tank, represented by its convener, Muhammad Yakubu, debunked claims that the northern region opposed the bills.

“It is not true that the North is against the tax reform bills. We have seen the benefits, and we have sensitised our people in the North,” Mr Yakubu stated.

Similarly, Mohammed Dogarawa, a professor, representing the Supreme Council for Sharia in Nigeria, dismissed concerns of regional bias in the reforms.

READ ALSO: Akpabio asks Nigerians to embrace Tinubu’s tax reforms

Unified tax administration

In his opening remarks, Mr Akpabio emphasised the necessity of a tax system that promotes national development.

The public hearing will continue on Tuesday with critical stakeholders, including the Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, and the Governor of the Central Bank of Nigeria, Yemi Cardoso, stating their positions on the proposed legislation.