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Senate Passes President Tinubu’s Tax Reform Bills for Second Reading

November 28, 2024

President Bola Tinubu’s four tax reform bills have passed their second reading in the Nigerian Senate.

These bills, which were transmitted to the National Assembly two months ago, seek to review the allocation of Value Added Tax (VAT) revenue, ensuring that states receive a share based on consumption within their territories.

Additionally, the bills propose the removal of VAT from essential goods and services, such as education, healthcare, transportation, and accommodation, in a bid to reduce the tax burden on low-income earners.

The bills, which were sponsored by Senate Leader Opeyemi Bamidele, were read for the second time and referred to the Senate Committee on Finance for further scrutiny. Senate President Godswill Akpabio has directed the committee to report back within six weeks, encouraging them to invite stakeholders such as the National Economic Council (NEC), Nigerian Governors’ Forum (NGF), and Civil Society Organizations for a public hearing on the proposed reforms.

The bills aim to ease the tax burden on a majority of Nigerian workers, with an emphasis on supporting low-income groups. One key provision is the reduction of the federal government’s VAT share from 15% to 10%, while the distribution among states will also factor in the derivation principle. These proposed changes were explained to lawmakers by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, during a recent session.

 

Despite the support for the reforms, the bills have faced criticism, particularly from the Northern Governors Forum, which argued that certain provisions, especially regarding VAT, are against the interests of northern states. The forum has urged lawmakers from the region to oppose the bills, while the National Economic Council has called for further consultations. However, President Tinubu has stood firm on his position, insisting that any disagreements be resolved within the legislative process.

 

 

Written by Adeyemi Adewale




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