Tinubu’s Tax Reform Bills pass second reading in Senate

Barely 24 hours after the interactive session of the members of the Presidential Committee on Fiscal Policy and Tax Reform with the senators, the Senate on Thursday passed for second reading Tax Reform Bills before the National Assembly

Senate President, Godswill Akpabio who had thrown his weight behind the bill alongside Senate Leader, Opeyemi Bamidele, former Bayelsa State Governor, Senator Seriake Dickson and Senator Tahir Mongunu however said he will not call for vote on the bill until he heard from Senator Ali Ndume.

Senator Ndume in his contribution to the debate said there is no doubt that reform is necessary for development to take place and for a country to move forward.

“I am not against reforms and I am not against this tax reform but let it be on record that I said that my problem with the bill is number one, the timing, number two; the issue of derivation makes the reforms contagious, contaminated and contradictory because the constitution has to be amended in order for some of this proposals to be effected.

“As the Senate has decided, we should not throw away the baby with the birth water. I would have preferred we remove the baby and throw away the water first and that is to go with what the Governors and NEC propose that this bills should be withdrawn first for us to work on it and then submit it to the National Assembly again after getting the buying of the Governor, NEC and even our traditional rulers. Yes, the bills possess so many good things but these two issues of derivation and VAT should be addressed at the public session,” he said.

However, the Chief Whip of the Senate, Senator Tahir Mongunu immediately opposed the submission by senator Ndume saying it will violate the rules of the Senate which was drawn from the Constitution of the Federal Republic of Nigeria.

“I beg to disagree with you that this bills should be withdrawn first and consultations should be made to the Nigerian Governors Forum and traditional rulers. We have our procedures which is clearly and unambiguously stated in our rules book for the purpose of lawmaking and the constitution in a very clear manner gave us the power to regulate our proceedings in section 60.

“Pursuant to section 60 of 1999 constitution as amended we gave these rules to ourselves in order to guide our proceedings and the process of lawmaking is very clear and unambiguous that after second reading it will now be transmitted to the committee for public hearing.

“In the course of the public hearing, Nigerians from all walks of life including the Governors and traditional rulers could come and ventilate their opinions before the public hearing so that our committee could look at various opinions, aggregate it and then bring it for clause by clause consideration.

“So, this procedure that senator Ndume has suggested with all due respect is foreign to the process of legislation. It is purely academic and should not be considered,” he said.

On his contribution in support of the bills, Senator Mongunu said the bills as propose will remove the tax burden on Nigerians as electricity and medical services are exempted from VAT. “Similarly, people that are not earning more than the national minimum wage are exempted from PAYE tax,”

Earlier in his lead debate the Leader of the Senate, Senator Opeyemi Bamidele said the Nigeria’s tax reforms bill is a significant move to overhaul the country’s tax system.

According to him, the bills aim to simplify the tax landscape, reduce the burden on small business and streamline how taxes are collected.

“In broad terms, the four Bills seeks to ensure uniformity in tax revenue administration in Nigeria in accordance with the provisions of the Constitution, eliminate the incidence of double taxation across the country, deploy taxation as a tool to encourage private sector investments in critical industries and boost individual disposal incomes through targeted tax exemptions as captured in the various bills.

“In the area of tax exemptions, there is a proposal to exempt those whose salaries are not more than the minimum wage from P.A.Y.E deductions while small businesses with annual turnover of N50, 000,000 or less are equally exempted from payment of taxes. Similarly, there is a proposed huge reduction in company income tax from the current 30% to 25% by 2026.

“As part of deliberate attempt to curtail the incidence of double taxation and multiplicity of taxes and levies, multiple taxes hitherto paid by companies under various tax heads namely 2.5% education tax, 0.25% NASENI tax have been harmonized into a development levy of 2% which by 2030 will be applied to fund the newly established student loan scheme which will benefit many Nigerian youths.

“Furthermore, unlike what is obtained under the existing tax regime whereby the Federal Government takes a lion share of VAT revenues, it is proposed that the sharing formula should allow state government share 55% of VAT revenue from the current 15% to 10% sharing formula.

“However, local governments share of VAT revenue remains unaffected. Relatedly, basic items consumed by Nigerian households such as ‘food items, medical services and pharmaceuticals, educational fees, electricity etc are exempted from VAT.

“Again, as part of efforts to ease the administration of income taxes and levies across the Federation, there is a reasonable effort made to consolidate core tax statutes and related tax legislations,” he said.

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