Abuja – In a significant move toward reshaping Nigeria’s fiscal landscape, Northern Senators convened a closed-door meeting on Thursday following the Senate’s approval of the Tax Reform Bills for a second reading.
The meeting, chaired by Senator Abdulaziz Yar’Adua, Chairman of the Northern Senators Forum, lasted about two hours in Room 301 of the National Assembly complex. However, Yar’Adua refrained from disclosing details of the discussions.
Senate Advances Tax Reform Bill
Earlier in the day, the Senate tasked its Finance Committee with organizing a public hearing on the controversial bills. Governors, traditional rulers, and key stakeholders are expected to participate.
The Tax Reform Bills, submitted in October by President Bola Tinubu, aim to overhaul Nigeria’s tax system, streamlining processes and introducing measures to ease the burden on small businesses. Senate Leader Opeyemi Bamidele (APC, Ekiti Central) led the debate, emphasizing the legislation’s pro-growth and equitable proposals.
The bills include:
- Joint Revenue Board of Nigeria (Establishment) Bill, 2024
- Nigeria Revenue Service (Establishment) Bill, 2024
- Nigeria Tax Bill, 2024
The Finance Committee has six weeks to conduct public consultations and return the bills to the Senate for further deliberation.
Key Proposals in the Bills
The proposed legislation includes the following highlights:
- Increasing states’ share of Value Added Tax (VAT) from 15% to 55%, while reducing the Federal Government’s share to 10%. Local governments will retain their 35% allocation.
- Exempting essentials such as food, medical services, pharmaceuticals, educational fees, and electricity from VAT.
- Reducing company income tax from 30% to 25% for two years to boost business activity.
- Consolidating multiple taxes, such as the Education Tax and NASENI Tax, into a unified 2% development levy, with proceeds supporting the Student Loan Scheme by 2030.
- Introducing zero VAT on exports and essential consumables to promote trade and reduce production costs.
Additionally, small businesses with an annual turnover of ₦50 million or less, as well as minimum-wage earners, will be exempted from tax obligations.
Support and Opposition
The bills received broad support from Senators Abba Moro (PDP, Benue South), Sani Musa (APC, Niger East), and Seriake Dickson (PDP, Bayelsa West), among others. Dickson lauded the reforms as a step toward fiscal federalism, urging the Senate to address disparities in tax collection.
He noted, “For example, PAYE taxes of oil workers in Bayelsa or Rivers should be paid to states where the revenues are generated, not where companies are headquartered. This will ensure fairness and local revenue growth.”
Meanwhile, Senator Ali Ndume (APC, Borno South) expressed reservations about the timing and foundational elements of the bills. He raised concerns about insufficient consultations with stakeholders and the potential for perceived unfairness in tax exemptions.
“The timing of these reforms could lead to misunderstandings. Furthermore, aspects such as derivation and VAT require constitutional amendments,” Ndume argued.
However, Senator Tahir Mongunu (APC, Borno North) countered, emphasizing the public hearing stage as an opportunity for all stakeholders to voice their concerns.
Senate President’s Assurance
Senate President Godswill Akpabio stressed the importance of transparency and inclusivity in the legislative process. He assured Nigerians that public hearings would provide a platform for comprehensive dialogue before the bills proceed to their third reading.
“The Finance Committee will aggregate opinions from governors, traditional rulers, and other stakeholders during the public hearing. The final version of the bills will reflect the interests of all Nigerians,” Akpabio stated.
When put to a voice vote, the majority of lawmakers supported the bills, paving the way for the Finance Committee’s further scrutiny.
Next Steps
The public hearing, to be held in the coming weeks, is expected to provide clarity on the contentious aspects of the Tax Reform Bills. Stakeholders will also have the opportunity to propose amendments that could shape the final draft before its passage into law.
Stay tuned to The Bureau Newspaper for updates on this pivotal legislative development.