Tax reform bill: Passionate appeal to Northern people to have a re-think, by Kola Amzat
This is the second time this writer is making submissions on the above subject since the Bill was transmitted to national assembly by the president for consideration and eventual passage into law.
My present submission is consequent upon the vehement opposition of the people of the North to the bill.
Key stakeholders in the region have voiced concerns over the bill’s socioeconomic impact on the entire northern region, already struggling with economic challenges, high poverty rates, and security challenges.
At the heart of the opposition is their strong belief that the proposed tax reforms would disproportionately burden northern states, further widening the gulf between Nigeria’s wealthier and prosperous south and its economically fragile and disadvantaged North.
Nothing can be farther from the truth. It’s unambiguously clear that the position of our northern country men and women is indeed borne out of the fact that, they’ve not taking time to comprehensively digest the bill.
If they’ve, or perhaps bother to seek opinion of the tax experts on Bill, they would’ve appreciated that they’ve been largely unfair to the president who transmitted the bill to NASS for the purpose of ensuring uniformity in tax revenue administration in Nigeria in accordance with the provisions of 1999 Constitution as amended, eliminate the incidence of multiplicity of taxation across the country, deploy taxation as a tool to encourage private sector investments in critical industries, as well as boost individual disposal incomes through targeted tax exemptions as captured in the Bills already with national assembly.
It’s also instructive to emphasize to our brothers in the north that no patriotic, well-informed, exposed and urbane southern president who indeed worth his salt, would attempt to REGRESS the north. Not in the 21st Century!
The more developed the north, the better for the country particularly on the huge population of the region.
It’s also important to reiterate that the president would still largely place reliance for his re-election bid on the people of the north during the 2027 general elections.
So, what would he gain from transmitting to National Assembly an executive bill meant to retard the region economically, socio-culturally and politically?
For emphasis, the Tax Reform Bill that seeks to introduce an equitable basis for VAT revenue sharing to ensure that states without headquarter of companies are fairly treated and rewarded for their economic contributions cannot be said to be against the interest of the north.
The existing VAT revenue sharing arrangement largely favour Lagos and Rivers as the two states housed many of the company’s headquarters.
The proposed arrangement by the new Tax Reform Bill that seeks revenue sharing by consumption would surely favour some of the states in the north on account of their high consumption level, consequent upon the huge population of the region.
Let’s check this: On the basis of Nigerian Bureau of Statistics for MTN in the 1st Quarter of 2023, Lagos, Ogun, Kano, Kaduna, Oyo, Delta, Osun, Edo had 26.8 million, 13.5 million, 12.4 million, 7.3 million, 6.2 million, 6.8 million, 5.4 million and 6.5 million of subscribers respectively.
In the proposed reform, each state will henceforth be credited with the portion of VAT that accrued in that state on the basis of the subscribers usage of the network, unlike in the existing arrangement that Lagos is paid the whole VAT proceeds because the headquarters of MTN situates in Lagos.
Technically, what this suggests is that VAT collected from 12.4 million and 7.3 million subscribers will automatically accrue to Kano and Kaduna states respectively. Are the people of the north justified in their submission that Tax Reform Bill is against the region?
The Tax Reform Bill seeks to exempt from PAYE (Pay As You Earn) for minimum wage earners and reduced tax burden for over 90% of all workers in the private and public sectors.
No iota of doubt, about 75% of northern population of 140 million people that presently ravaged by poverty, deprivation, hunger and continually being harassed by scourge of criminality are firmly in this group. Is it therefore fair to the president that the Tax Reform Bill he transmitted to the national assembly is anti-north?
It’s also important to submit that a whopping 3% of the gross annual VAT accrued to government from diverse economic activities is made available to North East Development Commission (NEDC), an initiative of the president meant to reconstruct, rehabilitate, as well as restore the loss of colossal fortunes of North East region, particularly the tragic and large-scale destruction visited on Sambisa, Maiduguri city and other notable locations of the region.
Meanwhile, it’s only NEDC of all Development Commissions that enjoy the gesture of the president. Isn’t NEDC created to take care of one of the northern regions?
With the above, are the north justified in the virulent attack of the bill, as well as the president?
There are other awesome initiatives seek to be achieved by the Tax Reform Bill as understated:
There is Tax exemptions for small businesses with annual turnover of N50 million or less, including withholding tax, value added tax, and 0% corporate income tax rate.
There is VAT at 0% for food, education, healthcare, and exemption for rent, public transportation, fuel products and renewable energy. These items constitute an average of 82% of household consumption and nearly 100% for low income households to ameliorate the rising cost of living for the masses.
The Bill also seek changes to the income tax laws to facilitate remote work opportunities for Nigerians in Nigeria within the global business process outsourcing. This will empower Nigerian youths to play a key role in the digital economy space.
The bill seeks for reduction of corporate income tax rate from 30% to 25% over the next 2 years and elimination of earmarked taxes on companies to be replaced with a harmonised single levy at a reduced rate.
The Tax Reform Bill equally purposed to eliminate minimum tax on loss-making companies and those with low profit margins.
Is this not a wonderful innovation particularly in our country presently facing challenges of power supply, infrastructural deficits and insecurity, all hydra-headed challenges hindering business operations across the country?
Other innovative idea in the bill includes Grant of input VAT credit to businesses on assets and services to improve investment competitiveness and reduce the cost of goods and services
And what of redesigning the personal income tax brackets and rates, VAT and capital gains tax to be progressive, while protecting the poor?
This writer is also of strong view that systematically, Tax Reform Bill seeking to gradually phase out TETFUND in favour of NELFUND is germane, apt, necessary and overdue.
Tertiary Institutions are not the only one to enjoy huge funding from federal government; other institutions should also benefit.
In any case, would there be Tertiary Institutions if vibrant and strong secondary schools, colleges of education, and even primary schools across the country are not sufficiently funded?
ASUU should please stay away from this and allow the new Tax reforms to be.
Finally, I implore and encourage our northern people of the need for them to double their patriotism, keep an open mind and collaborate with the president in his avowed and strong desire to develop and put Nigeria on the path of prosperity.
Tax Reform Bill is one of those initiatives of the president that we expect them to solidly and strongly support.
Without doubt, they are key stakeholders in the Nigeria project; the best generality of Nigerians demand for them is to jettison unnecessary suspicion as this would continue to project the entire north in the bad light.
Kola AMZAT (FCA, FCIB, ACTIN, ACS),
Lagos Financial Consultants,
09077509348.
