HoR Passes Key Tax Reform Bills For Second Reading

The House of Representatives on Wednesday, approved for second reading four tax reform bills presented by the President to the National Assembly. The bills, comprising the Nigeria Revenue Service (Establishment) Bill, the Nigeria Tax Bill, the Nigeria Tax Administration Bill, and the Joint Revenue Board (Establishment) Bill, were passed without opposition from members.

These bills were first introduced on October 8, 2024, but their progression had been delayed due to disagreements among members, particularly concerning the content of the Nigeria Tax Administration Bill. The bill faced objections from northern leaders and the Nigerian Governors Forum, which had previously held up the debate.

Before the debate on Wednesday, Speaker Abbas Tajudeen emphasized the importance of thorough consultations with constituents, urging members to engage with their communities regarding the benefits of the proposed bills.

To streamline the process, the House consolidated the four bills into a single document for the purpose of the debate.

While members raised some concerns over certain sections of three bills that appeared to conflict with provisions of the Constitution, as well as a few other clauses, the overall sentiment was one of strong support. The House unanimously favored the bills for a second reading.

Minority Leader of the House, Kingsley Chinda, who appeared to speak on behalf of the minority group, expressed support for the overall intention behind the four proposed bills but raised concerns about certain aspects of their provisions.

Chinda acknowledged that the bills aim to reform the nation’s tax system to enhance revenue generation. However, he emphasized that while the spirit of the bills is commendable, some of the specific provisions need further scrutiny.

“We all agree that the intention behind these four bills is positive. However, we have reservations about certain provisions. While we oppose some aspects of the bills, we support their underlying goals. We want to reassure Nigerians that we will monitor these provisions closely, and at the appropriate time, we will ensure that any issues with the provisions are addressed in the best interest of the nation,” Chinda stated.

He advocated for a reduction in the Value Added Tax (VAT), emphasizing that it is possible to lower taxes while simultaneously addressing conflicts and improving various areas of concern.

During the debate on the bills, House Leader Prof. Julius Ihonvbere praised the President for having the courage to introduce legislation aimed at reforming the nation’s tax laws. These reforms, he noted, are designed to tackle issues such as multiple taxation, improve revenue collection, and diversify the economy.

While acknowledging those who voiced opposition to the bills, the House Leader expressed that these differing views have contributed to strengthening the proposed reforms, which aim to overhaul the country’s tax system, one of the oldest in the world.

Hon. Ihonvbere stated that the proposed tax reform bills aim to empower citizens by supporting small-scale businesses and boosting revenue generation. The reforms are expected to create a more conducive environment for businesses to flourish.

He further explained that the tax bills will simplify the current complex tax system by reducing the number of taxes imposed on companies. This, he said, will lead to sustainable growth. Additionally, the reforms will ease the financial burden on the less privileged by lowering personal income tax and introducing zero taxes on essential sectors such as food, healthcare, and education. The bills also propose zero tax on the minimum wage.

According to Ihonvbere, the number of taxes in the country will decrease from over 60 to just about nine. Disputes arising from tax-related matters will also be resolved within 14 days, ensuring greater efficiency in the tax system.

He urged members of the House to actively contribute to shaping history by reforming the tax system, with the goal of fostering revenue growth, boosting employment, and improving the lives of ordinary Nigerians.

Minority Whip, Ali Isa (PDP, Gombe), commended the Speaker for providing an opportunity for members to thoroughly engage with and consult on the contentious aspects of the four tax bills. He emphasized that through these consultations, Nigerians have been well-informed about the proposed changes.

However, Isa raised concerns about Clause 146 of the Nigerian Tax Bill, which proposes a gradual increase in VAT from the current 7.5% to 10%, and eventually to 15%. He cautioned that, while the government must explore solutions to alleviate the ongoing economic hardship, such a VAT increase would likely exacerbate the challenges faced by the people.

Isa concluded by urging the House to remain vigilant, ensuring that the bills reflect the areas where Nigerians most desire improvements.

Speaking also on the bills, Hon. Bamidele Salam, the Representative for Osun State and Chairman of the House Committee on Public Accounts, emphasized that while reforms are often challenging and disruptive, they are necessary for a country’s development.

Salam explained that Nigeria’s tax system is one of the most duplicative in the world, stifling economic growth and discouraging foreign investment due to its complex and burdensome nature. He noted that these inefficiencies have created obstacles in the ease of doing business in the country.

He further stressed that any reform initiatives under consideration must prioritize the welfare of the Nigerian people. “We must always ask ourselves how these laws will benefit the people,” Salam said, underlining the importance of ensuring that legislative changes serve the public interest.

Stanley Olajide (PDP, Oyo) on his part stressed that on a daily basis, the House of Representatives passes bills to establish various institutions. He emphasized that these newly created institutions will require funding, and that the bills aim to provide the necessary financial resources to support them.

Meanwhile, Deputy Chief Whip, Isiaka Ibrahim Ayokunle (APC, Ogun) expressed his support for the proposed tax bills, calling them one of the best developments for the country. He explained that once enacted, the bills will streamline and harmonize all existing tax laws and levies in the nation. However, he noted that while the proposed law includes penalties for those who fail to comply with tax regulations, it should also incorporate penalties for those responsible for the law’s poor implementation.

Hon. Ayokunle emphasized the need for safety nets within the law to protect companies that, although not operating at a loss, may declare losses to avoid paying taxes.

Contributing to the discussion, Hon. Sada Soli (APC, Katsina) acknowledged that the proposed bill would improve efficiency, ensure completion, and harmonize tax collection. However, he pointed out several inconsistencies and challenges within the existing laws that the House must address.

These issues, he noted, raise constitutional and jurisdictional concerns, particularly with Section 141 of the Tax Administration Law, which he argued contradicts the provisions of the Constitution and overlaps with the functions of existing laws. Additionally, he highlighted the absence of interpretation clauses in the laws, as well as concerns regarding VAT and fiscalization, which he believes impose an undue burden on taxpayers.

Contributing also to the debate, which lasted for about three hours, Hon. Babajimi Benson (APC, Lagos) emphasized that the proposed bills would promote fairness, equity, and justice across the country, while also ensuring that more funds become available to the states. He praised the governors for supporting the retention of agencies such as TETFund, NITDA, and NASENI, which have also received backing from the House. He further commended President Buhari, saying, “I commend the President for having the courage to introduce these reforms at this time.”

In a similar vein, Gboyega Nasiru Isiaka highlighted that from the moment the 10th House was inaugurated, they had committed to embracing reforms. “Tax reform is one of the promises we made to Nigerians,” he stated. “Our tax system is outdated and needs urgent reform. Our tax-to-GDP ratio is the lowest in all of Africa, and it is crucial that we improve our tax returns.” He further pointed out that the country’s budget is inadequate, the deficit continues to grow, and a significant portion of the economy remains underground, which needs to be addressed.

Marian Onuoha (APC, Imo) on her part emphasized that the bills aim to achieve a balance in income generation by placing a greater tax burden on the wealthy.

However, Abubakar Hassan Fulata raised concerns about the lack of an interpretation clause in three of the four bills, stating that any law without such a clause is prone to misuse and can be easily manipulated by those tasked with its enforcement.

Ademorin Kuye (APC, Lagos) highlighted the importance of tax reforms for Nigeria’s global competitiveness, stressing the need for the country to modernize its tax laws. Leke Abejide (ADP, Kogi) added that President Tinubu is focused on revitalizing the Nigerian economy, which is currently facing serious challenges.

On the contentious issue of the derivation principle, Ahmed Jaha (APC, Borno) called for clarity in the law, emphasizing that it should specify the exact type of derivation being referenced.

Finally, Donald Ojogo (APC, Ondo) stressed that in crafting the bill, Parliament must ensure that appropriate technology is implemented to curb revenue leakages and enhance effective revenue generation.

Former House Leader, Al Hassan Ado Doguwa, commended the patriotism displayed by lawmakers and the determination of the Speaker in ensuring a thorough debate on crucial bills. He highlighted the Speaker’s decision to delay the bills until adequate consultations were conducted with the people, underscoring the importance of democratic processes.

Doguwa also lauded the President for his democratic approach, allowing Parliament to carry out its responsibilities. He commended the President’s decision not to phase out certain agencies, describing it as one of the best decisions made.

Former Deputy Speaker, Ahmed Idris Wase, weighed in on the contentious tax bills, noting that they had almost caused a division within the House when first presented. Wase credited the Speaker’s diplomatic approach with uniting the House on the matter. He also emphasized the significance of retaining TETFund in the new law, asserting that those who sought its phased removal were undermining the country’s educational development.

The four bills were unanimously passed for a second reading, with a resounding voice vote and no dissenting votes. They have now been referred to the House Committee on Finance, which will conduct a public hearing on the bills.