economy
Presidential Committee seeks tax exemption for 95% of informal sector businesses
The Presidential Fiscal Policy and Tax Reforms Committee has said that it is working on a system that will provide tax relief to 95% of the informal sector of the economy in the country.
Chairman of the Committee, Mr Taiwo Oyedele, stated this at the closing session of the committee on Sunday in Abuja. According to him, this would be achieved through the exemption of businesses earning N25 million a year or less from the various taxes hindering their progress over time.
“So, we think that 95% of the informal sector should be legally exempted from all taxes; withholding tax, company income tax, even payee on their staff.
“We’re using data to inform our decisions. Currently, if you earn N25 million a year or less, you don’t have to pay company income tax, you don’t have to worry about VAT.
‘’We think that the informal sector are people who are trying to earn a legitimate living, we should allow them to be and support them to grow to a point where they can then have the ability to pay taxes,” he said.
Focus on 5%
Oyedele said the new reforms being proposed would focus on the top 5% of that sector, the middle class, and the elite for taxes. He said the committee was drafting the laws to effect the necessary changes in the fiscal policy and tax reform ecosystem of the country.
According to the chairman, the new laws will ensure that reviews become sustained by all governments coming in, adding that: “we don’t want this whole effort to go down the drain, after one or two years.”
On compliance, he urged all stakeholders to fully cooperate with the government in implementing a new fiscal and tax policy that would be used for the general good of the citizens.
‘’We think that the days of being above the law in paying taxes are over. The same thing we’re saying to our leaders, whether they are elected or appointed. They have to lead by example by showing that they have paid the taxes, not only on time but correctly to the lawful authorities as contained in the various laws,” he said.
He explained that some of the taxes complained about by Nigerians were those already in the constitution, which the committee had looked at and called for their review.
‘’So, our expectation is, as we progress now from ideation, implementation proposal, you’ll see less and less of those issues and then you’ll see harmony in the direction of the fiscal system.
‘’Not only in the number of taxes we collect, you will also see an improvement in how those monies are being spent,” he said.
Driving revenue generation
Speaking during the ceremony, Vice-President Kashim Shettima restated President Bola Tinubu’s commitment to revitalizing revenue generation in the country. According to him, the government aims to revitalize revenue generation in Nigeria, while sustaining an investment-friendly and globally competitive business environment.
However, he noted that contrary to speculations in some quarters, the government is not here to frustrate any sector of the economy but to create an administrative system that ensures the benefits of a thriving tax system for all its citizens.
“I am confident that both the Federal and State Governments stand ready to ensure the effective implementation of your reform proposals,” said Shettima.
What you should know
Small businesses across Nigeria have struggled with multiple taxation either from different agencies of the federal government or similar kinds of taxes from different levels of government (federal, state, and local government).
Oyedele recently said that the committee was making recommendations to the state and local governments across the country to suspend “nuisance taxes” that don’t add value to the state’s coffers.
While many of the committee’s proposals seem to be in favour of small businesses and the informal sector to drive growth in economic activities, the implementation is still at the discretion of the government.
