By Dada Ahmed
(News Analysis).
Not long ago, precisely on October 3,2024, President Bola Tinubu transmitted four tax reform bills to the National Assembly, for debate and passage These bills are:
The Nigeria Revenue Service (Establishment) Bill: This bill proposes replacing the Federal Inland Revenue Service (FIRS) with the Nigeria Revenue Service (NRS) to improve tax collection and accountability.
The Nigeria Tax Bill: It aims to consolidate and streamline the fiscal framework for taxation in Nigeria.
The Nigeria Tax Administration Bill: This focuses on creating a legal framework for fair and efficient tax administration to encourage compliance and reduce disputes.
The Joint Revenue Board (Establishment) Bill: This bill seeks to establish a body for harmonizing and resolving tax-related disputes, including a Tax Appeal Tribunal and the Office of the Tax Ombudsman.
These reforms are intended to enhance revenue generation, simplify the tax system, and promote economic growth.
The Nigerian Senate went into debate on the bills but has to suspend action on the controversial Tax Reform Bills following public agitation and regional opposition.
Punch reports that the decision was accompanied by directives to its Finance Committee to pause public hearings while a special committee collaborates with the executive branch to address contentious issues.
The Deputy Senate President Jibrin Barau is qouted as emphasizing the Senate’s role in fostering unity and resolving disagreements through dialogue, stressing the need for consensus-building to ensure the bills align with national interests.
But Key stakeholders, including northern governors, have criticized the bills as inequitable and detrimental to their region, particularly regarding the proposed derivation formula for VAT distribution.
For instance,Governor Babagana Zulum of Borno State wondered why the federal government engaged in rushing the process, citing research indicating potential financial losses for northern states.
He called for a pause to allow for deeper consultations and revisions to clauses perceived as harmful to regional development.
Similarly, northern senators voiced strong opposition, to the bills arguing that theu lacked thorough expert review and adequate stakeholder engagement.
In response, the executive arm, led by President Bola Tinubu, tasked the Ministry of Justice to collaborate closely with the National Assembly to address “grey areas” in the legislation.
Nonetheless, the Senate’s special committee has continued its deliberations, emphasizing the urgency of resolving the controversy.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, defended the bills, arguing that they aim to simplify Nigeria’s complex tax system and address the economic struggles of ordinary Nigerians.
Oyedele underscored the urgency of passing the reforms, likening their importance to emergency measures taken during the COVID-19 pandemic.
He highlighted the challenges faced by small businesses and citizens under the current tax regime and called for swift action to alleviate economic hardships.
While the bills have been under consideration for over a month, Oyedele acknowledged the need for further engagement to address misconceptions and regional concerns and urged stakeholders to expedite the process to provide much-needed relief to Nigerians.
Financial experts aggree that in every society, taxes serve as the lifeblood of governance, fueling public services, infrastructure, and social programmes. They add that taxes are also a perennial source of contention, stirring heated debates across political, economic, and social divides. As the latest tax reform bills come under scrutiny, the nation finds itself at a crossroads, asking a pivotal question: should these bills “be” or not “be”?
Proponents argue that the tax reform bills are not merely fiscal adjustments but long-overdue corrections to an inequitable They argue that for years, the tax code has been riddled with loopholes, allowing the wealthy to evade fair contributions while placing an undue burden on the middle and lower classes. Advocates also assert that the bill introduces progressive measures aimed at redistributing wealth, fostering economic growth, and creating a level playing field.
Among the highlights is a reduction in corporate tax rates, ostensibly to encourage investment and stimulate job creation. The bills also promise increased deductions for small businesses and incentives for green energy projects, aligning fiscal policy with sustainability goals. For individuals, adjustments to income tax brackets and an increase in the tax-free threshold could provide much-needed relief to struggling families.
Economists backing the bill believe these changes will boost consumer spending, reduce income inequality, and strengthen the social contract between citizens and the government.
Those on the other side of the coin warn of unintended consequences that could outweigh the intended benefits.
According to them, lowering corporate taxes disproportionately benefits large corporations while failing to guarantee job creation or wage increases. They expressed concern that similar measures in the past have primarily resulted in stock buybacks and inflated executive bonuses, with little trickle-down effect for the average worker.
Furthermore, the bill’s critics highlight potential risks to fiscal stability. If revenue from the proposed tax reforms falls short, the government may face deficits, leading to cuts in essential public services, they argue. There is also skepticism about whether the wealthy will truly bear a greater burden, given the ingenuity of tax avoidance schemes.
For low-income earners, concerns centre on the proposed introduction of consumption taxes, which may inadvertently increase the cost of living. Critics also question whether the promised benefits of the bill justify the complexities it introduces to an already labyrinthine tax code.
Therefore,public opinion on the tax reform bill is predictably polarized. Many citizens, frustrated by economic hardship, say they see the bill as a glimmer of hope for a fairer system. Others, wary of government promises, remain skeptical, fearing that the reforms may inadvertently worsen their financial struggles.
Small business owners, a key constituency, are divided. While some welcome the incentives, others worry about the administrative burden of complying with new regulations. Environmental advocates hail the green tax incentives, though they caution that such measures must be robustly enforced to have meaningful impact.
As the debate rages on, it becomes clear that the question of whether the bill should “be or not be” depends on careful deliberation and compromise. The urge is for policymakers to as a matter of necessity,address legitimate concerns about equity, enforcement, and fiscal sustainability. Many discerning minds following trends on the bills call for transparency in the bills’implementation and put in place,mechanism for regular review which is critical in building public trust.
Ultimately, the success of the tax reform bills hinges on their ability to balance competing interests and deliver tangible benefits to the majority. In Shakespearean fashion, the question of “to be or not to be” may find its answer not in absolutes, but in the pursuit of pragmatic, inclusive solutions that prioritize the nation’s collective good.
As Nigerians watch and wait, while the pendulum in the bills swing, one thing is basic: this debate will shape the economic and political landscape of their country for years to come.
Ahmed publishes The Reporters
