The chairman of the Presidential Fiscal Policy and Tax Reform Committee, Taiwo Oyedele, has insisted that the Nigerian government’s tax reforms do not include an increase in value-added tax (VAT).
According to him, the committee’s proposal to the federal government is to lower VAT on commodities that form 82 percent of what a typical Nigerian household consumes.
These include food, education, healthcare, transport, and accommodation.
“Our proposal is meant to make the life of the vast majority of Nigerians easier, I will say 99.9 percent,” he said on Monday on Nigeria Info 99.3 FM Lagos’ Morning Crossfire.
The VAT rate will be adjusted higher only for non-essential items and services. Mr. Oyedele told Nigeria Info that the increment will be progressive.
“We are proposing a rate increase from 7.5 percent to 10 percent by 2025 if our proposal is approved, and that rate goes up to 12.5 percent by 2026,” he said.
He also stated that the committee is proposing a cut in company income tax during the same period from 30 percent to 27.5 percent in 2025 and 25 percent by 2026.
In addition, the proposal suggests that individuals earning N70,000 or less be exempted from the Pay-As-You-Earn (PAYE) tax, those earning between N70,000 and N1.5 million a month pay less, and those earning more than 1.5 million should pay slightly more to balance the national budget and prevent inflation and poverty.
“Small businesses earning less than N50 million will not be paying VAT,” he added.
Mr. Oyedele went on to say they have been intentional in finding the places where the poorest people, the masses, are carrying the weight of taxation and taking those things out deliberately.
“Ninety percent of those unnecessary taxes will no longer exist. The ones that are left; we have harmonized them, and we are left with eight taxes across local government, state, and federal.
“The eight we have, nobody will have to pay more than four.
“We have proposed these not only in terms of the law we have drafted, but we have also sent it to the National Assembly to amend the constitution so that nobody will come and reverse these reforms,” he said.
