In a move aimed at easing the economic burden on Nigerians, the Federal Government has proposed eliminating Value Added Tax (VAT) on essential goods and services such as food, education, and healthcare.
This proposal is part of the Nigeria Tax Bill 2024, which is under consideration by the National Assembly.
Economic Crisis Demands Action
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, made the announcement on Monday in Abuja.
He described the reform as a response to Nigeria’s dire economic challenges, which include an inflation rate of 33.88%, high unemployment, and widespread poverty.
“Over 95 million Nigerians live in monetary poverty, while 133 million experience multidimensional poverty,” Oyedele said during an interactive session with lawmakers.
He stressed the need for bold fiscal reforms to address these pressing issues.
Simplifying the Tax System
Oyedele outlined the government’s plan to scrap “nuisance taxes” that yield low revenue but place a heavy burden on the poor and small businesses.
“We want to focus on high-revenue taxes that are broad-based, easy to collect, and fair,” he said.
The proposed reforms aim to reduce the number of taxes across all government levels to a single digit, merge overlapping levies, and institutionalize tax harmonization for long-term sustainability.
He added that the changes would allow businesses to recover VAT on assets and services, ultimately reducing costs and curbing inflation.
“No Region Will Be Undermined”
Addressing fears of regional bias, Oyedele assured Nigerians that the reforms were designed to benefit everyone equally.
“There is no negative thinking about any region or anything,” he said.
Under the current VAT Act, revenue is shared among the Federal Government (15%), states (50%), and local governments (35%).
Oyedele explained that the new system would ensure that states receive more revenue based on where goods and services are consumed.
“Over 97% of small and medium enterprises will be exempt from charging VAT on their sales,” he said.
Legislative Scrutiny and Debate
The Speaker of the House of Representatives, Hon. Tajudeen Abbas, promised Nigerians that the proposed bills would be thoroughly reviewed.
“The House owes Nigerians a duty to ensure these reforms serve the national interest,” Abbas said.
He emphasized that taxes are essential for funding critical services such as education, healthcare, and security.
Despite being Africa’s largest economy, Nigeria’s tax-to-GDP ratio stands at just 6%, far below the global average and the World Bank’s benchmark of 15% for sustainable development.
“This is a challenge we must address to reduce reliance on debt financing and ensure fiscal stability,” Abbas added.
Controversy Sparks Public Debate
The proposed reforms have sparked heated discussions among civil society, media, and governance stakeholders.
“These debates are healthy and necessary in a democracy,” Abbas said.
He commended the Presidential Committee on Tax Reforms for their efforts and urged lawmakers to approach the session with open but critical minds.
Dr. Zacch Adedeji, Chairman of the Federal Inland Revenue Service (FIRS), said the agency awaits the bill’s passage to implement its provisions.
“Our responsibility is to execute the laws passed by the National Assembly,” Adedeji said.
“Reforms Must Be People-Centered”
Oyedele and Abbas both stressed that tax reforms should prioritize the welfare of citizens.
“We must ensure fairness, transparency, and equity,” Abbas noted.
Oyedele called for greater public participation in shaping the reforms to ensure they reflect the needs of ordinary Nigerians.
