In a bold move aimed at revitalising Nigeria’s economy, the National Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has called on President Bola Tinubu to implement sweeping tax reforms. The business association is advocating for a significant reduction in corporate taxes to 19% and a decrease in the Value Added Tax (VAT) to 7.5%.
The call for these adjustments, outlined in a recent statement by NACCIMA’s National President, Dele Kelvin Oye, comes at a time when Nigeria’s tax policies are under intense scrutiny. The current proposals, which are before the National Assembly, foresee a gradual increase in VAT, starting from 10% in 2025 and reaching as high as 15% by 2030. However, NACCIMA argues that the government’s existing tax policies may stifle economic growth and are not conducive to improving the business climate.
NACCIMA’s Bold Tax Proposal
Oye, speaking on behalf of the association, emphasized that reducing corporate tax rates to 19% and capping VAT at 7.5% would have far-reaching positive effects on the Nigerian economy. He argued that these tax cuts would stimulate economic growth, encourage investment, and, crucially, increase government revenue. “We believe corporate taxes should be further reduced to 19%, and VAT pegged at 7.5%,” Oye said in the statement. “This would grow the economy and result in higher tax revenues for the government. As a caveat to protect government revenues, each taxpayer must not pay less than the preceding tax year.”
Oye also pointed out that lowering taxes could foster a more favorable environment for businesses to thrive, ultimately leading to more job creation and stronger economic output. The proposed changes, according to NACCIMA, would align Nigeria’s tax system with global standards while addressing the country’s unique challenges.
The Disconnect Between Federal and State Governments
NACCIMA’s statement also touched on the ongoing tension between the federal and state governments over revenue-sharing arrangements. According to Oye, this rift has manifested in public spats and media engagements that distract from the real needs of taxpayers and the broader public. Oye noted that the constant media exchanges between federal and state officials were further evidence of the disconnect. “The current media engagement between federal and state governments in newspapers and press releases only further confirms the disconnect described above,” he remarked. “The beneficiary parties receiving taxpayer funds engage each other on how to secure a larger portion of taxpayer funds without consideration for the public or taxpayer interest.”
This growing discord has led to a situation where the taxpayer’s needs are often sidelined in favor of political maneuvering. Oye is calling for a shift in focus, with both federal and state governments working together to create a more harmonious tax and revenue-sharing system that prioritizes the public good.
A Call for Sector-Specific Reforms
In addition to urging tax cuts, NACCIMA has stressed the need for broader reforms across various sectors. Oye specifically highlighted the telecommunications sector, a key contributor to Nigeria’s tax base, as an area in dire need of reform. He pointed out that without targeted reforms, sectors such as telecommunications could fail to reach their full revenue potential, which would be a missed opportunity for economic growth.
“Significant tax payers like the telecommunications sector who require reforms should not be ignored,” Oye insisted. “There must be real dialogue with genuine concessions to be made by all parties.” The NACCIMA president emphasized that reforms in such vital sectors could lead to enhanced tax collection and a more dynamic economy overall.
Furthermore, Oye called for greater involvement of the private sector in the tax reform process. He criticized the current approach, which often involves committees that “lecture taxpayers” without resulting in any tangible benefits. “The private sector (aviation, telecommunications, manufacturers, Free Trade Zones, and other stakeholders) must be engaged in written communication,” he stressed. “Committees that come to lecture taxpayers are not giving positive outcomes.”
The Need for Collaboration and Transparency
NACCIMA’s statement also pointed to the lack of collaboration between various stakeholders in tax policy development. The association advocates for more inclusive discussions, where the private sector can be directly involved in shaping the future of tax reform. This would allow for more balanced and effective policy changes, particularly for industries like aviation and telecommunications, which are critical to Nigeria’s growth.
To facilitate better coordination, NACCIMA suggested that the outcomes of these engagements be sent to the National Assembly through the office of the Attorney General. Oye believes this could improve transparency and ensure that tax reforms are better aligned with the needs of Nigeria’s diverse economy.
Can Nigeria’s Tax System Survive Without Reform?
As the debate over Nigeria’s tax system continues to intensify, many are questioning whether the country’s current policies are sufficient to address its mounting economic challenges. The NACCIMA proposal, with its focus on reducing corporate taxes and VAT, offers a potential pathway to greater economic stability and growth. However, some critics remain skeptical, arguing that reducing taxes could strain public finances, especially given Nigeria’s reliance on oil revenues.
Regardless of the opposition, NACCIMA’s stance is clear: tax reform is essential to the country’s future. By adopting more business-friendly tax policies and ensuring that the private sector is fully engaged in the process, Nigeria could emerge as a more competitive and prosperous economy in the years to come.
As Nigeria’s tax reform journey unfolds, the collaboration between government, private sector, and civil society will be crucial to achieving meaningful and sustainable changes. Only time will tell whether the Tinubu administration will heed the call for a comprehensive overhaul, but NACCIMA’s push for lower corporate taxes and VAT has certainly added a new dimension to the conversation.