The House of Representatives on Wednesday passed the controversial tax reform bills submitted by President Bola Tinubu for a second reading. The bills, which include the Nigeria Revenue Service (Establishment) Bill, the Nigeria Tax Bill, the Nigeria Tax Administration Bill, and the Joint Revenue Board (Establishment) Bill, are aimed at overhauling the nation’s tax system.
The executive bills were first presented to the National Assembly on October 8, 2024. However, debates on the bills were delayed due to their controversial nature, with northern lawmakers particularly opposing certain aspects, including the distribution formula for Value Added Tax (VAT).
The National Economic Council (NEC), which includes governors and is chaired by Vice President Kashim Shettima, had urged the president to withdraw the bills for further consultation. However, President Tinubu resisted, directing that all concerns should be addressed within the National Assembly.
During Wednesday’s plenary session, House Leader Prof. Julius Ihonvbere praised President Tinubu for introducing the bills, emphasizing that they would help address issues like multiple taxes, revenue collection, and economic diversification.
Opposition within the House
While many lawmakers supported the spirit of the tax reforms, concerns were raised about certain provisions. Minority Leader Hon. Kingsley Chinda expressed his support for the overall objectives of the bills but called for revisions to certain provisions. He urged a reduction in VAT, arguing that tax burdens could be eased without harming the system’s effectiveness.
Hon. Miriam Onuoha voiced her support for the bills, highlighting their potential to ensure a more progressive tax system. She pointed out that the bills include provisions like tax exemptions and rebates for companies that employ individuals on a salary of N100,000 or less. Onuoha also called for the removal of a sunset clause for TETFUND, advocating for continued support for the agency’s work in reducing infrastructure gaps in Nigeria’s tertiary institutions.
Concerns Over Tax Provisions
Some lawmakers raised concerns about the lack of interpretation clauses in the bills, with Hon. Hassan Fulata noting that this could lead to ambiguity and potential misuse. He urged that these clauses be added to ensure clear understanding and implementation.
Lawmakers’ Reactions to the Tax Reform Bill
Hon. Ahmed Jaha, representing Chibok, Damboa, and Gwoza Federal Constituency of Borno State, expressed his concerns about certain provisions of the Tax Reform Bill. He cited objections from the National Economic Council and various governors’ forums, particularly from the northern states, as sources of initial controversy. Jaha pointed out that while he disagreed with certain aspects, he supported some provisions, especially those addressing revenue distribution based on consumption derivation. He emphasized the need for technology and infrastructure to track and fairly distribute VAT based on where consumption actually occurs.
Jaha also opposed the proposed inheritance tax, arguing that it conflicted with religious teachings, particularly in Islam, where inheritance is clearly governed by religious principles.
Despite the ongoing controversies and differing opinions within the House of Representatives, the tax reform bills passed their second reading, marking an important step in the potential overhaul of Nigeria’s tax system. While some lawmakers have called for revisions to certain provisions, the bills are seen as a vital move toward addressing the country’s tax challenges and fostering economic growth.
