The Presidential Fiscal Policy and Tax Reforms Committee says it will transmit its policy recommendations to the National Assembly by the end of Q3 2024.
These include new National Tax and Borrowing Policies to be implemented in September and new proposals to amend the Constitution, which would take effect from 2025.
The committee led by Taiwo Oyedele announced that his team had closed its proposal phase and is now “consulting with the private sector” for the rest of May.
The Committee expects to secure internal approvals from the Federal Executive Council, National Economic Council and other organs of government “up until the end of June.”
He explained, “We envisage by the Quarter Three, our documents will be ready to go to the National Assembly and by the end of that Q3.
“We should have them enacted into law so we can give reasonable notice to the public, businesses and individuals before commencement for many of them kick off in 2025. But where we have executive orders and directive regulations that don’t require enactment into law, we just need the ministers to sign.
“For instance, we have a new withholding tax regulation where small businesses will be exempt from having to deduct withholding tax. So it’s ready; we’re waiting for the final signature.”
The tax reforms chief hinted about a new National Tax Policy and a Spending Policy that would dictate government spending as well as a Borrowing Policy “so that the social contract with the people is delivered to them in a meaningful way.”
“So, all of that will happen before the end of the year. But where we are enacting the law and proposals to amend the Constitution, that will happen in 2025 and, maybe, 2026 because I think the timeline that the National Assembly has is about two years,” he explained.
Oyedele argued that these processes are necessary to ensure that the “reforms can be enduring and sustained,” adding, “We don’t want this whole effort to go down the drain, after one or two years if somebody comes with a different idea and introduces new taxes. We have to fix this problem once and for all.”
Fielding questions on the foreseeable tax threshold for small businesses, he said after the deploying considering its data, the Committee has agreed that “if you earn N25m a year or less, you don’t have to pay company income tax, you don’t have to worry about VAT.”
He said, “The informal sector is people who are trying to earn a legitimate living”; therefore, “we should allow them to be and support them to grow to a point where they can then have the ability to pay taxes.”
Consequently, “We think that 95 per cent of the informal sector should be legally exempted from all taxes; withholding tax, company income tax, even payee on their staff. Let them be.
“We can then focus our attention on the top 5 per cent of that sector and, of course, the middle class and the elites. We think the days of being above the law in paying taxes are over.
“This is the same thing we’re saying to our leaders, whether elected or appointed; we think they have to lead by example by showing that they have paid the taxes, not only on time but correctly to the lawful authorities as contained in the various laws.”
The Oyedele-led Committee said it is “very convinced” that the government needs to increase the exemption threshold for small businesses such as for low-income earners, because “if you can’t make ends meet, the last thing you want is someone asking you to pay tax and we don’t think that is right.”
On the policy flaws entrenched in the controversial Cybersecurity Levy, Oyedele called for patience from the Nigerians battling multiple taxations, saying, These problems will not disappear overnight. It’s a work in progress.”
He stated, “As we progress from ideation, proposal to implementation, you’ll see less and less of those issues.”
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