Presidency Reveals Reasons Behind Tinubu’s Introduction of Tax Reform Bills

The presidency has shed light on the motivations behind President Bola Tinubu’s introduction of the tax reform bills.

According to Sunday Dare, Special Adviser on Public Communication and Orientation to the President, the bills aim to create an efficient tax system that will drive the country’s development.

Speaking during a courtesy visit to the Premium Times office in Abuja, Dare said that the current tax system is plagued by redundancy, with over 80% of the 61 existing taxes being unnecessary. The goal, he explained, is to refine the tax system and transition from voluntary to corporate taxation.

Dare pointed out that this model has been successfully implemented in Lagos State during Tinubu’s tenure as governor between 1999 and 2007. The reform led to a significant increase in the state’s internally generated revenue, from N600 million in 1999 to a substantial amount that would require combining the revenue of at least 15 states.

“That template still exists in Lagos State. That’s why to get the state tax revenue, you will have to put together at least 15 states to get the revenue.

“What the president cares about is blocking the loopholes in the revenue and tax system and increasing the government revenue. We saw the success he brought to Lagos state,” he said.

Dare assured that the president is committed to listening to opposing views and is being briefed daily on the arguments for and against the tax reform bills. He said that the bills do not intend to burden the poor or small business owners, but rather aim to reduce the tax burden on the poorer population.

Under the new tax system, individuals earning below N1 million and businesses with profits below N50 million will be exempt from taxation. The Pay As You Earn (PAYE) tax will also be abolished.

“The implementation of this tax reform will bring to life the true fiscal federalism that we have never had before,” he said.

“It also places some level of responsibility on the state government. They now have to bring investors, increase the VAT revenue from your state and use them. For NEC, the federal government has shed some weight. It now handles only 10 per cent, state 55 per cent, local government 35 per cent. This is true federalism.

“I am not saying it is a perfect document, but the very core of the tax reforms that we need is built into that document, which will foster development.

“The president has said the entire philosophy around this tax bill is that I do not want to tax the poor. He wants to tax prosperity. If there is no law, no one will pay,” he noted.

The tax reform bills, which have passed the second reading in the Senate, comprise the Joint Revenue Board of Nigeria (Establishment) Bill, 2024; The Nigeria Revenue Service (Establishment) Bill, 2024; The Nigeria Tax Administration Bill, 2024; The Nigeria Tax Bill, 2024.

These bills have faced opposition from the Northern Governors Forum and the National Economic Council (NEC), who have expressed concerns over specific provisions, particularly those related to Value Added Tax (VAT).