TUC, Sharia Council Reject Proposed VAT Hike In Tax Reform Bills

The Trade Union Congress (TUC) and the Supreme Council for Sharia in Nigeria (SCSN) have strongly opposed the planned increase in Value Added Tax (VAT) from 7.5% to 15%, as proposed in the 2024 tax reform bills currently under review by the National Assembly.

Naijaonpoint recall that the controversial tax proposals, sent by President Bola Tinubu in October 2024, include the Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, Joint Revenue Board Bill, and the Nigeria Tax Bill.

At a public hearing held at the National Assembly on Wednesday, representatives from labour unions, religious organizations, state governments, and business stakeholders voiced concerns over the proposed tax amendments, warning that they could worsen economic hardship for Nigerians.

TUC: VAT Hike Will Burden Nigerians

The TUC Secretary-General, Nuhu Toro, called on the government to maintain VAT at 7.5%, arguing that increasing it to 15% would further strain households and businesses, worsening inflation and unemployment.

“Allowing the VAT rate to remain at 7.5% is in the best interest of the nation. Increasing it will place an additional burden on Nigerians who are already struggling with rising inflation and unemployment. Higher taxes will further strain households and businesses, which may slow down the economy,” Toro stated.

The TUC also recommended raising the tax exemption threshold from ₦800,000 to ₦2.5 million per annum and called for the retention of key funding mechanisms like the Tertiary Education Trust Fund (TETFund) and the National Agency for Science and Engineering Infrastructure (NASENI) due to their contributions to national development.

Sharia Council: VAT Should Be Reduced, Not Increased

Similarly, the Supreme Council for Sharia in Nigeria (SCSN) advocated for reducing VAT to 5% or, at worst, keeping it at 7.5%.

Speaking at the hearing, Prof. Nafiu Baba-Ahmed of Ahmadu Bello University, Zaria, argued that VAT should not exceed the current rate, warning that a hike could further impoverish millions of Nigerians.

“Section 146 of the Nigeria Tax Bill, 2024 should stipulate that VAT shall be charged at 5% or, if necessary, 7.5%, but not higher,” he said.

The Sharia Council also objected to the inheritance tax provision in the Nigeria Tax Bill, arguing that it contradicts Islamic inheritance laws.

“Family income should not be construed to include inheritable property under the personal law of the deceased,” Baba-Ahmed added.

Kano Govt: Nigeria’s Tax System Is Inefficient

While supporting tax reforms, the Kano State Government described Nigeria’s tax system as cumbersome and inefficient.

Speaking on behalf of the state, Permanent Secretary Umar Jalo urged lawmakers to ensure that tax policies promote justice, fairness, and equity.

“Despite past reforms, tax administration remains weak due to inefficiency, corruption, and poor governance. The House and Senate must ensure that these bills do not worsen economic hardships for Nigerians,” Jalo stated.

Customs Service Warns Of Jurisdictional Conflicts

The Nigeria Customs Service (NCS) raised concerns over conflicting jurisdictional roles within the tax bills.

The Comptroller General of Customs, Adewale Adeniyi, cited Sections 23 and 29 of the Joint Revenue Court Bill as problematic and warned that Section 162 of the Nigeria Revenue Service (Establishment) Bill could eliminate the NCS’s role entirely.

Adeniyi also objected to replacing the term “levy” with “tax”, emphasizing that the two terms have distinct legal meanings and could create confusion in enforcement.

NLNG Calls For VAT Exemption On Exports

On its part, the Nigeria Liquefied Natural Gas (NLNG) urged lawmakers to exempt export processing zones from VAT, arguing that taxation could undermine Nigeria’s global trade competitiveness.

“Exports from Nigeria should be zero-rated to ensure that our businesses remain competitive globally,” said Clement Efeyita, NLNG’s Manager of Tax and Financial Systems.

Efeyita further noted that once the Nigeria Tax Bill becomes law, several executive orders on tax policies will be repealed, urging lawmakers to integrate essential provisions into the new framework.

Fiscal Responsibility Commission Supports Tax Bills

Meanwhile, the Fiscal Responsibility Commission (FRC) expressed support for the tax reform bills, stating that they align with the Fiscal Responsibility Act of 2007 and would benefit small businesses.

However, FRC Chairman, Victor Muruako, urged amendments to the Joint Revenue Board Bill, particularly its reporting deadlines, to ensure compliance with the Fiscal Responsibility Act.

The Senate and House of Representatives are expected to consider public feedback before making final amendments and passing the tax reform bills into law.