The Presidential Committee on Fiscal Policy and Tax Reforms has recommended raising the Value Added Tax (VAT) from the current 7.5%. Taiwo Oyedele, the committee’s chairman, announced this during an interview on Channels TV’s Politics Today on Monday.
Oyedele indicated that his committee is trying to integrate different taxes in Nigeria to assure a decrease, and that the proposed tax bill will be presented to the National Assembly.
He stated, “We have severe challenges with our tax revenues. We have revenue concerns in general, including both tax and non-tax. You can describe the entire fiscal system as being in crisis.
“When my committee was formed, we had three broad mandates. The first was to examine governance: our nation’s finances, borrowing, and cooperation between the federal government and across subnational levels. “
The second one involved revenue transformation. The country’s revenue profile is quite low. If we devote our entire revenue to road repairs, it will be insufficient. The third focusses on government assets.
“The measure we propose to the National Assembly increases the rate from 7.5% to 10% by 2025. We don’t know when they will be able to pass the law. Then, further increases are stated in terms of the year they will take effect.
“While we do that, we have a proportional cut in personal income tax. Anybody earning N1.5 million or less per month would have their personal income tax reduced. Companies will see their income tax rates reduced by 30% over the following two years to 25%. That is a big reduction.
“They also pay a number of other taxes, such as the IT levy and the education tax. All of these are being consolidated into one. They will pay 4% initially. That will drop to 2& in the coming years.”
