Senate braces for heated debate as Tax Reform Bills set for passage today

• Tax chief laments over-taxation of Nigeria’s poor, calls for equity
• Says 52 per cent of household income spent on food
• Reps approve $75 oil benchmark ahead of 2025 budget presentation

The Senate is poised for a decisive moment today as lawmakers prepare to vote on the contentious Tax Reform Bills, following yesterday’s stormy session marked by sharp disagreements over the presence of external tax experts in the chamber.

The legislation, which promises sweeping changes to Nigeria’s tax structure, has sparked intense deliberations, reflecting deep divisions within the Red Chamber.

Deputy Senate President Barau Jibrin (APC, Kano North), who presided over yesterday’s plenary, disclosed that deliberations on the bill would continue today, with the legislative process set to include a first reading, an executive session, and eventual passage after the third reading.

The bills, initially listed for first reading on October 30, 2024, was postponed to accommodate the screening of ministerial nominees, including Bianca Odinaka Odumegu Ojukwu. It was subsequently excluded from the Order Paper before the Senate’s three-week recess.

The chamber descended into chaos after some lawmakers opposed the presence of Taiwo Oyedele, the chairman of the Presidential Committee on Fiscal Policy and Tax Reform, and other consultants in the chamber to discuss tax reform policies.

The conflict began when Senate Leader Michael Opeyemi Bamidele proposed suspending Senate rules to allow Oyedele and his team access the session. However, former Deputy Senate Leader Abdul Ningi swiftly objected, citing Order 12 of the Senate Standing Rules, which prohibits non-senators from entering the chamber during a session.

Despite Ningi’s objections, Jibrin overruled him, arguing that the experts were invited to facilitate open discussions on the contentious tax reform bills.
Tensions escalated when another senator, former Senate Majority Leader Mohammed Ali Ndume, raised a point of order, labelling the presence of “strangers” in the chamber an aberration, as it was not listed in the order paper. Heated exchanges ensued between Ndume, Ningi, and Jibrin, causing a delay in Senate proceedings.

The situation worsened when Ndume objected to Jibrin’s use of the term “rhetoric,” describing it as unparliamentary language. Jibrin, however, ruled Ndume out of order, insisting the term was used in a general context.

MEANWHILE, Oyedele informed the lawmakers that the average Nigerian household spends 52 per cent of its income on food alone. He revealed that Nigeria currently has about 60 taxes nationwide and 140 poorly structured levies that impose an unfair burden on low-income earners.

Oyedele stated that if the National Assembly approves the reform bills, Nigerians earning N30,000 per month or N1.5 million per annum would be exempt from paying personal income tax.

The chairman of the tax reform committee explained that the proposed reforms aim to ensure that wealthy individuals and corporate organisations pay more equitable taxes. He lamented that Nigeria has disproportionately overtaxed its poorest and most vulnerable populations—a situation the reforms are designed to address.

He also informed the lawmakers that the current 24 per cent top tax rate for high-income earners would be increased marginally to 25 per cent. Oyedele described Nigeria as one of the top 10 countries with the highest corporate tax rates globally, noting that this trend has deterred potential foreign investors. “When potential investors discover the details of our tax system, they quietly withdraw and choose more tax-friendly African countries to invest their capital,” Oyedele said.

He observed that the country has attracted minimal foreign exchange from Nigerians in remote employment compared to their counterparts in other countries. According to him, unlike in other nations, Nigerian tax laws require remote employers based overseas to pay tax in Nigeria, even after their remote employees have already been taxed.

“Businesses in Nigeria are required to pay taxes even when they incur losses. In contrast, countries like the United States assist such businesses to help them remain operational. We want to modernise our tax system. We won’t tax businesses when they make losses. We won’t tax seeds; we will tax the fruits.

“We propose a 15 per cent tax on profits to be paid to the Federal Government. We have observed that the current framework stifles the growth of Nigerian companies into multinationals.

“Under the proposed system, businesses earning N50 million or less yearly would be exempt, with taxes assessed based on the ability to pay. Technology would be employed in tax administration to ensure refunds are made when companies overpay,” Oyedele explained.

Oyedele and his team argued that a well-structured tax system would give the Federal Government sufficient funds to finance its budget and reduce reliance on external borrowing.

They highlighted that Nigeria lags in tax revenue compared to South Africa, Kenya, and other African countries with effective tax systems due to poor tax administration. Oyedele listed other components of the tax reforms, including the Tax Appeal Tribunal, All Joint Revenue Board, Tax Ombudsman, and the Nigeria Revenue Bill.

The Director-General of the Budget Office, Tanimu Yakubu, also reviewed Oyedele’s presentation. Yakubu explained that if the reform bills are enacted, they would streamline the tax system to ensure that revenue from taxes is channelled into education, healthcare, security, infrastructure, and other priority areas.

He noted that Nigeria’s GDP has been steadily declining—from N363 billion to N241 billion—a trend that could worsen by 2025 without the right interventions.
Yakubu warned that further GDP decline could result in a 51 per cent economic downturn in the coming years.

The Federal Inland Revenue Service (FIRS) Chairman, Zach Adedeji, stated that the reforms could potentially transform Nigeria’s economic landscape. However, he added that broader consultations with key stakeholders are ongoing.

Adedeji emphasised that the reforms aim to stimulate economic growth, stating: “We won’t tax poverty; we will tax prosperity.” ALSO, ahead of President Bola Ahmed Tinubu’s presentation of the 2025 Appropriation Bill, the House of Representatives has approved a $75 per barrel oil benchmark price for the 2025 fiscal year.

The decision was taken during a plenary presided over by Deputy Speaker Benjamin Kalu, following the adoption of recommendations by the Finance, National Planning, and Economic Development committees led by Mr James Abiodun Faleke.

The lawmakers also set benchmarks of $76.2 and $75.3 per barrel for 2026 and 2027, respectively, as part of the 2025–2027 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

For domestic crude oil production, the House approved significant increases in projections: 2.06 million barrels per day (mbpd) for 2025, 2.10 mbpd for 2026, and 2.35 mbpd for 2027.

The GDP growth rates for the three years were pegged at 4.6 per cent, 4.4 per cent, and 5.5 per cent, while the projected exchange rate was set at N1,400/USD for the same period, subject to review in early 2025 based on fiscal and monetary policies. Inflation rates were projected at 15.75 per cent, 14.21 per cent, and 10.04 per cent for 2025, 2026, and 2027, respectively.

The proposed 2025 federal budget is N47.9 trillion, with a retained revenue of N34.82 trillion. The lawmakers approved new borrowings totalling N9.22 trillion, comprising domestic and foreign loans, while debt service is projected at N15.38 trillion. Pensions, gratuities, and retirees’ benefits were valued at N1.443 trillion, with a fiscal deficit of N13.08 trillion.

Capital expenditure for 2025 was projected at N16.48 trillion, excluding statutory transfers of N4.26 trillion and a sinking fund of N430.27 billion. The total recurrent (non-debt) expenditure was set at N14.21 trillion, while special intervention funds for recurrent and capital expenditure were estimated at N200 billion and N7 billion, respectively.

Additionally, the House approved a promissory note programme and bond issuance to offset outstanding claims and liabilities owed by the Federal Government to states, high-priority judgments, and liabilities incurred by federal ministries, departments, and agencies.