IMPI backs tax reform bills, hails move to revamp Nigeria’s economy

The Independent Media and Policy Initiatives (IMPI) has thrown its weight behind the tax reform bills currently awaiting approval by the National Assembly, hailing it as a bold move to revamp Nigeria’s economy.

Speaking during the organisation’s press conference in Abuja yesterday, Chairman of IMPI, Omoniyi Akinsiju, stressed the significance of the proposed legislation, stating it is crucial for generating revenue, fostering enterprise growth, and enhancing citizens’ purchasing power.

He expressed dismay over what he called ‘unwarranted controversy’ about the reforms, particularly the Value Added Tax (VAT) sharing formula, calling it a distraction from the transformative benefits of the bills.

“We have reviewed all four tax bills presently before the National Assembly, and after a historical and contextual analysis of the bills, we must admit our feeling of dismay at the unwarranted controversy that had been spurned around the bills,” he said.

Akinsiju clarified that the tax reform bills are designed to address Nigeria’s long-standing fiscal challenges, noting that for the first time, the tax laws will integrate three crucial aspects: generating government revenue, supporting businesses, and enhancing citizens’ economic well-being.

He outlined key provisions, including removing the clause that makes companies pay taxes even when they have losses; small businesses earning less than N50 million per year paying zero per cent tax, benefiting about 43 million registered small businesses as well as medium and large companies enjoying a phased reduction in Company Income Tax (CIT) from the current 30 per cent to 27.5 per cent in 2025 and 25 per cent in 2026.

“The zero tax payment is the equivalent of a fiscal elixir that helps businesses survive tough economic conditions,” Akinsiju said. He added that this shift will enable companies to reinvest in their operations with the money they earn from their businesses and grow organically.

He lauded changes to the Capital Gains Tax (CGT) system, which now exempts individuals from taxes on chargeable gains below N50 million, compared to the current N10 million threshold.

“This provision allows citizens to retain more of their income, stimulating consumer spending and, in turn, driving demand for goods and services,” he explained.

Addressing the heated debates over the VAT sharing formula, the IMPI Chairman called for a more constructive approach.

The Guardian reports that under the new proposal, VAT revenues will be allocated based on consumption and the place of supply rather than company headquarters. While some states have opposed this proposal, Akinsiju urged them to focus on adding value to local resources, such as agricultural and solid mineral products, to benefit from consumption-based derivations.

“This change encourages competitive value-added production among states. It’s an opportunity for states to innovate and tap into their economic potential,” he said.

He encouraged critics to present alternative viewpoints during the upcoming public hearing at the National Assembly.

IMPI also commended the Federal Government’s effort on the annual recruitment of 30,000 police officers for the next six years. Akinsiju said this initiative is possible by the multiple inflows of revenue in the economy from the economic reforms.

His words: “Among other social-based expenditures undertaken by the government, we are impressed by the presidential approval for the annual recruitment of 30,000 police officers and men for the next six years.
“This simply means that the country’s capacity to fight the prevailing insecurity is further boosted by the multiple inflows of revenue in the economy.”

He encouraged Nigerians to see the tax reforms as a move towards economic growth that benefits everyone, even as he commended government’s commitment to transparency and democracy, stressing that the reforms will help increase Nigeria’s tax-to-GDP ratio from 10.86 per cent to a projected 16 per cent.

IMPI further commended the Federal Government’s economic reform for the payment of N3.3 trillion legacy debt owed to gas production companies.

This, he said, boosted Nigeria’s power output in November 2024, while also expressing concern over the collapse of the national grid.