Economists, Bismarck Rewane and Biodun Adedipe, have backed the tax reforms proposed by the administration of President Bola Tinubu whose bills are currently before the National Assembly.
Rewane and Adedipe shared their opinions on the bills during the FirstBank Nigeria Economic Outlook 2025 in Lagos on Wednesday, with the theme of the event titled “Nigeria 2025: Path to Economic Rebound & Recovery.”
In October, President Tinubu introduced four tax reform bills to the National Assembly: the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
The proposed bills, according to the president, aim to provide a clear and concise legal structure for managing taxes in Nigeria, to reduce disputes and enhance efficiency.
Rewane, who is the Managing Director of Financial Derivatives, speaking about the bills and their potential impact, said:
“Basically, the Nigerian government is focused on revenue. They need to increase the revenue-to-GDP ratio, and so, as long as it is easy to administer, that is the two things they consider.
“But the problem with revenue-intensive taxes is that, by nature, they are regressive. Therefore, you’re going to have this sales tax, VAT. It also takes money from consumers and gives it to the government.
“Secondly, what does the government do with the money? Is it transparent? Is it efficient? Is it adding to productivity and output by doing certain things? Is the government multiplier as efficient as the investment multiplier? I think that is key.
“The local governments are going to be important in this new dispensation. It’s a policy announcement that must be backed by institutional reforms. We must curtail government profligacy.”
Adedipe, giving his opinion on the topic, highlighted two major aspects of the tax reform bills during the panel discussion at the First Bank Outlook event.
“The first thing for me is the reduction in the number of taxes from about 62 to nine. Secondly, is the way proceeds have been shared under the current dispensation. That is also going to change, putting more money at subnational levels than we have now,” he said.
“So, if I drink Coca-Cola in Katsina, the VAT paid will not be attributed to Lagos because the headquarters of the company paying it is in Lagos.
“There will be a portion attributed to Katsina, where it was consumed. That’s the biggest shift, and it makes it more equitable.”
The Northern Elders Forum recently called for the immediate suspension of the controversial tax reform bills being proposed by Tinubu.
In a press statement released on Saturday and signed by its Management Board Chairman, Al-Amin Daggash, the forum maintained its stand on the bills and berated the federal government for its failure to seek experts’ opinions before drafting them.
The forum warned that the bills are strategically drafted to cripple the economy of the country as a whole, stressing that the body is prepared to dialogue with the president on the way forward.
